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Detailed report available on NICE's proposals for value based assessment of health technologies

Value Based Assessment
VBA NICE Board Papers

T
he NICE Board discussed a paper on Value Based Assessment of Health Technologies at its meeting on January 22nd 2014.  The paper set out proposals on the incorporation of “burden of illness” and “wider societal benefit” into NICE’s technology appraisal process.  Both of these appeared in the Terms of Reference value assessment of branded medicines under Value-Based Pricing given to NICE by the Department of Health.  The proposals gave more detail about the way “burden of illness” will be assessed and suggest changing “wider societal benefit” into “wider societal impact” which is also defined in the paper.  The reasoning behind the change to wider societal impact is that NICE believes that any measure of wider societal benefit would be unfair because it inevitably take age into account to some degree.  Many people feared that Value Based Assessments would be biased against the elderly suggesting “that vulnerable groups, such as the elderly, may lose out because they do not contribute as much to society as younger people”.  (see Daily Telegraph 9/1/2014 http://www.telegraph.co.uk/health/nhs/10562382/Fears-for-the-elderly-under-new-NHS-drugs-policy.html)  

NICE formally consulted on the new processes in March 2014.

The consultation closed in June 2014 and NICE reported back on the responses to the consultation in September 2014.  The proposals were not received well and NICE signalled a re-think.

The original proposals are set out below.

NICE's proposals for value based assessment Jan 2014

“Burden of illness”

The burden of illness will represent the shortfall in quality and length of life, measured in QALYs, as a result of having a disease or condition when compared with the QALYs that people would expect to have over the rest of their lives without the condition.  It will be measured in two ways – absolute shortfall and proportional shortfall.  The absolute shortfall is measured by subtracting the total QALYs for people with the condition from the total QALYs expected for people of the same age and gender without the condition.  The proportional shortfall is calculated by dividing the absolute shortfall by the expected QALYs for people without the condition.  There are pros and cons with each measure but NICE consider that the proportional shortfall is less influenced by age and should be used for burden of illness.

NICE have produced two tables to illustrate the calculations of absolute and proportional QALY shortfall.

Table 1: Example of QALY shortfall in circumstances of loss of quality of life without premature death

A

B

C

D

E

F

G

H

I

Age now

Years of remaining life with current treatment

Life expectancy without the condition

Quality of life with current treatment

Quality of life without the condition

Total QALYs with current treatment (B x D)

Total QALYs without the condition (B x E)

Absolute QALY shortfall (G – F)

Proportional QALY shortfall (H/G)

20

60

80

0.5

1.0

30

60

30

0.5

70

10

80

0.5

1.0

5

10

5

0.5

Ratio A/B absolute = 6:1; proportional 1:1

Table 2 Example of QALY shortfall at the end of life

A

B

C

D

E

 F

G

H

I

Age now

Years of remaining life with current treatment

Life expectancy without the condition

Quality of Life with current treatment

Quality of life without the condition

Total QALYs with current treatment (B x D)

Total QALYs without the condition (B x E)

Absolute QALY shortfall (G – F)

Proportional QALY shortfall (H/G)

20

2

80

0.5

1.0

1.0

60

59

0.98

70

2

80

0.5

1.0

1.0

10

9

0.90

Ratio A/B absolute = 6.5:1; proportional 1.05:1

The Department of Health has calculated the burden of illness for a range of conditions from a dataset developed by the University of York.  The dataset divides conditions by ICD-10 code across 16 age/gender categories.  However, this is a very broad categorisation of conditions and there will be different levels of severity within each category which will have to be captured. 

“Wider societal impact”

Having moved away from measuring the “wider societal benefit”, NICE proposed to measure the “wider societal impact” which they are defining as the loss in an individual’s societal function as a result of living with a disease or condition, compared with the total amount of future societal function possible without the illness.  They proposed to use quality and length of life as a proxy for this with the absolute shortfall in QALYs as the measure.

This results in the burden of illness being measured by the proportional QALY shortfall and the wider societal impact being measured by the absolute QALY shortfall.  It is important to note that neither measure appears to be dependent on the drug/technology being appraised and they are both characteristics of the patient population being treated with the current standard of care.  NICE intended to ask the company whose product is being appraised to calculate the absolute and proportional QALY shortfall for the specific patient population proposed to be treated. 

