Download Market Access in the Wake of NICE: BioPharma`s Friend or Foe?

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BioFinance and Management
Market Access in the Wake of NICE:
BioPharma’s Friend or Foe?
Joshua Cohen at the Tufts Center for the Study of Drug Development reviews the impact of NICE on drug development,
considering the effect it has had on the biopharmaceutical industry on a global, as well as national, scale
Spending on pharmaceuticals across the
Organization for Economic Cooperation
and Development (OECD) countries has
increased by close to 50 per cent in real
terms since 1998. Growth in spending has
been driven to a large extent by newer and
more expensive drugs replacing older
therapies. As a consequence, public and
private payers are considering whether
to (conditionally) reimburse newer
and (usually) more expensive drugs.
Effectively, payers are imposing a fourth
hurdle that biopharmaceutical firms
must clear in order to attain widespread
market access, the first three being
safety, efficacy and quality of
manufacturing practices.
The establishment of a fourth hurdle is a
phenomenon that began in Australia in the
early 1990s, and has since spread to other
jurisdictions, particularly in Europe,
each with its own ways of conducting
technology assessment and implementing
results. Even the world’s largest market for
biopharmaceuticals, the US, has not been
bypassed by the fourth hurdle: although
considered to lag behind compared to
other nations, a de facto fourth hurdle has
been instituted. Among watershed events
in the past five years, we have seen the
enactment of federal regulations that allow
cost and clinical evidence to be considered
in outpatient drug reimbursement
decisions affecting Medicare beneficiaries.
Also, the Centers for Medicare and
Medicaid Services (CMS) have stated
that FDA authorisation is insufficient to
support reimbursement decisions for
certain physician-administered drugs, such
as the erythropoesis-stimulating agents
covered under Medicare Part B. And,
in the private sector, the Academy of
Managed Care Pharmacy (AMCP) trade
group has issued detailed guidelines
specifying precise parameters to be
included by drug sponsors in the
formulary dossiers they submit to payers
for the purposes of reimbursement.
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But of all developments surrounding the
fourth hurdle, none has had such farreaching implications as the establishment
of the National Institute for Health and
Clinical Excellence (NICE) in England
and Wales in 1999. NICE has become the
world’s most prominent appraiser of new
medical technologies, including drugs and
biologics. This article will evaluate its
decision-making process, the controversial
cases that have drawn media attention, and
recent initiatives aimed at streamlining
NICE assessments, concluding with an
analysis of policy implications and the
global ramifications of NICE.
OVERVIEW OF THE NICE
DECISION PROCESS
NICE is a governmental organisation that
functions in an advisory capacity to the
British National Health Service (NHS). It
is responsible for providing guidance on
the “promotion of good health and the
prevention and treatment of ill health” in
England and Wales. In particular, NICE
produces guidance with respect to:
G
G
Health technologies – the use of new
and existing medicines, diagnostics,
treatments and procedures
Clinical practice – appropriate treatment
and care of patients with specific
diseases and conditions
Broadly, NICE’s stated goals are to
rationalise clinical care and eliminate
inequities by geographic area. NICE’s
raison d’être is premised on the oft-cited
‘tragedy of the commons’: resources are
scarce but competing demands on them are
infinite. A patient acts rationally in seeking
an expensive treatment that produces a
benefit (even if small) because the cost
falls almost entirely on others. The same
can be said for doctors who seek the best
care for their patients as the costs, in terms
of fewer resources for other patients, fall
almost entirely on other doctors’ patients.
Ultimately, however, from a societal
perspective, to ensure efficient resource
allocation, it is required that an
intervention’s health benefits are greater
than their opportunity cost, or the value
of the next best alternative is limited.
NICE tackles this resource allocation
problem by evaluating the costs, benefits
and risks of new medical technologies,
and recommending resource allocation
accordingly. NICE does not commission
primary research; instead, it bases its
recommendations on systematic analyses
and economic modelling. The costeffectiveness technique used by NICE to
assess different treatments – cost-perquality-adjusted-life-year (QALY) –
facilitates system-wide comparisons across
a wide range of treatments. This ratio
incorporates the added cost of a treatment
over the current standard therapy, set
against the additional health benefits
conferred by the treatment.
Besides cost-effectiveness, equity
considerations such as the burden of
disease and the rule of rescue may
inform reimbursement and use decisions,
with treatments that target more
severely impairing diseases generally
being prioritised.
NICE has published approximately 150
guidances covering over 200 different
drugs and medical devices. Approximately
50 per cent of assessed technologies are
recommended for reimbursement and use
in all licensed indications. About 40 per
cent are conditionally recommended (for
example, only for specific indications,
patient subgroups, or as step therapy), and
10 per cent are not recommended at all
for reasons related to lack of clinical or
cost-effectiveness (1).
