Top-up fees - Health Committee Contents

5  The potential consequences of the proposals to make more drugs available

82. As we discussed earlier, the Richards Report made a number of recommendations aimed at increasing the number of drugs funded by the NHS. The challenge of making new, often expensive, treatments available quickly to patients within limited resources is faced by health systems around the world. In October 2008, the London School of Hygiene & Tropical Health published a report "Paying for expensive drugs in the statutory system: An overview of experience in 13 countries."[93] The report, which was commissioned and funded by the Department of Health, examined the process of decision-making by regulators / health authorities in 13 countries with regard to the funding of "expensive" licensed pharmaceuticals. The report noted wide variations in the way that countries go about licensing and funding drugs, but found that in each country "Tensions between authorities, whether governmental or non-governmental, responsible for reimbursement decisions and the pharmaceutical industry regarding reimbursement issues are seen in most countries".[94]

83. During our recent visit to New Zealand we met PHARMAC (the Pharmaceuticals Management Agency) and learned at first hand about some of these tensions. The organisation uses the same data as NICE in judging the effectiveness of drugs (based on QALYs) and has declined, on grounds of cost-effectiveness, to fund a number of drugs that NICE has also decided not to fund.

84. In the Next Stage Review Final Report, published in June 2008, the Department announced changes to the way that NICE assessed drugs so that the time from a drug's appraisal by NICE to it being available for prescription by doctors, would be no more than six months.[95] In addition the proposed NHS Constitution will reinforce the right of all patients to receive a drug approved by NICE. As we have seen, linked to these announcements, the Department and NICE made two significant announcements which were aimed at increasing the availability of expensive drugs to all patients:

  • the supplementary guidance to NICE Appraisal committees on end-of-life drugs; and
  • the new Pharmaceutical Price Regulation Scheme.

The review of guidance for NICE Appraisal Committees

85. The new NICE guidance was criticised by a range of witnesses. Concerns fell into four broad areas:


86. The issue of how to determine NICE thresholds has long been a concern to this Committee.[96] As our 2008 Report into NICE noted, and the Department acknowledged, the QALY is not derived from empirical data and has been the subject of much debate amongst health economists; some economists suggest that it should be lowered, others that it should be raised.[97]

87. NICE's instruction that Appraisal Committees should treat drugs designed to treat patients with rare terminal diseases with greater flexibility was not accompanied by any detail about what the new cost per QALY should be. Although when we pressed him for further information Professor Sir Michael Rawlins denied reports that the guidance had effectively raised the cost per QALY to £70,000 for patients at the end of their life, he acknowledged that "we have always given our advisory committees latitude to go above and below it [the threshold of £20,000-£30,000]" and that the guidance had made this flexible approach clearer.[98] Two justifications for treating the end-of-life cost per QALY "more flexibly" (i.e. having a high threshold) were given. First, drug companies are not able to provide drugs cheaply to small patient populations and second, the public places a higher value on the treatment given to patients at the end of their life.

Defining small populations

88. NICE has defined the size of the population of patients suffering from terminal illnesses who would benefit from its new guidance as "small patient populations". For cancer, this means that the four most common types of cancers in the UK (affecting the colon, breast, prostate, and lung) would not benefit from the guidance. Professor Rawlins argued that it was important to place clear limits on the numbers of patients who would benefit from the new guidance because: "we cannot do this for common lethal conditions. It would cost the health service hundreds of millions of pounds a year".[99]

89. According to Professor Rawlins, the guidance on the cost per QALY threshold for less common cancers merited more flexibility because:

All this recognises that the development costs for treatments for less common conditions are going to be pretty well the same as development costs for common conditions but the market will be smaller and therefore the unit cost is likely to be higher. We recognise that manufacturers may well have to charge more for treatments for less common conditions.[100]

90. Less common cancers that would be covered by the guidance include: oral cancer, myeloma and cancer of the kidney.[101] Hilary Whittaker, Chief Executive of Beating Bowel Cancer was one of a number of witness who argued for greater clarity about what constituted a "small patient population".[102] Evidence submitted by the Centre for Health Economics, University of York, argued that:

Given that increasingly new drugs are 'designer' technologies for small subgroups of patients, often with particular genetic characteristics, many new products can be viewed as treatment for 'rare' diseases. For example, while breast cancer is not a particularly rare condition, treatments such as trastuzumab (Herceptin) are clinically effective only for a sub-group of patients—in this case those who have HER-2 breast cancer. Does this make it a rare condition? For the 'rarer' cancers, the argument is that there should be special consideration of patient sub-groups of 7,000 or less. Again, the central issue is demonstrable cost-effectiveness rather than special consideration.[103]

