Select Committee on Health Appendices to the Minutes of Evidence


APPENDIX 9

Memorandum by the King's Fund (NC 46)

  The King's Fund supports the use of explicit priority setting within the NHS and is broadly supportive of the objectives and processes of NICE. Rationing within the NHS—even at vastly higher levels of expenditure—is unavoidable, and explicit approaches have the potential to facilitate consistent, transparent and accountable decisions about resource allocation.

  In the following submission we outline six aspects[14] of NICE's processes which we consider could be strengthened or improved to better meet its objectives. In each case, we briefly outline the relevant issues and offer a specific recommendation for change. Analysts from the King's Fund are willing to provide oral evidence if required.

SUMMARY OF RECOMMENDATIONS:

  1.  That NICE retain its NHS cost perspective, but accompany this with an impact report of the resource implications for public and private groups and individuals.

  2.  That NICE explicitly justify its decision threshold cost per QALY gained, and state what tradeoffs between QALY maximisation and other objectives (such as minimisation of unequal health status) it is prepared to accept.

  3.  That guidelines for evidence on the collation and reporting of patient experience be accompanied with clear procedures for how this evidence will be used to make comparisons between patient groups.

  4.  NICE should develop systematic ways to choose which services and treatments are to be appraised rather than responding mainly to new technologies.

  5.  That NICE work with manufacturers of pharmaceutical products to ensure that appropriate measures of quality of life are routinely included in clinical trials.

  6.  That local variations in marginal cost and benefit, and cost effectiveness in implementation, be explored as to their implications for technical appraisal and national guidance.

1.  Costs

  NICE appraisals are undertaken from the perspective of the NHS. This means that resource use associated with conditions and their treatment is restricted to that of the NHS. This raises a fundamental question: whose budget should we be concerned with? The NHS? The Public Sector? Patients? Or the whole economy?

  There is no technically correct view about this. Focussing solely on publicly-funded healthcare costs and ignoring costs falling on patients or the wider public, can mean that appraisals favour interventions which shift costs away from the NHS onto private individuals or the rest of the public sector. The desirability of an all-encompassing (social) perspective is emphasised by many prominent writers in economic evaluation.

  But a wider perspective on costs would require NICE to extend its remit to optimising resource use in the public sector generally, not just health care, and indeed in the economy as a whole. Decisions made from this broader perspective might maximise society's welfare, but would not maximise health gain from the NHS budget. Including non-NHS costs would create still more uncertainty over what is an appropriate cost-effectiveness threshold (see 2 below), as resource use outside the healthcare budget is more difficult to identify, measure and value. Moreover, it would require a higher threshold; some conditions imposing low non-NHS costs might no longer be regarded as cost-effective.

  Recommendation 1: That NICE retain its NHS cost perspective, but accompany this with an impact report of the resource implications for public and private groups and individuals.

2.  The cost-effectiveness threshold

  Cost effectiveness evidence has no "absolute" interpretation—whether or not a treatment with a given cost per QALY gained is considered to give good value for money or not relies on comparison of this evidence with that for other services that are already funded (but this assumes currently funded services to have been rationally chosen and to be good value for money), or against a benchmark known as a "threshold".

  Guidelines issued by NICE to date imply a threshold in the range of £20,000 to £30,000. Statements made at the AGM of NICE suggest a de facto threshold of £30,000. However, cost-effectiveness is not the only factor considered in issuing guidance. For example, NICE decided in favour of Riluzole for motor neurone disease, despite a cost per QALY gained of between £34,000 and £43,500, stating that the committee took account of "the severity and relatively short life span" of patients and "the value patients attached" to the extension in survival.

  The threshold is a way of representing the opportunity cost of treatments "at the margin"—it represents society's willingness to pay for an extra QALY. But because we lack information on the cost per QALY gained for all possible health care interventions, the threshold represents an estimate of society's willingness to pay.

  NICE has a responsibility explicitly to justify the threshold that appears to have emerged as its decision rule. For the sake of consistency and transparency, NICE should also explicitly state which factors other than value for money—for example, reductions in health inequality—are considered important and how they are incorporated into decisions. The choice and use of the threshold are critical in decision making, and making these explicit would enable more transparency and better public debate on these matters.

  Recommendation 2: That NICE explicitly justify its decision threshold cost per QALY gained, and state what tradeoffs between QALY maximisation and other objectives (such as minimisation of unequal health status) it is prepared to accept.

3.  Patient experience

  Both the DoH and NICE have declared their intention to seek patient (or public) input to their decisions. It will be important to state clearly the objective of doing so and to establish guidelines for collating and presenting such evidence so that it facilitates NICE's overall aims.

  There are risks inherent in relying on individual patient or lobby group representations, including the selective nature of such evidence and the possibility of bias against health services where individual patients cannot be identified (eg, public health strategies) or where lobby groups have not formed. Systematic recording of patient experiences, using qualitative research methods, offers an alternative. However, the key point here is that explicit priority setting requires evidence to be weighed up across patient groups and treatments which represent potential claims on resources. A decision to recommend one sort of treatment, which meets one set of patient needs, has the opportunity cost of denying other treatments, which meet other patients' needs. Evidence of any kind—whether cost per QALY gained, or patient experience—is useful only if it facilitates such comparisons; this is the essential task faced by NICE. Unfortunately, qualitative evidence is hard to compare in this manner. What is done with evidence on patient experience is, therefore, as important as the method used to generate it.

