A report commissioned earlier this year by the UK's cost-effectiveness watchdog, the National Institute of Clinical Excellence, concludes that NICE's basic measure for assessing a drug's cost-effectiveness, the QALY (quality-adjusted life year) is sound, but could be improved to take into account a drug's wider benefits. Moreover, NICE methodologies and the criteria used in its judgments should be more clearly communicated.

Sir Ian Kennedy, a professor of health law, ethics and policy at University College London, was asked to independently address the red-hot questions of how broadly NICE should define 'value,' and how it should assess innovation when deciding whether a particular medicine or technology should be reimbursed by the National Health Service.

The Kennedy study was triggered by an earlier report on the broader state of the UK biosciences sector, which underlined a widespread perception that NICE stifles innovation and, as a result, investment in the UK.

The report's recommendations - there are 25 in total - and the extent to which they are incorporated into NICE's working methods, may impact other countries developing their own Health Technology Assessment bodies, many of which look to the UK as a reference.

The QALY Stays - But With Significant Scope for Revision

Behind what Sir Ian describes in his report as "'undeclared hostilities, if not war'" between the pharmaceutical industry and NICE lies a widespread condemnation of the measure at the heart of NICE's cost-effectiveness calculations, the QALY. This represents the estimated additional cost of one year of healthy life, for one person, when comparing a new drug with current standard practice.

Industry argues that the QALY is too narrow and overly quantitative. They say it fails to take into account wider benefits to society that a product may offer, such as making life easier for caregivers and employers, and fails to capture the broader contribution of industry R&D efforts to the UK economy and innovation.

"Too much calculation, and not enough judgment," was how David Fisher, commercial director of UK industry body The Association of the British Pharmaceutical Industry, put it earlier this year. (Also see "The Cost-Sharing Solution: The New NICE Ticket" - In Vivo, 1 March, 2009.).

For Sir Ian, however, the QALY approach is "fundamentally sound." He describes it in the report as "quite simply the best tool available to do the job which NICE has been set," allowing apples to be compared "fairly and effectively with pears," and being neither patient- nor disease-specific.

Yet although Sir Ian recommends that the QALY remain at the center of NICE's deliberation process, he acknowledges that improvements can be made.

The report calls for the broader benefits a drug may offer - besides direct therapeutic effects - to be taken into account in the QALY calculations. NICE claims that some of these, such as improvements to quality of life, already are included in its methodology.

But the report says this process must be more explicit and recommends that NICE draw up a list, after consultation, of all health-related factors to be taken into account. Examples listed in his report include a drug delivery system that may allow patients to be treated at home rather than in hospital, a reduction in side effects, or treatment effects that bring greater independence or dignity to patients.

Yet these wider health benefits should not result in an increase in the current £30,000 cost-per-QALY threshold currently used by NICE, the report concluded. It also recommends, however, that NICE "sponsor research to determine whether the instruments used to calculate QALYs and capture health benefits are entirely appropriate....and whether they are applied properly and consistently."

Not Hostile To Pharma; Higher Prices Allowed

Pfizer says it's disappointed the report stops short of suggesting how these wider factors be included in the current QALY process. "The way that the QALY (currently) calculates improvement in qualify of life (using a questionnaire) remains crude," said UK managing director Richard Blackburn.

And to industry's frustration, Sir Ian does not recommend that NICE include "social benefits" in its appraisal - those that don't result in gains or losses to the NHS but might, for instance, benefit the Work and Pensions department (one example - reduced absenteeism). He argues this would lead to bias in favor of those of working age and would be overly complicated to calculate. (In any case, NICE's statutory remit doesn't permit such a holistic approach; it deals only with costs or benefits to the NHS.)

Still, by calling into question NICE's practices - albeit while defending the QALY principle - the report looks less hostile to industry than many feared. "It's more positive than we imagined it might be," Steve Bates, government relations director for Genzyme in the UK, said in an interview when asked about some initial skepticism about how independent the report might prove to be.

The ABPI also cautiously welcomed the report, declaring that it recognizes "the need for NICE to change - for it to be more transparent, to foster innovation, and to take greater account of wider health benefits." Added Fisher: "He [Sir Ian] is not saying that the current approach is good enough - far from it. His assessment is that the current QALY-based approach is necessary, but not sufficient, for appraising a new technology."

The industry also welcomes suggestions as to how and when the "£30, 000 QALY straitjacket" could be loosened. In the case of truly innovative drugs, the report recommends that, "as an incentive to pharma," NICE could accept a higher QALY threshold - thus a higher drug price - for a set period of time, such as three to five years. After that, the price would be adjusted to bring the product within the normal threshold. "In this case, you might allow it [the drug] to bust the threshold a little bit for a limited period," clarified Sir Ian in a podcast summarizing the report's findings.

This, of course, raises the thorny question of what constitutes innovation, to which Sir Ian devotes several pages of his report. He takes a stab at defining it, stating that a new product which offers a 'step-change' in terms of outcomes for patients, meets an unmet need and is effective in close to 70 percent of targeted patients, may qualify.

As an alternative to raising the QALY threshold, the report proposes using the sort of risk- or cost-sharing deals between pharma and the NHS highlighted in the UK's recent revision to the Pharmaceutical Prices Regulation Scheme PPRS, and which are gathering steam both in the UK and elsewhere in Europe ('The Pink Sheet,' Nov 17, 2008). But the NHS should be reimbursed, the report warns, if a product fails to live up to expectations.

End-Of-Life Guidance A "Trojan Horse" For NICE

While clearly keen that NICE's processes should be designed to help encourage drug makers to invest in innovative R&D (including for drugs that treat rare diseases), Sir Ian warns in his podcast interview against breaking the QALY threshold too often or too easily. This risks "destabilizing the cost-effectiveness system at precisely the moment when public finances are about to go over a cliff," he says.

He also warns that NICE's 'end-of-life' guidance, which allow a more generous cost-effectiveness threshold for drugs which extend life for terminal patients in some disease areas, "could constitute a Trojan horse for the whole of NICE, unless it's controlled." Several drugs, including Celgene Inc.' s multiple myeloma treatment lenalidomide ( Revlimid ) have been approved thanks to these more relaxed cost-effectiveness criteria. (See 'NICE Deal, Celgene,' The IN VIVO Blog, Feb 9, 2009).

Similarly the "Innovation Pass" announced earlier this month by the Office of Life Sciences Blueprint to jumpstart the UK industry, could be seen as a loophole as it allows certain novel drugs treating small patient populations to bypass NICE until sufficient data has been collected to warrant a regular review. ('The Pink Sheet,' July 20, 2009) "I don't think it need be" the thin end of a wedge, however, says Sir Ian, "particularly at it will be managed by NICE" and additional funds will be provided.

Elsewhere, the report recommends that NICE redouble its efforts to work more closely with drug makers and more actively explain its role and decisions.

Sir Ian also recommends that NICE deliberations on cost-effectiveness, during the second half of its Appraisal Committee meetings, should be made available by video recording after guidance is made public. As part of the Blueprint project, NICE has already agreed to allow manufacturers to attend the first part of Appraisal Committee meetings, and to take other measures to improve transparency. Industry welcomes all of this.

That said, NICE is not obliged to implement any of the report's recommendations. Given that it commissioned this research, though, "it will be hard for NICE to ignore them," opined Genzyme's Bates. NICE will issue a formal response at its next public Board meeting in September 2009 and begin a three-month consultation.

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- Melanie Senior (m.senior@elsevier.com)

NICE Enough? Watchdog's Basic Approach Is Sound, But More Transparency Is Urged

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