Willingness-to-pay exercises

91. NICE also partly based its decision to promote greater flexibility for end-of-life treatments on measures of society's "willingness to pay for treatment of people at the end of life".[104] It does this through the citizens' juries and surveys of the public which are designed to determine the level of funding the NHS should devote to treating patients at the end of their life. Professor Rawlins argued that these exercises were beneficial in a number of different ways:

First of all, would people want to be allowed to pay and all the evidence there is that four-fifths of the population are saying they would want to be allowed to pay on top of NHS care. Cambridge University Hospitals did some work where they asked people how much they would be prepared to pay. Only 120 people responded to this but over 50% of them said they would pay up to £10,000 and 30% of them said they would pay £30,000.[105]

Professor Cam Donaldson argued that public consultations were justified on the grounds that:

what can be more legitimate than asking those who pay for services and who stand to gain or lose from different allocations of NHS resources—i.e. the public—what are their views about what should count?[106]

92. Other witnesses, however, questioned whether NICE's assessment of public opinion was the best means of determining the value which should be put on treatment for patients nearing the end of their life. Professor McCabe argued that:

patient preferences…may not be relevant to the type of resource allocation…In reality, the evidence base to support a claim that society attaches a special value to interventions which extend life at the end of life is notable by its absence.[107]

93. PCT managers also questioned the validity of the exercises noting that they failed to inform the public beforehand of the treatments and services they would have to forego if additional funds were given to end-of-life treatments.[108] The UK CPHN maintained that healthcare professionals were best placed to make these decisions in the context of the overall healthcare budget. The organisation argued that if the public was made aware of the opportunity cost of providing additional resources to treating the terminally ill, then the results of the exercise would be very different. The UK CPHN stated:

It is right that Society's values need to be embedded into NHS decision making but this cannot be done in a piecemeal way. If politicians and the public wish resource allocators to give preferential treatment to certain patients then they will also need to say which services and treatments should be reduced or not provided at all.[109]

94. While witnesses disagreed about the weight that should be given to these studies, there was agreement that more work should be done to explore the public's attitudes to funding treatments for rare cancers. The King's Fund argued that:

If media coverage and political interest is anything to go by, there does appear to be public support for the idea that a patient who has been given just a few months to live may well regard the time left to them as particularly precious and that it is reasonable for the state to place additional value on that time compared to say someone who can expect to have say 20 years left. However, more work does need to be done to explore public attitudes and to have a wider and more considered debate than hitherto. There does not seem to have been much research in this area, the Review identified just two studies on patients' notional willingness to pay for an extended, or improved, quality of life.[110]


95. As we discussed in Chapter 1 a recurring criticism has been the inconsistencies in the way that PCTs implement NICE guidance. The Department hopes that the commitment in the NHS Constitution, that patients will be entitled to NICE approved drugs, will address much of this concern. However, a number of witnesses noted that the supplementary guidance is mandatory only for NICE approved drugs. Whilst there might now be greater consistency in funding of drugs that NICE has approved, there remains significant scope for inconsistency, and consequently for controversy, in the cases of drugs that:

96. In each of these cases, some PCT commissioners may be prepared to pay for the drug concerned, whereas others may not. There are no nationally set criteria or procedures to which PCTs must adhere in making determinations about exceptionality. As stated earlier, where funding of drugs is turned down by PCTs, patients can appeal against the decision through a process known as Exceptional Funding Requests.[111]

Changes to the Exceptional Funding Request procedure

97. Many patient groups complained that the individual funding request process was carried out inconsistently by PCTs. In 2008, Macmillan surveyed PCTs about their exceptional funding processes. According to Macmillan, the survey revealed:

  • A lack of consistency across the country around the rules;
  • A lack of doctors on the panel judging the requests; and
  • Little patient awareness: only 38% of PCTs that responded said they actively promoted the process to patients.

