Intended for healthcare professionals

Observations Briefing

NICE and value based pricing: what do we know?

BMJ 2010; 341 doi: (Published 10 November 2010) Cite this as: BMJ 2010;341:c6390
  1. Rebecca Coombes, features editor, BMJ
  1. rcoombes{at}

What precise powers does NICE have now, and how does the coalition government want to change them?

The UK National Institute for Health and Clinical Excellence (NICE) currently issues guidance about the use of both old and new medicines and procedures. It is perhaps best known for its technology appraisals, of which it issues about 25 a year. Not all new drugs approved by the Medicines and Healthcare products Regulatory Agency (MHRA) are subsequently scrutinised by NICE, in fact only a minority are.

An advisory body assembles the evidence based on data supplied by the drug industry. NICE then issues guidance—an assessment of therapeutic benefit and economic impact of a drug—along with a recommendation for use. NICE rulings are mandatory for primary care trusts (PCTs): if NICE says a patient should have this drug—and, crucially, if their GP agrees—then the PCT has to pay.

The government is now set to strip NICE of its role to make a judgment on the cost of new drugs and on whether the NHS can afford them. Instead it wants to move to a system of value based pricing, where the government takes a central role in deciding on price and GP commissioners decide if the local NHS can afford the drugs.

It seems that NICE will still retain a key role in advising the government on the clinical value of individual drugs.

On what basis will the government decide on a drug’s value?

In some senses it is likely to be business as usual. The information on which decisions are based will essentially be the same as that used in current NICE judgments. Quality adjusted life years (QALYs) are still a popular measure of the therapeutic benefits derived from drugs and are likely to remain a key tool.

Questions remain about the current data and models used by NICE, and about issues such as whether the impact of new drugs on carers should be taken into consideration when they are appraised. …

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