I think I’ve found a NICE way of saving money
07.11.13
Over the last decade or so the UK has, however, become a more challenging environment. Access and uptake of medicines has been poor by international standards (which is at least associated with relatively poorer healthcare outcomes in some disease areas). And despite government attempts to ensure that positive NICE guidance is followed by patient access to medicines, this has been far from successful. So the stakes were high for this latest round of PPRS negotiations.
The new deal, which will run for 5 years is, I think, a great example of what is possible when industry and governments sit down together and jointly work through common problems, based on mutual respect and an understanding that give and take is necessary on both sides. I think that both the ABPI and the UK Government will come out of these negotiations feeling that the management of medicines spending in the NHS is moving in the right direction. But I think that the Government may have got an even better deal than they thought.
The PPRS has traditionally been based on limiting the profits made by individual companies. But this time there is a twist. This time the overall medicines bill is capped by a maximum growth rate agreed between both sides. If the medicines bill exceeds the cap, then companies pay back. This is an interesting and important move. For the first time, perhaps, the NHS has a real opportunity fix its long-standing uptake problem. Now that a cap is in place, if doctors prescribe more medicines, any cost that exceeds the agreed limits will be paid by pharmaceutical companies. As the Times has reported, today, this is a strategic gamble for the industry. One that I hope works.
All this begs a fascinating question about the future role of NICE. All of the coverage I have seen so far on the new PPRS deal has focussed on the fact that NICE has also now been asked to take on wider societal benefits into its appraisals. This is a positive development, of course. As Richard Bergström notes on this blog it has been something the industry has been calling for, for a while and should make a real difference in some disease areas. But I think there is a bigger question – do we need NICE at all, now that we have a budget cap?
Health Technology Assessment (HTA), as practiced by NICE, is predicated on the notion that when a new medicines comes along it is important that the benefits of that new medicine outweigh the opportunity costs in terms of other areas of healthcare spend (including other medicines) that would be displaced by spending the money on the new medicine. Seems sensible. But what if there are no opportunity costs? If there is a budget cap then, by definition, spend on a new medicines will not prevent the NHS from doing anything because the industry pays back any cost that exceeds the agreed limits! As Andrew Jack puts it, the new deal effectively turns the UK into a simple price-volume market.
OK, technically, if a new medicine comes in and gets used it arguably (and indirectly) changes real relative prices of other medicines being used. But that’s not the same as a new medicine actually displacing other spend – and arguably it’s the industry’s problem.
To be clear, I’m not calling, here, for the abolition of NICE (not all of it anyway). After all, it does much more than technology appraisals of new medicines. It will always be important to have good quality, credible information on relative benefits of different technologies – and NICE’s public health guidance is going to become more important if society in the UK is to turn a corner and become healthier. But I do think it’s sometimes important to step back from the detail of the health economic mumbo-jumbo that surrounds most discussion on HTA. What problem are we trying to solve? If the answer to that is ‘keep the medicines bill under control while giving patients access to medicines’ then surely the sort of budget caps agreed in the latest PPRS are an incredibly simple, cheap and effective way of achieving that – if, of course, set at the right level, that provides a fair return and maximises the overall efficiency of the healthcare system. Why complicate things?