  A central concern for many patient groups seems to be the inadequacy of quality of life measurement and valuation techniques used in technical appraisals. There may also be other concerns—for example, that the way in which health states have been modelled, such as their duration, transition probabilities and side-effects from treatment, fails to capture the reality of patients' experiences. Evidence about patient experience might provide a basis for judging the reliability and reasonableness of technical appraisal results. This will require an extra step in the process: rather than just providing a patient impact assessment report, it needs to feed into and inform the appraisals. If this is not done, even the most carefully analysed qualitative evidence is likely to become sidelined in the decision making process, since it will not in itself facilitate between-group comparisons of need or ability to benefit.

  Recommendation 3: That guidelines for evidence on the collation and reporting of patient experience be accompanied with clear procedures for how this evidence will be used to make comparisons between patient groups.

4.  The appraisal agenda

  Evidence-based priority setting faces the challenge of how to deal with missing evidence—this affects not only how but also which things are appraised. For example, bias in the selection of services and products towards those that have evidence from randomised control trials can distort decision-making. It makes it more likely that priority setting focuses on the ranking of relatively new treatments, while existing services, which are less likely to have been subject to trials, remain outside the scope of assessments, while continuing to make a claim on resources. Under these circumstances, new services might fail to clear the efficiency threshold and be denied funding, while "old" services remain embedded which may be less cost-effective. Appraisal processes need to be accompanied by clear methods, based on economic evaluation principles, to identify which services get appraised. A variant of Programme Budgeting Marginal Analysis could provide a way forward.

  Recommendation 4: NICE should develop systematic ways to choose which services and treatments are to be appraised rather than responding mainly to new technologies.

5.  Quality of life measurement

  The lack of evidence on the impact of treatments on quality of life can act to limit the scope and the veracity of analyses of cost per QALY gained. In order for a pharmaceutical manufacturer to obtain a licence for a product, it must meet certain regulatory criteria, which involves their providing evidence on safety, efficacy, and production standards for the product from their trials. There is no requirement to collect quality of life data, and no guidelines are provided for the type of data (eg, the instruments used to measure quality of life) that should be collected. Incorporating quality of life measurements into clinical trials imposes significant additional development costs on manufacturers—in order to produce this evidence they need to face incentives to do so.

  There are two options. One is to mandate the inclusion of QoL measures into clinical trials—a move likely be unpopular with the industry (and potentially inefficient since many drugs do not proceed past early phases anyway). A second option is for manufacturers to be encouraged to include QoL measures routinely into trials—and for this to be accompanied by clear guidelines as to the type of measures that are expected to facilitate NICE appraisals. We would suggest that these should include a patient-experienced, condition specific measure, as well as generic measures for which health state valuations (of the type used in estimation of QALYs) are available.

  Recommendation 5: that NICE work with manufacturers of pharmaceutical products to ensure that appropriate measures of quality of life are routinely included in clinical trials.

6.  Localism versus centralism and allocative efficiency

  One of the purposes of NICE is to provide clear, nationally consistent guidance on resource use. However, another key goal is to provide guidance that is locally owned and acted on in the right way. These two objectives may not be easily reconciled. In practise, NICE technical appraisals are based upon national, average data. Yet the basis for economic evaluation is in incremental analysis: allocative efficiency relates to marginal costs and marginal QALYs gained. There are a number of reasons why there may be differences between national and local costs and benefits.

  First, where local marginal costs are different from national average costs—due to different levels of throughput, spare capacity, and economies of scale and scope in provision—efficient service levels may also differ.

  Second, whether a treatment demonstrated to be cost effective at a national level is so locally depends in practice upon the way in which NICE's Guidance is implemented locally. For example, Guidance issued in favour of Riluzole may be interpreted in one area as an additional service for patients with MND (and resources taken from other treatment areas); in others, Riluzole may be funded but support services for MND patients withdrawn. Thus the budget constraint, net budgetary impact, opportunity cost and incremental benefit from that treatment are potentially different in each setting than estimated nationally.

  While inter-regional variations in service availability probably do reflect non-optimal (and inequitable) patterns of provision, neither is it guaranteed that identical services are optimal. Thus there needs to be provision for local consideration of costs and benefits (especially given the newly mandatory status of NICE's guidance) and the extent to which national average data is a good reflection of the conditions prevailing locally.

  Recommendation 6: That local variations in marginal costs and benefit, and cost effectiveness in local implementation, be explored as to their implications for technical appraisal and national Guidance.

CONCLUDING STATEMENT:

  The processes employed by NICE to assess the effectiveness and cost-effectiveness of spending options facing the NHS are based on sound principles. We have outlined a number of means by which those processes could be strengthened and made more explicit in order to better meet the stated objectives of NICE.

  Many of the concerns voiced publicly by stakeholder groups regarding NICE appear to focus on the use of economic evaluation and QALYs in particular. Cost-effectiveness analysis of the kind used by NICE is not without its problems, and provides just one kind of information (ie, efficiency, defined in terms of maximising QALYs), which must somehow be balanced against other, possibly conflicting, health service objectives (such as the minimisation of health inequalities) and principles (such as the rejection of "ageism" in health services). Nevertheless, the heart of the rationing problem is that devoting resources to one treatment can only be achieved by denying the use of those resources to fund other treatments. Evaluation of cost per QALY gained represents by far the best means of assessing value for money across different conditions and treatments.

December 2001




14   Part of this Evidence draws from "Patients' views of explicit priority setting: what are the implications for NICE?", Devlin N, Appleby A, Parkin D (2001) King's Fund. Back


 
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