98. The Department has accepted some of this criticism and through the implementation of measures in 2008/09 claimed to have addressed them. The most significant of these appears to be the commitment in the NHS Constitution and Professor Richards' proposals that Exceptional Funding Requests should be subject to more openness and transparency. The Department's final guidance on NHS patients who wish to pay for additional care, instructs PCTs to ensure that they have "robust, transparent processes in place to make sure such decisions, including decisions on exceptional funding".[112]

99. The King's Fund argued that Richards' proposals for a more transparent process regarding appeals for exceptional funding would help to promote a degree of consistency because it would allow "both patients and clinicians to see and compare what information and arguments have been used in similar cases".[113] A number of witnesses argued that patients should receive information about how their application for exceptional funding was assessed and who had made the decision. A survey by the National Prescribing Centre (NPC) in October 2008 revealed that only 57% of PCTs "believed that there was some patient and public awareness of the decisions made by the panels which made them". In addition, the NPC noted that even where there was awareness, the level of understanding was relatively low.[114]

100. However, some PCT commissioners were concerned that the changes to the rules governing exceptional funding requests would put pressure on PCTs to fund drugs that they could not afford. The UK Commissioners of Public Health Network (UK CPHN) argued that PCT funding decisions were more likely than ever to be based on the phenomenon of "he who shouts loudest" and would be biased in favour of services for which there is private sector provision.[115] According to the group, this would eventually lead to a "breakdown in any notion of a [cost per QALY] threshold and that there would be less consistency among PCTs about the funding decisions they reached, thereby making the application of value for money potentially redundant within the NHS".[116]


101. Several witnesses argued that within a finite, albeit large, NHS budget, devoting more resources to funding end-of-life drug treatments would divert funding from other areas. According to the UK CPHN:

The effect of this will be that the NHS will spend an increasingly greater proportion of its funding on treatments which have the least effect, and proportionately less on other patient groups.[117]

The Network added that:

treatments for patients with metastatic or particularly aggressive disease are unlikely to improve five year survival rates but might compromise the NHS's ability to deliver other aspects of care.[118]

102. Ms Sophia Christie, Chief Executive of Birmingham PCT, questioned whether resources were best spent on giving patients a few extra weeks of life. In effect, she argued that money used to keep terminally ill people alive for a small additional period of time, could be better spent on caring for patients whose lives can be actually saved:

If NICE are not able to prioritise what they put forward for funding, then PCTs will not be able to prioritise our investment to local health need. We will not be able to deliver wise investment of taxpayers' money, we will not be able to achieve the stated policy aims of tackling health inequalities and improving mortality and adding years to life as well as life to years, because all of our money will have gone in the last six weeks of people's lives and potentially—and this is the bit that really worries me—without them getting any better service.[119]

103. Several witnesses argued that it might be more cost-effective for the NHS to focus resources on non-pharmaceutical treatments including surgery and radiotherapy, which it was argued would represent better value for money than drug treatment.[120] Other witnesses including Professor Sikora argued that the Department was right to focus on making pharmaceutical treatments available because future breakthroughs in treatments for life threatening conditions was likely to come from developments in pharmaceutical research.[121]

104. The Department maintained that the proposals were affordable if the NHS carried out more disinvestments in technologies, which might be effective but had been superseded by other more cost effective medicines.[122] Professor Richards argued that the Department had introduced a number of changes to clinical guidelines for certain treatments and thought that there would be scope in the NHS to eliminate waste and to use its resources more efficiently:[123]

It is not usually so much a question of stopping doing things altogether, it is refocusing and making sure that children with sore throats only get antibiotics under some special circumstances and not as a routine. These are the rather more subtle things. In 2007 we counted there were over 150 disinvestment opportunities from the guidelines and we keep on recycling these to remind people.[124]

The need for NICE to disinvest from old technologies was highlighted in this Committee's two reports into NICE. Most recently, in 2008, we concluded "Many treatments currently used [in the NHS] are not cost-effective and that NICE should give more emphasis to examining old technologies to encourage disinvestment".[125]

The Pharmaceutical Price Regulation Scheme

105. In our report on NICE, published in 2008, we expressed concern about the affordability of medicines supplied by pharmaceutical companies to the NHS and made a number of suggestions for improving the PPR Scheme to give greater value for money.[126] A new PPRS, agreed between the Government and the pharmaceutical industry, was published in January 2009 and Professor Rawlins claimed the scheme "Is as good an arrangement as there is in the world".[127] A number of other witnesses however remained sceptical that the new scheme would result in greater cost-effectiveness for the NHS largely because of its continuing reliance on risk-sharing schemes as a means of bringing greater cost-effectiveness for the NHS and failure to implement the recommendation by the Office of Fair Trading that future schemes should include a commitment to value-based pricing.


