Rapid Responses to:
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Rapid Responses: Rapid Responses published:
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![[Read Rapid Response]](/icons/misc/sectionDOWN.gif)
Value based pricing – is there any other way?
- Jonathan V Howell (6 February 2008)
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Reports of the demise of the PPRS are much exaggerated
- Jim Furniss (8 February 2008)
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Drug reimbursement policies: prospective vs. retrospective application of the value for money principle
- Andrea Messori (2 June 2008)
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Correction - Drug reimbursement policies: prospective vs. retrospective application of the value for money principle
- Andrea Messori (3 June 2008)
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Jonathan V Howell, Consultant in Public Health West Midlands Specialised Commissioning Team, Edwin House, Burton upon Trent DE14 2WF
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Claxton et al demonstrate the need to be clear about the importance of value based decisions in the NHS (1). At the sharp end of NHS commissioning there feels to be no other way to make decisions as the arrival of new technologies continues to outstrip the budgets that are available. If Claxton et als' paper lacks anything it is a discussion of the political pressures in skewing agreement about values. These pressures can cut across the processes of Primary Care Trusts (PCTs) when they are trying to make some of the more difficult decisions around value based priorities. We have seen how the guerrilla media tactics around Herceptin wound up the public and the politicians (2)(3). When this was combined with aggressive marketing then many PCTs caved in and agreed to fund Herceptin without waiting for NICE’s assessment on its value. Even the National Institute for Health and Clinical Excellence (NICE) is subject to some political constraints. In the case of the highly priced orphan disease drugs NICE does not have these on its schedule whilst the Scottish Medicines Consortium will carry out assessments and can find them to be of poor value, for example, “No information is presented in the submission to support the therapy being cost effective.” (4). Pharmaceutical companies increasingly appear to price orphan drugs at what the market will bear although any drug costing around £250,000 per patient per year is likely to look very poor value even if it might demonstrate good outcomes in the future. This means that companies have to target the Department of Health (DH) whilst the DH also has to try and achieve good deals for the NHS at the same time. The DH and a leading pharmaceutical company involved in developing orphan drugs recently agreed a £7 million partnership (5). This agreement raises questions about what compromises might have been made on behalf of the NHS to overcome the perception of poor value with these drugs. If we want the optimum value from treatments and the maximum benefits for patients is there really any other way but being serious and signalling real intent about value based pricing ? (1) Claxton K, Briggs A, Buxton MJ, Culyer AJ, McCabe C, Walker S, Sculpher MJ. Valued based pricing for NHS drugs – an opportunity not to be missed? BMJ 2008;336:251-254 (2 February). (2) BBC webpage. Woman gets cancer drug in U-turn. http://news.bbc.co.uk/1/hi/england/staffordshire/4421570.stm 9 Nov 2005. (3) Boseley S. The selling of a wonder drug. The Guardian March 29 2006. http://www.guardian.co.uk/science/2006/mar/29/medicineandhealth.health (4)Laronidase (Aldurazyme) resubmission. The Scottish Medicines Consortium issues advice on laronidase (Aldurazyme®) for mucopolysaccharidosis I. http://www.scottishmedicines.org.uk/smc/4062.html (5) Department of Health website. Genzyme and NHS Commissioning Group form a £7 million partnership to support world class commissioning for rare diseases. 5 Nov 2007. http://www.advisorybodies.doh.gov.uk/NSCAG/pressrelease-5nov07-genzyme.pdf Competing interests: JH is a member of the National Commissioning Group |
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Jim Furniss, Consultant Bridgehead International Ltd, Pera Innovation Park, Nottingham Rd, Melton Mowbray, LE13 0PB
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Karl Claxton and colleagues [BMJ2008;336;251-254] boldly state that the current Pharmaceutical Price Regulation Scheme (PPRS) is dead. Would that were so! The Office of Fair Trading (OFT) report on the PPRS, on which they comment, has both strengths and weaknesses; but if it does nothing else it provides a devastating critique of the current scheme. The PPRS is rooted in the past and both fails to deliver its stated objectives, and fails to reflect the realities of the modern NHS and the modern pharmaceutical industry. When I was head of the PPRS Branch in the Department of Health fifteen years ago I argued that with the introduction of prescribing budgets the scheme was no longer necessary or appropriate. With practice based commissioning the case for fundamental reform is now unanswerable. Unfortunately, though, all the indications are that the PPRS has not yet reached its deathbed. The Government plans to consult shortly on likely changes to the scheme, and to implement those changes by July. What the consultation document will say remains confidential at this stage, but all the indications are that the focus will be on a quick fix now (consisting of a mandatory price cut accompanied by cosmetic changes) coupled with a promise to consider the proposed value based pricing over the next two (or three, or five) years. Another opportunity missed! Competing interests: None declared |
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Andrea Messori, Coordinator Laboratory of Pharmacoeconomics, SIFO, c/o ASL 3, Pistoia, Italy
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In handling the complex issue of drug reimbursement, the principle of value for money can take different forms. Case A (“traditional cost-effectiveness approach”) is the most frequent one. Under these circumstances, the effectiveness data for the innovative drug provide a reliable estimate of its incremental benefit in comparison with the previous treatment (e.g. mean survival gain = 6 months per patient). The average is thus drawn on the side of effectiveness (e.g. an average gain of 6 months per patient can result from 50 non-responders who gain nothing in terms of survival plus 50 responders who gain 12 months each). Then, this average magnitude of the (incremental) benefit is converted into an economic (incremental) countervalue. In the above example, if each month gained is valued up to £ 2,000, the (mean) survival gain of 6 months per patient translates into the conclusion that this benefit can be worth up to £12,000 per treatment (irrespective of whether the individual patient who receives this innovative treatment is a responder or a non-responder). Case B (“risk sharing ” or “payment by results”) is less frequent, but in recent times regulatory agencies have been using it more and more. Under these circumstances, no average is drawn on the side of effectiveness. Instead, all patients are assessed individually using an all-or-none classification (e.g. responder vs non-responder where, for example, each responder gains 12 months while each non-responder gains none); then, the outcomes are individually converted into an economic countervalue (e.g. £24,000 for responders vs £ 0 for non-responders). This risk-sharing policy accepts to pay $24,000 for each responder and pays nothing for non-responders (alternatively, according to some modifications of the risk-sharing approach, non-responders are initially paid at £24,000 each, but then this amount of money is requested as a pay-back from the manufacturer). Anyhow, if there are 50 responders and 50 non- responders, drawing the average of the 100 individual economic countervalues (50 cases valued at £24,000 plus 50 cases valued 0) gives the same result as in Case A (maximum “acceptable” expenditure = £12,000 per patient). The approach according to Case A is particularly suitable for circumstances where the clinical evidence is sound so that the national health system and the manufacturer are willing to share the same expectation about the treatment outcome. The application of the economic agreement can therefore be prospective. In contrast, the approach according to Case B is suitable for circumstances where the clinical evidence is not sound, and so the national health system and the manufacturer tend to have different expectations about the treatment outcome. The controversy can therefore be solved by adopting this “payment by results” approach wherein the value for money principle is applied retrospectively. Case B could be an excellent approach for handling the cost of expensive but poorly documented medical devices; however, no experience has yet been made in this area. Competing interests: None declared |
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Andrea Messori, Coordinator Laboratory of Pharmacoeconomics, SIFO, c/o ASL 3, Pistoia, Italy
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In paragraph 3, line 6, of my Rapid Response the sentence "This risk- sharing policy accepts to pay $24,000...." should read "This risk-sharing policy accepts to pay £24,000....". I apologise for this error. Competing interests: None declared |
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