• AcademyHealth: NICE’s application of cost-effectiveness threshold(s)

    The United Kingdom’s National Institute for Health and Care Excellence (NICE) strictly applies a cost-effectiveness threshold to make its care coverage recommendations, right? Actually, no. See my latest AcademyHealth post for the details.

    Related to that post is a comment in Health Economics by Karl Claxton and colleagues titled “Causes for concern: Is NICE failing to uphold its responsibilities to all NHS patients”? I’m not going to comment on the contents of that comment apart from a meta point. Below is the opening paragraph.

    In 2007, the UK’s Office of Fair Trading suggested that the prices paid by the UK National Health Service (NHS) ought to be based on an assessment of the value that each drug offers (Office of Fair Trading, 2007). The type of economic evaluation already undertaken for NICE’s technology appraisals can identify the maximum price the NHS can afford to pay; where the additional benefits offered by the drug just offset the benefits expected to be lost or ‘displaced’ elsewhere because the additional resources required are not available to offer care, which would benefit other NHS patients. It is this principle, of paying the maximum, but no more than the maximum, for branded pharmaceuticals (and only whilst they are protected by their patent) that became known as value-based pricing (VBP) (Claxton, 2007; Claxton et al., 2008). Aside from estimating the additional costs and benefits that a new drug might offer, two other questions are critical: (i) how much health is expected to be displaced (an evidence-based assessment of the cost-effectiveness threshold); and (ii) how to establish mechanisms that would enable manufacturers to negotiate value-based prices in the UK that might be lower than in other countries (Claxton, 2007; Claxton et al., 2011)?

    My meta point is this: The paragraph exemplifies just how huge a gap there is between the UK and the US in even considering cost effectiveness criteria. Look how many cost-effectiveness related UK institutions and concepts seem to roll off the tongues of these authors. One could barely write such a paragraph about the US and if one did, one would not be referencing any significant agencies or policies that are actively engaged in cost effectiveness. We just don’t do that here. We hardly ever discuss it. And if we do, we get an earful about how it’s anathema to the nature of health care.


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