106. Risk sharing schemes have been modified in the new PPRS to become patient access schemes. Dr Felicity Harvey, Director and Head of Medicines Pharmacy and Industry, Department of Health, told us that patient access schemes introduced in the new PPRS would produce benefits because:

the important thing about patient access schemes is that they need to go through an appraisal by NICE in terms of the clinical and cost effectiveness of the scheme and the drug, so it is not just the drug but the drug in the context of the scheme. I think that is going to be very important moving forward.[128]

107. In our 2008 report into NICE we were critical of the risk-sharing scheme for the drugs beta-interferon and glatiramer for patients with multiple sclerosis. Under the scheme, the manufacturers of the drugs came to an agreement with the Department whereby the drug could be used in the NHS as part of a long-term trial. It was agreed that if the drug was less effective than £36,000 per QALY, industry would recompense the NHS. The evaluation was to take 10 years. In 2003 Sheffield University signed a contract with an MS organisation, four medicines manufacturers and the Department of Health (industry division) for an initial three years. Sheffield researchers then wrote a report about the scheme which was submitted in 2006. The next seven year contract then went to tender and Sheffield University did not bid for it. In evidence to the Committee, Professor Jon Nicholl, who led the study, indicated that there were problems with the scheme:

Details of the scheme have not been publicised and the report from Sheffield is not in the public domain, but there are indications that the study will not yield reliable information about the beneficial effects of the drugs.[129]

As we noted in our 2008 report into NICE, there were further problems with the risk-sharing scheme. They included the difficulty of imposing clinical trial conditions in the real world of the NHS. According to Professor Nicholl, the universal availability of drugs used under risk-sharing schemes meant that there are no comparator groups and no controls. This meant that the uncertainties observed initially were not resolved:

One cannot collect evidence which says that the outcomes for patients who are being treated by the treatments being made available under a risk-sharing scheme are better than for patients not being treated by those drugs. In turn the consequence is that we cannot resolve the uncertainties in the cost and effectiveness as we try to do in the first place.[130]

108. The Sheffield group subsequently published a report in January 2009.[131] Astonishingly when we asked Dr Felicity Harvey about the Sheffield study, she denied that there were problems and stated:

It is actually being taken forward through Parexel so actually the study will continue. It continues for ten years; the first set of data has been analysed and is about to be submitted for publication. There are fixed points throughout the ten years where the data will be locked, there will be an analysis and it will be published. The first of those will be published fairly shortly.

109. However Professor Raftery said of the Sheffield University study that:

There are rumours that it is not a success and there are suggestions that lessons should be learned from it. It seems to me that unless those lessons are learned we will repeat the mistakes.[132]


110. The challenge of making new, often expensive, treatments available quickly to patients within limited resources is faced by health systems around the world. The Department and NICE have introduced two significant initiatives which are aimed at increasing the availability of expensive drugs: the provision of supplementary guidance for end-of-life treatments to NICE Appraisal Committees and the introduction of a new Pharmaceutical Price Regulation Scheme.

111. While Professor Rawlins denied claims that NICE had raised its end-of-life cost per QALY threshold to £70,000, he accepted that NICE Appraisal Committees would be more flexible in the way they appraised expensive treatments. In effect the QALY threshold has been raised for end-of-life drugs. We believe that the decision by NICE to raise its cost per QALY threshold for end-of-life drugs is both inequitable and an inefficient use of resources. By spending more on end-of-life treatments for limited health gain, the NHS will spend less on other more cost-effective treatments.

112. NICE said that that it was important to place clear limits on the numbers of patients who would benefit from the new guidance because the NHS could not afford to apply the guidance for all conditions. However, given that increasingly new drugs are 'designer' technologies for small subgroups of patients many new products can be viewed as treatment for 'rare' diseases. We believe that the definition of subgroups of patients suffering from rarer cancers as "small populations" is too woolly and needs more clarity. There is a clear danger that the new arrangements will lead to the system becoming unaffordable as pharmaceutical companies target new drugs on subgroups of diseases.

113. Although we consider it proper that the public's view on how NHS resources are spent is taken into account, we are not convinced that NICE's method of doing so is the right one. We recommend that more research is undertaken to determine whether NICE's favoured method of using citizens' juries and "willingness-to-pay exercises" is the best way of taking into account the public's view on this matter.

