National Institute for Health and Clinical Excellence - Health Committee Contents


Examination of Witnesses (Questions 560 - 575)

THURSDAY 18 OCTOBER 2007

PROFESSOR NANCY DEVLIN AND PROFESSOR JOHN APPLEBY

  Q560  Dr Naysmith: They are not the best attended meetings in the community?

  Professor Appleby: The will to live almost ebbs away! They are not organisations skilled in engaging the public. Again, they are not bad people and they are not trying to hoodwink the public, but they just do not put effort into doing that and they should. You seem to be touching on the top-down aspect of NICE which was set up to deal with the postcode lottery, which was the phrase used when it was set up.

  Q561  Dr Naysmith: I do not believe the term "postcode lottery" was used by the Government or NICE; it appeared in the press.

  Professor Appleby: But the idea that one should not have differences between geographical areas in terms of access to services was one that arose at the time NICE was set up. In that sense PCTs are being told what to do, and yet they are also told to do their own thing, as it were, given their populations and so on. That problem has always existed in the NHS. The way that money is allocated through the weighted capitation formula more or less sets out PCTs' budgets, but it does not go any further than that. Those budgets are not ring-fenced in terms of how the formula works. All the PCTs get is a big lump of money that they can spend as they like which in part leads to variations in spending. That is a recognition that there is a national formula, as it were, which tries to deal with the desire for more equity in terms of access, but how far down the system does one go to tell it what to do? Presumably, we will not tell doctors to refrain from treating Mr Smith but to treat Mrs Bobbins. One cannot go that far. At the moment it stops at the PCT level. That is the organisation which has bottom-up decisions from clinicians and so on and top-down decisions from government and national organisations. They have to wrestle with that difficult issue and it seems to me there is no way of resolving it one way or the other.

  Q562  Dr Naysmith: You talked earlier about how PCTs all around the country had some probably quite expensive special cases panels that met regularly and decided the same issue in different parts of the country. Is it not better to achieve that by deciding it nationally so that clinicians locally can recommend a particular drug? They have to carry the cost of it in their PCTs.

  Professor Appleby: I do not believe so. The point about the exception panels is that they deal with individual cases, so a consultant may want to prescribe a particular drug which the local PCT says it will not fund except in certain circumstances. It is so detailed that they have to discuss the actual medical case of the individual with the consultant.

  Q563  Dr Naysmith: But is it not possible to do something to deal with what are often very expensive and exceptional drugs?

  Professor Appleby: That would be possible only if there was an indisputable common theme to do with age, say, but the point is that often there is a dispute between clinicians—they are autonomous, professional people who feel they are making the right decisions for their patients—and the PCTs who have the money and are able to fund it but who disagree. To put it politely, there is a discussion between the two. How that can be generalised I am not sure.

  Q564  Dr Naysmith: Do you have evidence that there are different individual factors in different cases?

  Professor Appleby: There is only anecdotal evidence from people I know and interviews with those involved in these panels.

  Professor Devlin: In a way, that is the express purpose of the panels. It is almost like a safety valve for some of the disinvestment decisions that PCTs make. Therefore, the exception panels will consider special circumstances that consultants may wish to put forward. Some process needs to be there, but it is possible that some general truths, facts or evidence may arise from them which can inform either other panels or other disinvestment decisions more generally.

  Q565  Chairman: In any health economy anywhere in the world have you seen citizen juries, as opposed to health professionals and/or patients, taking decisions about where expenditure should occur?

  Professor Appleby: I am not aware of what other countries have done along those lines. I know that in England every now and then PCTs have used informed public opinion, as it were. A group of members of the public are presented with evidence by experts and discussions go on. That has fed into a decision by the PCT.

  Chairman: That has happened in my own area. One has to decide what evidence is used in coming to these decisions and the views given in the papers presented to us and what you have said this morning.

  Q566  Dr Stoate: We heard evidence last week that drug companies when pricing new drugs based their decisions on what the market would bear or, in layman's terms, what they could get away with. If NICE explicitly dropped its threshold do you think that would have a bearing on forcing down the cost of new technologies?

  Professor Devlin: I believe that we commented on this in our evidence. One of the points about having an announced threshold is that it can inadvertently provide a target for pricing, so if there is evidence on the clinical effectiveness of a drug there is at least an incentive to price that product in such a way that it comes in at or just below the particular threshold.

  Q567  Dr Stoate: Do you believe that goes on?

