Far from losing its mojo, the UK’s National Institute for Health and Clinical Excellence (NICE) will simply be sharing the stage with a range of new players under NHS reform — none of whom look supportive of the R&D industry.
The big issue for industry in the UK this week is handicapping the future of its favorite target: The National Institute for Health and Clinical Excellence (NICE), which vets new medicines for conformity with resource goals of the National Health Service (NHS). Reacting to government statements about the role of NICE in a new legislative manifesto for the NHS, media and other stakeholders are consigning NICE to the ultimate bureaucratic insult: irrelevance. “Sidelined,” “stripped,” and “downgraded” are the declarative adjectives greasing headlines in both the mainstream and industry press.
Not so fast – when was the last time you can recall a hugely influential, precedent-setting and global player like NICE forced to relinquish its authority, particularly given that delivering value for money is a key success metric for governments in an era of fiscal retrenchment?
Closer scrutiny by Pharm Exec suggests that NICE is poised to assume a bigger strategic mandate as access guardian in a new “value based” drug pricing system to take effect by no later than 2014, when the current voluntary arrangement with industry – the Pharmaceutical Price Regulation Scheme (PPRS) – expires. Aware that NICE is a policy innovation of the previous Labor government, the new conservative coalition is anxious to end the cycle of “trial by media,” in which negative appraisals of specific drugs lead to harsh politics and counter-pressure from patients.
The current NICE focus on formalized technology appraisals also detracts from the government’s overall reform approach, which is to deliver health care services “from the bottom up,” with physicians determining directly how the system spends taxpayer money. Put simply, we have to put the NICE role in the context of a major realignment in how the biggest government-run health care system in the world sets priorities, allocates resources and defines success.
So what will NICE be doing under the new health legislation tabled by the government earlier this autumn?
First, it will secure prime responsibility for defining the structure and content of a new Outcomes Framework that will set the overall direction for spending money through the NHS. It will do this by drafting quality treatment standards in a series of defined steps to guide clinician behavior – including prescribing – in some 150 practice areas. More important, all GP and most specialist practices are expected to observe the standards in “commissioning” care to patients on the basis of practice-level budgets allocated to them through a new and politically autonomous NHS Commissioning Board.
Second, a specific element in the development of these standards is the determination of what interventions are truly “cost effective” from the perspective of the entire health care system. This is given practical expression in extending the NICE mandate to define rules for incorporating a “social care” perspective in clinical decisions. All spending in the NHS will be subjected to this test, which means in practice that obtaining access to the NHS population will depend on the capacity of a new technology to contribute to managing or lowering the huge associated costs that extend beyond service provision itself. For example, can the technology prove it can minimize institutionalizations and lead patients away from expensive acute care delivered in hospitals? NICE will be front and center in providing the criteria as to how that will be determined.
Third, NICE will be charged to assist in expanding the role of an existing regulator of trust-based organizations, known as Monitor, as an economic regulator to oversee all entities with a contractual relationship with the NHS. The change closely tracks the recommendations of the government’s Office of Fair Trading report several years ago, which advocated a new instrument to monitor the level of competition within the drug industry. NICE will help guide the economic work of Monitor in such areas as examining whether pricing accentuates the existence of barriers to fair trade, monopolies, or other such “inefficiencies” in so far as these impact the NHS ability to provide cost-effective services and social care. Among other powers, Monitor will have the right to, if necessary, set maximum prices for any NHS-funded service, including drugs, in order to “drive productivity.” And its rights to monitor competition practices extends not just to NHS services but to privately funded care and social care as well.
Fourth, in co-operation with the government’s new 200 million pound Cancer Drugs Fund, NICE will maintain its current role in the national appraisal of oncology medicines through to 2014, when a new pricing regime for medicines is implemented to replace the PPRS. Much of the focus of the Fund will be in making such drugs available on the basis of regional access criteria, working closely with local clinicians to fill areas of need that may have been overlooked under the NHS-wide strata observed by NICE. It is recommended companies that refuse to provide evidence to NICE as a way to enhance their chances for funding through the Fund should be denied access to the Fund, once the program is underway in April 2011.
Fifth, under the new NHS reform legislation, NICE is given upgraded legal status as an independent public agency. This is just as the industry’s own policy framework with government – the PPRS, which in various forms has lasted for 50 years – is allowed to die. What the government means by a new system of “value based” pricing, in which the prices paid for drugs through the NHS is linked to the value of the treatment, has been left purposely vague – at this point, you might actually call the definition “value-free.” But it will certainly not include what is meritorious to the industry under the current PPRS: the right to price a new drug freely and maintain that freedom over the product life cycle, subject to an overall ceiling on profits.
Overall, what does this spell for Big Pharma?
More negative precedents on the international front, to be sure. But there are other implications: the re-energized NICE focus on quality practice standards will likely reinforce the ingrained therapeutic conservatism of UK physicians and continue to limit access, but without the political fuss attached to individual product appraisals. This is a clear win for government cost cutters.
And the way these NICE standards play in convincing physicians to put their limited budgets behind other types of interventions is well-documented: where all health care services are subject to a budget ceiling, drugs tend to be marginalized as “lender of first resort.”
The NICE work on social care is also important to monitor, as it is already very hard for companies to build evidence on the outcomes impact of drugs that treat diseases from a symptomatic profile. Is there a positive public health result that exists beyond its affordability to the NHS? Companies will be expected to have clear answers to that question.
The incorporation of competition oversight in the NHS reform plan is intriguing as is the impact that NICE will play on this addition from a clinical and economic perspective. Aggressive application of competition policy in drugs ought to be regarded for what it can be – a new form of cost containment.
Last, the fact that the PPRS is now history will require a new level of engagement by industry in figuring out a way to preserve the legacy of free pricing combined with access to the patient base. It is good there is some time. Reform is occurring in the midst of a leadership transition at the ABPI. Without a strong industry association profile, consensus around an effective position that engages the public will prove elusive, as individual companies follow their instinct in pursuing separate commercial interests.