Academic journal article Applied Health Economics and Health Policy

Considering the Value Associated with Innovation in Health Technology Appraisal Decisions (Deliberations): A NICE Thing to Do?

Academic journal article Applied Health Economics and Health Policy

Considering the Value Associated with Innovation in Health Technology Appraisal Decisions (Deliberations): A NICE Thing to Do?

Article excerpt

In the UK, the National Institute for Health and Clinical Excellence (NICE) is asked to make judgements on the value of health technologies to the NHS. In its health technology appraisal process, NICE considers clinical and cost effectiveness, and other factors are taken into account in a deliberative process, which commonly leads to NICE specifically assessing the broader social value of health technologies. How NICE considers one particular social value, the value of innovation, in health technology appraisal has been a topic for consideration in a recent independent review by Sir Ian Kennedy, former chairman of the Healthcare Commission.[1]

The Kennedy report[1] was initiated by NICE in response to the concerns of Sir David Cooksey,[2] chairman of the Bioscience Innovation and Growth Team, who suggested that NICE appraisals may not operate in a way that is supportive of innovation. Kennedy, whilst aiming to specifically consider innovation, found that the concern for innovation could not be easily separated from a range of other considerations, and he looked at the NICE process more generally, looking at its appraisal framework, and the way it considered benefits in its technology appraisal process. It was only after this more general examination of the NICE process that he considered whether innovation as a benefit was properly taken into account.

The Kennedy report[1] quickly got to the heart of the challenge faced by NICE, and is clear and insightful when capturing the inevitable conflict between individual interests (e.g. pharmaceutical industry interests) and the perspective of NICE, which is concerned with the collective needs of all patients. The report referred to the problem of 'weighing up' competing claims when resources are limited, and when putting the work of NICE in context it stated "the claims of both those who make themselves heard and those who are not heard must all be weighed."[1] This is a helpful statement from Sir Ian Kennedy, because NICE technology appraisal decisions are made against the backdrop of a fixed healthcare budget, and any decision by NICE to recommend that a technology be used by the NHS needs to be set against the opportunity cost associated with moving resources from one use to another. Resource allocation decisions involve winners and losers, so, if some people win due to a greater priority being placed on relatively expensive (and relatively inefficient) innovative treatments (however defined), then some others lose out.

As NICE does not know which people bear the opportunity cost of its appraisal guidance, it must make an assumption that the healthcare foregone by those who bear the opportunity cost is of less value - to society - than that delivered through the alternative use of resources. Therefore, to inform its decision making, NICE has referred to a cost-effectiveness threshold at which it regards an intervention to be cost effective.[3] NICE considers that an incremental cost-effectiveness ratio (ICER) of less than £20 000 per QALY gained represents value for money (i.e. the opportunity cost is acceptable). Above a cost per QALY of £20 000, and even more so when at £30 000 or above, there needs to be increasingly strong reasons for recommending an intervention as a cost-effective use of NHS resources. However, the conventional use of cost-utility analysis (CUA), using the cost-per QALY framework, only informs a decision-making perspective concerned with the maximization of health gain (QALYs), i.e. getting as much health gain as possible from available resources (efficiency in production). The cost-per-QALY framework does not inform on the broader social value of healthcare (efficiency in consumption). Yet, the specific consideration of social values, such as innovation, in terms of some special status, can be weighed up against cost-per-QALY considerations. This 'weighing-up' against a cost-per-QALY threshold, as part of the NICE deliberative process, sets the benefits from social values (or other factors) against trade-offs related to efficiency; asking if society is prepared to accept a lower level of health benefit (as measured by the QALY) in return for other 'non-QALY' benefits. …

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