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Value Based Assessment: Two new modifiers to NICE's assessment method, but no price setting agenda

28 April 2014 Kavita Rainova

The United Kingdom's National Institute of Care Excellence (NICE) has recently issued its document on Value based assessment (VBA) for consultation. The document brings in two new "modifiers" to the methodology in which NICE makes recommendations on health technologies. Considering that the VBA is not intended to be a method of setting an "acceptable price" for a drug, it is a far cry from the big game changer that value-based-pricing (VBP) was initially set out to be.

In 2010, the coalition government issued a white paper aimed at reforming the NHS. The white paper included the introduction of the so called, Value-based-pricing (VBP). At the time, the VBP was intended to replace the Pharmaceutical Price Regulations Scheme (PPRS) - first put in place in 1957 and renewed once every five years. The VBP, like the PPRS, would have applied to originator medicines. While the companies would still have been allowed to price medicines freely, the price would have been matched to the value threshold specific to the drug. In cases where the price is higher, the companies would have been required to provide evidence to prove the medicine's higher weighting. Although the VBP was planned to come into place in 2014, after the 2009 PPRS came to end, the debate over the methodology, and the form that VBP would take, came to a "lull", with the VBP having been ultimately scrapped for Value-based -assessment (VBA).

From the beginning of this year, the 2014 PPRS came into place, and the Department of Health (DH) noted in the 2014 PPRS document that VBA would be implemented by the autumn of the year. The VBA document that was put forward for consultation at the end of last month ended up being, unsurprisingly, a watered-down version compared to the system-overhaul that the original VBP was set to bring.

VBA: Two new "modifiers"
In essence, the VBA, as per the consultation document, would bring in two new elements/ "modifiers"- "burden of illness" and "wider societal impact (WSI)". The burden of illness element would replace the element of "life extending treatment at the end of life".

Burden of illness, as defined by the document, is the "shortfall in the quality of life and length", which is to be measured in QALYs, and where the shortfall would be measured in terms of proportional shortfall - in this methodology, the total QALYs for an individual with a condition is measured relative to the QALYs expected for an individual who does not have the condition, and who is of the same age and gender. By using proportional shortfall the element, like the previously used "end of life", would not be "particularly sensitive" to age. The WSI would allow NICE to take into consideration the overall benefits of drug technologies, and to provide preference to those drugs which enable the individual to contribute to the society. The WSI follows NICE's rejection of wider societal benefit (WSB) framework over concerns that it would lead to more vulnerable groups such as the elderly missing out in access to medicines. WSB was set to take into account the amount of resources in terms of production and consumption that is contributed by a person to the society, with NICE bringing out concerns that it would inevitably take age into account to some extent.

But what of the threshold…
The question over any potential changes to the cost-effectiveness threshold was answered by the 2014 PPRS, which noted that the threshold currently applied by NICE would be retained. So, while the threshold does not change, what the document does propose is that the above two elements be considered alongside the other elements, thereby implying that the incremental cost-effectiveness ratio (ICER) of over GBP 20,000 per QALY (the threshold) may be considered under particular conditions in which the factors would be relevant, with the upper limit being GBP 50,000 per QALY. In contrast, the threshold of GBP20,000-30,000 is currently used, which is increased to GBP 50,000 if the "end-of-life" element is applied. The change, along with the new elements, is expected to bring more flexibility in the system and increase access to innovative medicines.

While the document is up for consultation, with the possible criticisms and subsequent amendments, if any, yet to be assessed, the director of the Association of the British Pharmaceutical Industry (ABPI) Paul Catchpole noted that "the VBA has the potential to allow NICE to use a broader definition of value in order to reflect more fully the value that medicines bring to patients and society". However, Catchpole also noted that in terms of increasing access to innovative drugs as a whole, "a huge amount of work" is yet to be done.



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