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A new name, but same old NICE is left to pick the hot potato that is value based pricing

30 April 2013 Milena Izmirlieva

As Sir Andrew Dillon, Chief Executive Officer of the United Kingdom's National Institute for Health and Clinical Excellence (NICE) recently announced, the Institute's name is changing. It will be henceforth known as the National Institute for Health and Care Excellence - in formal recognition of its expanded role in healthcare provision guidance. The acronym NICE will be retained.

But while the names changes, the new responsibilities NICE will assume with the implementation of Value Based Pricing (VBP) in the United Kingdom are here to stay.

Department of Health Confirms NICE's VBP Responsibility
It has been known for a while that NICE would assume key responsibility in determining the value of new medicines subject to the UK's new VBP system. VBP is being introduced from 1 January 2014 for new medicines approved for marketing or new indications of existing medicines approved for marketing for the first time. Details on how the VBP of a drug would be determined are still fuzzy, but the Department of Health announced shortly after plans for the VBP new system were revealed that NICE - given its wealth of expertise in pharmacoeconomics and cost-effectiveness analysis - would be central to the implementation of VBP.

This view has been reiterated recently by the Department of Health, which stated in a March 2013 announcement that NICE will "have a crucial role in the future value-based pricing (VBP) arrangements for branded medicines" and will "build on its current drug evaluation processes by giving it broader scope to assess a medicine's benefits and costs".

Department of Health Passes the Ball to NICE
The restatement of this commitment to have NICE play a central role in VBP calculation is odd, to say the least. The only conceivable reason is perhaps the need to assure stakeholders that the implementation of VBP is still proceeding and is on track for introduction by 1 January and if there are any outstanding questions these should be directed to NICE. The British public itself has been relatively oblivious to the pending VBP implementation and what it would mean in terms of access to medicines. Instead the public focus has been on Accident and Emergency (A&E) department downgrades and hospital closures. So it seems that hardly any of the pressure to clarify progress with VBP implementation has come from the general population. Physicians -grappling with their new role as budget holders trying to reconcile savings needs with their commitment to local hospitals and local patients - have hardly been vocal in the VBP implementation debate. NICE, for its part, has raised some concerns about potential double-counting of certain benefits of a medicines under VBP, but mainly remains focused on developing its VBP methodology … diligently and quietly.

The reassurance then appears to be mainly directed at the pharmaceutical industry and the new NHS commissioning boards (i.e., the payer). The industry has been involved in negotiations with the Department of Health since September 2012 - or at least this is when the negotiations were publicly acknowledged by both sides. The outcome of these negotiations has not been announced, but concerns have been raised by the industry that the VBP calculation may not reward incremental innovation. Is it that now the DH is implicitly stating that the VBP calculation methodology is now in the hands of NICE and the industry should be talking to NICE? Or potentially a statement designed to reassure the NHS trusts that VBP is coming on 1 January one or another and the VBP calculation will help them to control costs going forward.

It remains to be seen in the coming months who was the intended target of these latest Department of Health comments and more importantly how stakeholders would be affected by the implementation of VBP from next year.

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