Should NICE's threshold range for cost per QALY be raised? No

doi:10.1136/bmj.b185

Published 26 January 2009, doi:10.1136/bmj.b185
Cite this as: BMJ 2009;338:b185

Head to Head

Should NICE’s threshold range for cost per QALY be raised? No

James Raftery, professor of health technology assessment

¹ University of Southampton, Southampton SO16 7PX

raftery{at}soton.ac.uk

NICE has recently raised the threshold for end of life drugs.Adrian Towse (doi:10.1136/bmj.b181) argues it should considerdoing the same for other treatments, but James Raftery believesthat the threshold is already too high

The fact that the National Institute for Health and ClinicalExcellence (NICE) has not updated its cost effectiveness thresholdover the past decade means that the threshold has been falling.This applies whether adjusted for inflation (up 40% from 1999to 2007) or for the NHS budget (up 90%).¹ This decline is appropriatefor several reasons. The correct threshold value, which shouldbe set by the value of those technologies displaced by NICEguidance, seems to be lower. NICE has recently increased thethreshold for end of life treatments. To offset this, the generalthreshold should be reduced. Precedent in the form of treatmentspreviously funded has arguably influenced what people thinkthe threshold should be. The most plausible precedent thresholdsare no higher than those of NICE.

Displaced services

Opportunity cost, a key concept in economics, expresses costin terms of the opportunity forgone by buying one thing ratherthan another. It plays a crucial part in ensuring scarce resourcesare used efficiently. Since primary care trusts fund the bulkof NHS healthcare, they must deal with the opportunity costsof NICE guidance. To fund NICE guidances primary care trustsmust either cut existing services or not implement new services.If displaced services are more cost effective than the NICEthreshold, that threshold is too high. NICE guidance would beperverse, reducing not increasing health.

The Commons’ health committee concluded, largely on thebasis of evidence from primary care trusts, that NICE’sthreshold was too high.¹ Two trusts have controversially appealedagainst NICE guidance in favour of the costly drugs trastuzumaband ranibizumab (both were rejected).² ³ Unfortunately, no systematicdata are collected on services displaced by NICE guidance. However,examination of the opportunity costs of NICE guidance on trastuzumabfor a Norwich hospital indicated that more cost effective oncologyservices had to be sacrificed.⁴ Analysis of the cost per qualityadjusted life year (QALY) of annual changes in primary caretrust spending shows values well below the NICE threshold.⁵This analysis covers three years and may indicate that nationalservice frameworks for particular diseases have been very costeffective. No evidence points the other way—that technologiesrecommended by NICE are more cost effective than those displaced.

NICE has just raised the threshold for life extending drugsfor end of life patients.⁶ Given the high cost per QALY forthe relevant cancer drugs, the new threshold will have to besubstantially raised.⁷ If many cancer drugs qualify, the financialimpact on the fixed budgets of primary care trusts will be substantial.Unless the general threshold is lowered to offset these newarrangements, even more services will be displaced.

Precedents

Economists see no theoretical basis for any threshold otherthan one based on opportunity costs. However, thresholds haveplausibly been set as much by precedent as by theory. The firstthreshold may have been for US government funding of renal dialysis,which was introduced in 1973 and was roughly $50 000 (£30000) per patient for each extra life year.⁸ Such benchmarksmake it difficult ethically and legally to refuse to fund anytreatments of similar cost effectiveness. NICE’s appraisalof dialysis put its cost at around £20 000 a year⁹ (oraround £30 000 per QALY¹⁰) Given that NICE’s appealprocess involves precedence, this provides some justificationfor the current thresholds. To avoid exceptional cases settingprecedents the case for their funding needs to be explicitlyjustified and monitored over time. Otherwise benchmarks setin a storm will be repented in leisure.

Economists closely linked to NICE have addressed the thresholdproblem by characterising NICE as a "threshold searcher."¹¹They accept that the threshold should be based on the opportunitycost in terms of displaced interventions, and that it shouldbe lower for recommended interventions which displace more (havea large budget impact). They argue for a single threshold ratherthan a range and that it should be flexible or dynamic, dependingmainly on the size of the NHS budget and efficiency gains. Audaciouslythey suggest that the case for any rise in the threshold linkedto the growth in the NHS budget in the past decade may wellhave been offset by improvements in NHS efficiency.

The key question is whether NICE can be left to search alonefor the threshold or whether it needs help. One suggestion hasbeen for an independent threshold committee, similar to howinterest rates are set.¹ ¹² Alternatively, NICE might be mademore responsive to primary care trusts by increasing their representationand by improved links with their annual purchasing plans. Sincedisplacement decisions are made by hospitals, they too mightbe better represented at NICE. Another suggestion is that NICEshould develop a disinvestment programme based on identifyingtreatments with poor cost effectiveness. Several of these optionsare being researched by NICE.¹ Either way, NICE must relatemore closely to those who make decisions in the NHS. Improvingthose links rather than increasing the threshold must be thepriority.

Cite this as: BMJ 2009;338:b185

Competing interests: None declared.

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