What is NICE?
The National Institute of Health and Care Excellence (NICE) was formed in 1999. It has developed a number of responsibilities over time, but its activities in technology appraisal are perhaps the most prominent. NICE technology appraisal uses available evidence to assess the clinical effectiveness and value for money of medical technologies, principally new prescription pharmaceuticals. The appraisals provide guidance to the NHS which is required to fund those treatments that NICE recommends, generally within 3 months.
When a new pharmaceutical receives regulatory approval to be marketed for a given group of patients, the NHS needs to decide rapidly whether it will be effective in patients' routine care compared to existing treatments, and whether it is sufficiently effective to justify the cost. In guiding these decisions, NICE uses the clinical evidence the manufacturer has provided to the regulators, usually data from clinical trials. NICE also uses evidence on a product’s cost-effectiveness. All evidence is generally provided by the manufacturer and scientifically assessed during the technology appraisal process.
Assessment of effectiveness
In assessing a treatment's effectiveness, NICE looks for evidence on its impact on factors that medical experts consider relevant to their treatment decisions. Ultimately, however, the product's effects on patients' survival duration and quality of life are the main considerations. The extent to which the treatment also causes side effects is a major consideration and is generally taken account of in the assessment of quality of life impacts and costs. Importantly, the outcomes of the new product are compared with those of existing treatments for the same patient groups.
Assessment of cost-effectiveness
In assessing a new treatment’s value for money, NICE asks whether it has a sufficient impact on patients' health, compared to available alternatives, to justify its additional cost. Specifically, the question addressed is whether the additional NHS resources required to make the treatment available can be expected to deliver more benefits to patients than could be generated if that money was used elsewhere in the NHS.
It uses an approach called cost-effectiveness analysis. This involves translating the available evidence on clinical effectiveness into a standard measure of health benefit, the quality-adjusted life-year (QALY), which reflects the treatment's impact on patients’ length of life and quality of life. An estimate is made of the additional QALYs the new treatment is expected to generate for the average patient, compared to those treatments the NHS currently uses. It then estimates the costs of the new and existing treatments, including the price the NHS would be charged by their manufacturers, but also any effects on other NHS costs such as visits to GPs, hospital stays, tests and procedures (which could be additional costs or cost savings). Usually, new pharmaceuticals cost more overall than existing treatments for the same conditions, but are expected to deliver more effectiveness in terms of QALYs.
A key metric NICE uses to develop its recommendations is called the incremental cost-effectiveness ratio (ICER), which is the extra cost of the new treatment per additional QALY it generates compared to existing alternatives. It then compares this figure with its 'cost-effectiveness threshold', which is normally £20,000 to £30,000 per additional QALY. If the ICER falls below this threshold, it is generally considered cost-effective for the NHS. In broad terms, the cost-effectiveness threshold gives an indication of the benefits that other patients could experience if the money was spent in the NHS more generally rather than on the new treatment. So, if the ICER is greater than the threshold, the new treatment is considered to confer fewer benefits than patients with other conditions would be expected to experience if the additional resource was devoted to their care.
Importantly, the use of the QALY (and other technical issues set out in NICE's methods guide) are intended to ensure that all new treatments are assessed on an equal basis. Further, the use of the cost effectiveness threshold acknowledges that, in the absence of funding the new treatment, the money would be used for other NHS services that would generate health improvement.
There is often considerable uncertainty associated with the evidence relating to a new treatment. This makes the estimates of the ICERs themselves uncertain and NICE's Appraisal Committees need to consider what they believe to be the most plausible estimates of costs and effectiveness. When there is considerable uncertainty, the committees may reflect this in their recommendations about a new treatment.
NICE has deviations from this general approach for assessing a treatment's value for money when particular circumstances apply. One of these is when a disease is associated with a very short remaining life expectancy, normally less than 24 months, and the new treatment confers at least a 3 month gain in life expectancy for the average patient. In these circumstances, an additional weight is attached to the QALYs generated by the new treatment, which effectively increases the NICE threshold to £50,000 per QALY. NICE also has different arrangements for new treatments which are highly specialised and used to treat very rare diseases, where it uses the Highly Specialised Technologies (HST) evaluation. Here the NICE cost-effectiveness threshold goes up to £100,000 per QALY gained; and higher for a new treatment that generates very large gains in QALYs.
Since 2000, NICE has issued positive guidance for more than 80% of the technologies it has considered. NICE has indicated that the majority of these involve commercial arrangements of some kind with the manufacturers, which effectively reduces the cost of the product to the NHS.
NICE and Orkambi
Orkambi does not meet the criteria for end of life or highly specialised technology and was, therefore, assessed using NICE’s standard ‘single technology appraisal; process in 2016. This used the product's 'list price'; that is, the price before any discounts were negotiated with the NHS. The evidence seen by NICE suggested that Orkambi had an ICER of between £218,000 and £349,000 per QALY, and much higher than the level that NICE usually considers cost-effective. Since that appraisal, NHS England and Vertex have been in negotiations about the price of Orkambi to see whether it can be made available to NHS patients at a cost which NICE would consider cost-effective. So far, those negotiations have been unsuccessful.