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Pricing
and Reimbursement
One of the key battlegrounds of the 1997
General Election was quality of care in the NHS. A headline
issue was 'postcode prescribing', where access to certain
treatments was determined, not by clinical need, but by where
patients lived.
This was the unintended consequence of a deliberate policy
of devolving decisions to lower levels in the NHS to make
the service more responsive to local needs and priorities.
But it conflicted with the ethos of a 'national' health service
with equal access for all to necessary healthcare.
Beta interferon was one of the classic examples of 'postcode
prescribing'. For example, Cambridgeshire health authority
decided that it was not prepared to fund the treatment because
of concern over value for money. However, Addenbrookes Hospital
also serves West Norfolk health authority, which took a different
view. Neurologists at Addenbrookes Hospital were thus in a
position where they were able to prescribe beta interferon
for some of their patients but not others, dependent on their
health authority of residence.
A rationing reality
This example illustrates the reality of rationing decisions
in the NHS, and is one of the reasons why the Government established
the National Institute for Clinical Excellence (NICE)
to try to bring consistency to such decisions based upon the
best available evidence.
A second objective of NICE was to propagate best practice
within the NHS, an organisation that has often been criticised
for the slow uptake of new medicines and other healthcare
technologies. Baroness Hayman, a junior minister in the Department
of Health (DoH), said of NICE: 'The basic thrust is to ensure
faster access to modern treatment and to ensure that innovations
which offer real benefits at fair prices will be actively
promoted.
A third objective, less acknowledged publicly, was to take
difficult rationing decisions out of the forum of political
debate, by providing a process and a set of technical criteria
by which decisions could be made without politicians having
to be directly involved.
NICE's mission statement is 'to appraise the clinical benefits
and the costs of those interventions notified by the Secretary
of State and the National Assembly for Wales and to make recommendations
on their use in the NHS'. This makes it clear that the primary
basis, on which its recommendations are based, is cost-effectiveness.
While the Chairman of NICE, Sir Michael Rawlins, has denied
that NICE operates a cost-effectiveness threshold, he has
also acknowledged that positive recommendations were, in general,
associated with a cost per quality adjusted life year of £30,000
or less. (QALY a measure used to compare the cost/benefit
performance of different interventions). Higher cost per QALY
figures are accepted only if there are special factors accepted
as relevant by the Appraisal Committee and not covered by
the formal modelling.
Beta interferon is an injectable treatment for the relapsing/remitting
stage of MS, and has been available on the market in the UK
for about six years. The first product launched was Betaferon,
from Schering AG, followed by Avonex from Biogen and Rebif
from Serono. The products are very similar, and generally
viewed as interchangeable for therapeutic purposes, although
not all neurologists would agree.
Beta interferon is expensive. At the time the NICE review
was initiated the annual treatment cost was approximately
£10,000 per patient. It does not result in a cure: it
reduces exacerbations and may delay progression of the disease.
Moreover side-effects, including flu-like symptoms, mean that
a significant number of patients discontinue treatment. For
this reason, many health authorities agonised about value
for money and whether or not to fund it. A classic example
of postcode prescribing.
So it is not surprising that treatments for MS (as well as
the three beta interferons, the review also included Copaxone
from Teva) were in the first wave of therapies referred to
NICE for assessment.
What did NICE recommend?
Despite being in the first wave of reviews, the final guidance
was not issued by NICE until January 2002. This reflects the
difficulties that NICE experienced in undertaking the review.
There were significant technical issues in calculating an
appropriate cost per QALY, relating to both the measurement
of quality of life in such a progressive and unpredictable
disease state and to the time periods for assessment of costs
and benefits. As a consequence, both manufacturers and patient
interests challenged the NICE assessment at every stage of
the process.
The final conclusion reached by NICE was that: 'On the balance
of costs and benefits, the beta interferons... are not cost-effective'.
This decision took into account 'the degree of clinical need
of people with the condition, the broad balance of benefits
and costs and the efficient use of NHS resources'. On the
most favourable assumptions, the best cost per QALY figure
the Appraisal Committee was able to reach was £35,000
but they noted that 'long-term extrapolation of treatment
benefit after cessation of therapy [necessary to reach that
figure] is not supported by the evidence'.
This guidance from NICE created a serious political problem
for the Government. MS sufferers had no effective alternative
treatments, and attracted a great deal of public sympathy.
Moreover, treatment with beta interferons had been available
for patients in some areas for several years, so implementing
the NICE guidance would have meant withdrawing a treatment
the NHS had previously provided never an easy thing to do
politically. Had NICE reviewed the evidence before launch,
the Government might have been more comfortable about following
its guidance it is easier to deny access in the first place
than to withdraw access once it has been granted.
On the other hand NICE had been established to take these
difficult decisions on an objective basis outside the political
arena, and rejection of its guidance would undermine its value
for the future.