114. We welcome the Department's guidance to PCTs for more transparency in the way that they deal with exceptional funding requests for treatments. All decisions on exceptional funding should be consistent with this guidance and PCTs should provide a clear and easily intelligible explanation to patients giving the reasons for any decision to approve or reject an exceptional funding request. PCTs must inform patients of the reasons for rejecting their exceptional funding request.

115. Despite the Department's proposals, inconsistencies will remain between PCTs about whether or not they fund certain treatments. Those PCTs which do not fund them are likely to come under severe pressure to do so through the exceptional funding request process.

116. The Department maintains that the proposals are affordable if the NHS carries out more disinvestments in technologies which might be effective but which have been superseded by other more cost-effective drugs. In our 2001 and 2008 reports into NICE we called for more effort to be put into disinvesting in obsolete technologies. We are extremely disappointed that little progress seems to have been made in this area.

117. The Department has introduced a new Pharmaceutical Price Regulation Scheme (PPRS) which it claims will reduce the cost to the NHS of purchasing drugs. The new PPRS will also place greater emphasis on risk sharing schemes which it has re-termed as patient access schemes. As we noted previously in our 2008 report into NICE, we have serious concerns about the effectiveness of risk sharing schemes where they place the burden of proving the success of the scheme on the NHS and not on pharmaceutical companies. We repeat the recommendation we made in our 2008 report into NICE that risk-sharing schemes be used with caution and that the risks should be borne by the company concerned.

118. We are surprised by the statement made by Dr Harvey, Director and Head of Medicines Pharmacy and Industry, Department of Health, that the risk sharing scheme evaluated by Sheffield University has been a success as other sources, including our 2008 report into NICE, have indicated that it has been a costly failure. The first published results of the evaluation of the process by the Sheffield group were much delayed and offer little evidence of cost effectiveness.

93   London School of Hygiene & Tropical Health," Paying for expensive drugs in the statutory system: An overview of experience in 13 countries." October 2008 Back

94   Ibid. Back

95   Department of Health, High Quality Care For All, Next Stage Review Final Report, Cm 7432, 30 June 2008 Back

96   See HC (2007-08) 27-I Back

97   Q 247 Back

98   Q 241 Back

99   Q 245 Back

100   Q 245 Back

101   Q 246 Back

102   Q 105 Back

103   Ev 80 Back

104   Ev 27 (HC 194-II) Back

105   Q 250 Back

106   Ev 52 Back

107   Ev 72 Back

108   Ev 17 Back

109   Ev 20 (HC 194-II) Back

110   Ev 41 (HC 194-II) Back

111   Also referred to as Individual Funding Requests Back

112   Department of Health, Guidance on NHS patients who wish to pay for additional private care, 23 March 2009. Back

113   Ev 41 (HC 194-II) Back

114   NHS National Prescribing Centre, A Comprehensive Survey of PCTs to Evaluate local decision making processes for funding new medicines, February 2009 Back

115   Ev 19 (HC 194-II) Back

116   Ibid. Back

117   Ibid. Back

118   Ibid. Back

119   Q 42 Back

120   Q 11  Back

121   Q 107 Back

122   The Department announced in 2006 that NICE would be "charged with purging from the NHS treatments that do not improve health or are poor value for money". Andy Burnham MP, then Minister of State at the Department of Health, stated: "New drugs and treatments are continually emerging, and trusts have to make difficult decisions about how to invest funding. I believe this important new work will show how the NHS can free up millions of pounds from obsolete or ineffective treatments. NICE has an excellent track record in identifying and recommending the most effective new treatments for widespread use in the NHS. But we need to ensure that we balance this with better advice on unnecessary and ineffective interventions that can be stopped." BMJ, "NICE is to root out ineffective treatments in the NHS", September 2006. Back

123   Q 287 Back

124   Q 268 Back

125   Health Committee, First Report Session 2007-08, National Institute for Health and Clinical Evidence, HC 27-I Back

126   HC (2007-08) 27-I Back

127   Q 278 Back

128   Q 276 Back

129   HC (2007-08) 27-I Back

130   HC (2007-08) 27-I (Q 510) Back

131   Pickin M, Cooper CL, Chater T, O'Hagan A, Abrams A, Cooper NJ et al. The Multiple Sclerosis Risk Sharing Scheme Monitoring Study - early results and lessons for the future. BioMedCentral Neurology 2009; 9:1-8. Back

132   Q 204 Back

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