  Professor Devlin: There is certainly an incentive for that to happen. I am not sure whether or not there is hard evidence that it happens in practice and, if so, to what extent.

  Q568  Dr Stoate: You do not know whether if NICE explicitly dropped its threshold it would have any effect on the cost of new drugs?

  Professor Devlin: In view of the particular circumstances that exist in the NHS there is a disconnect between the kind of assessments that are being made regarding value for money and the way pharmaceutical prices are regulated. Obviously, there are other health systems around the world that deal with this rather differently and, for example, harness to a greater extent the monopsonistic purchasing power that a health system can have.

  Q569  Dr Stoate: You are aware that most NICE approvals fall outside the fixed price tariff and are paid by results. Do you believe that the removal of the high cost exclusions under the tariff could help because it might mean that approved therapies would be covered by the tariff?

  Professor Appleby: How is the tariff then derived?

  Q570  Dr Stoate: If they are inside the tariff PCTs effectively would not have to bear the full burden of the cost; if they are outside the tariff effectively they are placed on the PCTs' budgets?

  Professor Appleby: The tariff for paying hospitals is derived from the cost of hospitals. They would have to pay somehow. You may be suggesting that somehow the cost is spread.

  Q571  Dr Stoate: That is what I am saying. The burden on individual PCTs will be less acute.

  Professor Appleby: The short answer is yes, maybe.

  Q572  Mr Scott: The report of the Office of Fair Trading recommended a system of value-based drug pricing. Is the data available at launch robust enough to allow value-based pricing judgments?

  Professor Appleby: The short answer is that I do not know.

  Professor Devlin: I suppose that the evidence to which you refer is related specifically to health outcomes.

  Q573  Mr Scott: Yes.

  Professor Devlin: The evidence generated about health outcomes is that which informs the decisions in terms of cost-effectiveness. In a sense, if the evidence is good enough to make a judgment on the grounds of cost-effectiveness arguably it may also support decisions on value-based pricing. The danger is that that evidence, especially for a new drug, is generated only within the context of a clinical trial and often very little is known about the outcomes beyond the trial period, or for patients when a drug is used in a real setting as opposed to a clinical trial. Obviously, there are clear limitations that need to be taken into account in using that evidence, as is also the case when making use of that evidence to make a value-for-money assessment.

  Q574  Mr Scott: What I am getting at is that sometimes we learn from the media that a drug will prove to be a wonder cure for x when tragically in reality it will not, and perhaps some more robust investigation will deal with that problem?

  Professor Appleby: One cannot disagree with the general principle that the NHS should maximise health for the money it spends. Investigating any way of making that happen is perhaps worth doing. There are issues about the practicalities of value-based pricing. For example, you have to collect information about health over a long period of time to see what the value is. Clinical trial data is just that. We know that when therapies are used in practice often they will be used on different populations and will be delivered in different ways and not exactly in trial conditions. All of those things will perhaps affect outcome. Having said that, it may be no bad thing to collect the sort of information that would be necessary for value-based pricing. Evidence about changes in people's health status as a result of receiving healthcare on a continuing or routine basis would provide valuable information for lots of things, including perhaps value-based pricing.

  Q575  Mr Scott: The SMC relies on cost analysis provided by manufacturers when making decisions, yet its decisions are almost always consistent with those of NICE. Does NICE really need the complex system of consultation and draft guidance that it currently employs?

  Professor Appleby: One matter to bear in mind is the complete timescale involved from somebody having an idea about a new therapy or drug through to NICE saying that it is a good buy. NICE's decision are at one end. An awful lot of time is spent on doing other things, for example testing the drug and so on. I do not say that that should be cut back, but we should keep it in context. Clearly, there will be an opportunity cost to NICE shaving or abandoning its pretty sophisticated consultation process. There may be an outcry that it is not taking it out to enough people and so on. I do not know the answer, but clearly it would be good to minimise the period that NICE takes to review something. We should not forget that there will be some cost to doing that.

  Professor Devlin: That is a very good question and it depends in part on the value that is placed on the process. That is a very difficult matter. My personal view, which is no more important than anybody else's, is that NICE's process is superb and internationally it is an outstanding example of how evidence-based decisions should be made in the public sector. The process of thinking about what the threshold should be is just an extension of that; it sharpens up the process and helps make it yet more transparent. I believe that it would be a loss to work backwards from that.

  Chairman: Thank you very much for the evidence both written and oral that you have submitted to the Committee.





 
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