How will this work in practice?

It is proposed that the cost-effectiveness threshold used by NICE will not change (currently £20,000 per QALY gained).  However, the Appraisal Committees will take into account the burden of illness and wider societal impact alongside the other considerations that the committees already take into account (with the current “end of life” criteria being subsumed within the “burden of illness” assessment).  The thinking behind this is that it is too early to consider using a specific weighting for the QALY gained per unit of burden of illness and it is better to provide the Appraisal Committees with the discretion to make judgements about the weighting to apply in appropriate circumstances.

The committees will now have a number of judgements to make when considering the evidence: -

  •          the degree of certainty around the ICER;
  •          whether the assessment of change in health related quality of life has been captured appropriately;
  •          the innovative nature of the technology;
  •          burden of illness
  •          wider societal impact and
  •         aspects that relate to non-health objectives of the NHS

These considerations will determine the acceptability of an ICER of above £20,000 per QALY gained.  The paper puts a maximum weighting that the Appraisal Committees should consider at 2.5 times – thus making a maximum acceptable ICER £50,000 per QALY gained.

Will value based assessments apply to all new medicines?

An issue not addressed in the recent NICE Board paper is whether all new medicines will have a value based assessment.  NICE does not currently assess all newly licensed medicines but only those referred to it by the Department of Health.  This is in contrast with the Scottish Medicines Consortium (SMC) whose remit is to provide advice “about the status of all newly licensed medicines, all new formulations of existing medicines and new indications for established products”. 

The Pharmaceutical Price Regulation Scheme (PPRS) 2014 states that “Prompt appraisal by NICE of significant new medicines is an important element of the Government’s approach to ensuring that patients can access innovative cost-effective medicines quickly and consistently. The Government is committed to ensuring that the majority of NICE appraisals of new medicines result in final guidance within a few months of a medicine’s marketing authorisation.”  This suggests that only “significant” new medicines will be appraised by NICE.  However, it later goes on to say that “Companies may request value-based appraisal of their new medicines, and such requests will not be unreasonably refused.”

It is unlikely that NICE will be able to expand its appraisal programme without an influx of new money.  Another NICE Board paper for its January 2014 meeting said that “NICE faces a significant savings challenge to find 10% savings in cash terms by 2015-16 whilst maintaining current outputs and delivering new programmes such as safe staffing guidance.” 

The definition of “significant new medicines” in the PPRS could be the main determining factor.  NICE is also entirely dependent on the manufacturer’s submission to base its appraisal on.  Currently, manufacturers can, and do, decide not to make a submission to NICE.  It is unclear what will happen to the price of a new medicine if the manufacturer declines to make a submission to NICE.

Conclusions

NICE proposed using two new measures of the burden of illness and the wider societal impact to give the Appraisal Committees discretion to accept ICERs above £20,000 per QALY gained.  Both are based on the effect of the condition on the quality and length of life and both use QALYs as their basis.  The measures have the potential to have a large impact on the price that a manufacturer can obtain with a QALY weighting of up to 2.5 times available – although the norm is likely to be significantly lower than this.

The end of life criteria currently used by NICE is relatively easy to apply with some clear decision points.  However, the Appraisal Committees will have added complexity to their decision making because neither of these new measures is absolute and both are “to be taken into consideration” when making a decision. 

The reference dataset generated by the Department of Health is too vague to be used in practice and manufacturers will need to generate much more specific measures for the patient population being treated.  These values are likely to be challenged by the Appraisal Committee in the same way that they challenge the ICERs quoted in the manufacturer’s submission.

Manufacturers will need to look carefully at the impact of these two new measures on both the appraisal system and on individual new products.  There may be additional quality of life data required that is specific to the patient population being treated by a new product and collecting this data may need to be built into future clinical trials.

This has the potential to give long term conditions which adversely affect people’s quality of life a similar weighting as conditions which significantly shorten life.  This could be a fairer system which better reflects the true value of a new medicine.  As always, the devil is in the detail.

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