How was this dilemma to be resolved?
Squaring the circle?
The solution reflected the outcome of discussions between
the DoH and the manufacturers that began some months before
the NICE guidance was issued. While those discussions were
independent of NICE, its outcome was hinted at in the wording
of the final NICE guidance: 'The DoH... and manufacturers
might usefully consider what actions could be taken, jointly,
to enable... the medicines... to be secured for patients in
the NHS'. This suggests that there was contact between the
DoH and NICE's appraisal committee before the guidance was
finalised, and raises questions about the independence and
objectivity of NICE.
A risk-sharing scheme was established for the supply of disease-modifying
treatments for MS within the NHS, for which all patients who
meet the appropriate criteria for treatment are eligible.
Health authorities have been placed under a statutory obligation
to provide funding for such patients (although no additional
funding was made available).
The key features of the risk-sharing scheme are:
All patients who meet treatment criteria can be included in
trials Any company providing products for the treatment of MS is
eligible to join trials, subject to agreement with the DoH
over a price which will create a cost per QALY (using agreed
assumptions) of £36,000 Clinicians may select the most appropriate of the medicines
included within the scheme Target outcomes have been agreed for each of the participating
products A patient registry has been established and outcomes for a
cohort of patients are being monitored at annual intervals Actual outcomes will be assessed against predicted outcomes,
and price reviewed in the light of this every two years If actual benefit is equal to or greater than predicted, initial
price levels will be retained, otherwise the price will be
reduced to the extent needed to restore the agreed level of
cost-effectiveness The scheme will continue for up to ten years
Risk sharing
The companies concerned effectively had no choice but to participate,
but for them this was a good deal. They previously only had
access to those patients whose health authority was willing
to pay; now they had access to all available patients. While
they have had to reduce their prices somewhat, the additional
revenue more than compensates for this. Moreover, the accumulated
knowledge and expertise they have from their clinical studies
and experience of their products in the market put them in
a strong position in negotiating the predicted outcomes they
could realistically expect to achieve.
For the Government, the scheme provided the opportunity to
meet one of its primary political objectives ensuring equity
of access to NHS treatment and to negotiate a price
reduction for a range of 'expensive' products (although overall
expenditure has undoubtedly risen), without undermining the
status of NICE. So, overall, the risk-sharing solution is
good for companies, provides a neat political solution for
Government, and above all is good for patients.
What does this mean? Several lessons can be drawn from this
example. Firstly, it is confirmation that, however much Governments
try, they cannot ultimately divorce rationing decisions from
the political process. 'Independent' bodies making decisions
on the basis of 'objective' evidence will not always reach
the 'right' political answer. This lesson is not confined
to the UK. In Australia, the Pharmacy Benefits Advisory Committee
advised against the reimbursement of Pulmozyme, an expensive
treatment for cystic fibrosis, on the grounds that it was
not cost-effective. In the face of mounting political pressure,
the health minister had to overrule that recommendation for
compassionate reasons. It also works in the other direction.
The UK government chose not to refer Viagra to NICE, for fear
that it would advise that it is a cost-effective product,
the 'wrong' answer.
For companies this means that they must always be alert to
the political context within which decisions will be made,
and actively look for any factor which could give them an
effective political edge and enable them to circumvent cost-effectiveness
hurdles.
Secondly, it confirms that the NHS in the UK is open to innovative
approaches to the funding and delivery of healthcare. While
some companies have offered elements of risk-sharing, for
example in the form of 'efficacy guarantees' for products
such as Roche's Herceptin, this is the first case where a
formal risk-sharing scheme has been established as a partnership
between the government, companies, professional associations
and patient organisations. It remains to be seen what the
long-term outcomes will be, but despite the inevitable teething
troubles, the scheme is now operational.
Thirdly, beta interferon provides a specific working example
of such an arrangement. This particular model can be expected
to have limited application, but could be relevant in a number
of chronic disease areas. But companies (and Government) will
have to be inventive in tailoring solutions to the requirements
and characteristics of specific treatments.
This could be viewed as a form of controlled entry to the
market, which could be valuable for other products. Chronic,
progressive diseases may show huge variations in the rate
of diseases progression, and clinical trials to establish
safety and efficacy for market authorisation may take two
years or more. To go beyond that and establish cost-effectiveness
before launch may be prohibitive in terms of cost, numbers
of patients required and timescale. As a consequence, products
may face severe restrictions. A solution might be a similar
scheme to that established for beta interferon, to establish
predicted outcomes and monitor progress against them.
Lastly, and less encouragingly, the example of beta interferon
demonstrates that cost per QALY still reigns supreme as the
primary technique for assessing the value and cost-effectiveness
of new products. While some generous assumptions have been
made to set the threshold for the beta interferons at £36,000
per QALY, that remains the critical threshold against which
cost-effectiveness will be assessed and prices may be adjusted.
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