Technologies supported by more
randomised trial evidence are more likely
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Table 1: Controversial cases
Product(s)
Date of decision
Summary decision
Aricept, Exelon,
Reminyl
2006
NICE recommends against use of all three
cholinesterase inhibitors to treat Alzheimer’s disease
Avastin
2008
NICE recommends against first-line use to treat
kidney and colorectal cancer
Erbitux
2007
NICE recommends against use in colorectal cancer
Lucentis
2007
NICE recommends against use to treat wet agerelated macular degeneration
Sutent, Revlimid
2008
NICE recommends against use to treat advanced
kidney cancer in new patients
Tarceva
2008
NICE recommends against use to treat non-small cell lung cancer
Tykerb
2009
NICE recommends against use to treat advanced breast cancer
Velcade
2006
NICE recommends against use in multiple myeloma
to be recommended for reimbursement and
use. In addition, the earlier technologies
are appraised, the less likely they are to be
rejected. Moreover, the higher the burden
of disease, the more likely a technology
is to be recommended. At the same time,
higher cost-effectiveness ratios increase
the probability of rejection: the more
uncertainty that exists concerning a
technology’s cost-effectiveness ratio, the
less likely it is to be recommended for
reimbursement and routine use (2).
NICE as justification for not spending
limited resources on that treatment” (3).
Moreover, delays between licensing and
reimbursement have led to a phenomenon
called ‘NICE blight’: NHS trusts hold back
decisions to fund technologies pending
publication of guidance recommendations
by NICE. Herceptin is a case in point.
NICE took 18 months to appraise the drug
before it recommended its reimbursement
and use. During that period many trusts
did not fund its use.
There is no evidence to suggest that overall
drug spending or its growth rate has been
reduced in England and Wales. In fact,
NICE recommendations have turned out to
be largely positive, which has increased the
NHS drug budget. This increase is due, in
part, to the statutory obligation of the NHS
to provide funding for NICE-recommended
drugs. Nonetheless, if NICE recommends
against reimbursement and use of a
pharmaceutical, the practical effect is
that it will be unavailable to patients. This
is because, in most instances, the 150
primary and 170 acute care NHS trusts,
acting as local health care purchasers,
will “point to the guidance issued by
As we can see from the abbreviated list of
controversial cases in Table 1, biotechnology
drugs appear especially vulnerable when
cost-effectiveness enters the equation, as
they are often being compared to relatively
old and usually inexpensive medications. In
NICE’s preliminary analysis, Velcade, for
example, was compared with off-patent
dexamethasone. In this respect, NICE can
be viewed as less of a foe to traditional
pharmaceutical than to biotechnology
companies.
NICE INITIATIVES
A coalition of drug sponsors and citizen
groups have appealed against
Table 2: NICE changing its tune
Product(s)
Date of decision
Summary decision
Aricept, Exelon,
Reminyl
2007
NICE recommends reimbursement and use, but only for
moderate and severe states of Alzheimer’s
Lucentis
2008
NICE recommends reimbursement and use for the first 14
treatments, after which sponsor agrees to pay for treatment
Sutent, Revlimid
2009
NICE recommends NHS pay first two years of Revlimid, after
which sponsor will pay. NICE recommends NHS pay for
follow-up cycles of Sutent after sponsor has paid for the first
six-week cycle
Velcade
2008
NICE recommends use in treatment of multiple myeloma in
individuals who have relapsed after one prior therapy. However,
recommendation is accompanied by an agreement that patients
with no or minimal response after four cycles of treatment will
be taken off Velcade. Sponsor will then rebate the full cost of
the drug.
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approximately 30 per cent of all NICE
decisions. To illustrate, all eight decisions
summarised in Table 1 were appealed. In
response to heightened criticism, NICE is
implementing faster appraisals, especially
for drugs likely to be major innovators –
those given priority status by regulators.
Some appraisals are even being conducted
in parallel with licensing.
NICE is also altering its cost-effectiveness
criteria so more biopharmaceuticals
for terminally ill patients can be
recommended for coverage. The new
appraisal criteria effectively raised the
cost-effectiveness threshold for certain
products; specifically drugs with a costeffectiveness ratio greater than £30,000
per QALY, drugs licensed for a patient
population with life expectancy less than
24 months, and drugs targeting a disease
in which no more than 7,000 new patients
are diagnosed per year.
Recent decisions reflect changes at
NICE (see Table 2). These decisions
illustrate NICE’s role at the forefront
of introducing both risk-sharing
arrangements and value-based drug
pricing. The former concerns schemes in
which the payer and manufacturer split the
(potential) cost of a new or unproven
therapy (4). The latter allows payers to pay
more for patients whose likely benefit is
greatest and less for indications where
there is less potential benefit.
LESSONS TO BE DRAWN
FROM NICE EXPERIENCE
There is consensus among stakeholders
that it is useful to make decisions about
reimbursement and use of newly approved
drugs on a rational, data-driven basis.
Also, there is agreement that the technical
quality of NICE assessments is world
class. Pricing specialists suggest that
cutting case-by-case deals with NICE,
such as the ones enumerated in Table 2,
is a better cost containment option than
across-the-board price ceilings. As a
result, NICE methods, as well as its
organisational model, have become a
beacon to governments and payers
wrestling with the issues of resource
allocation and fairness in healthcare
delivery. Even if critics may not appreciate
its role in rationing, everyone sees value in
having an independent, even-handed and
trustworthy body to turn to when different
courses of action are being weighed.
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Indeed, we see NICE’s influence already
being felt with its impact reaching as far as
the comparative effectiveness debate in the
US. Technology appraisals have become
almost universal in developed countries,
partly due to the path blazed by NICE.
Nevertheless, there are important limits to
NICE’s influence. Firstly, only in England
and Wales have the kinds of technology
appraisals that NICE conducts been fully
integrated with decision making, legally
binding, national in scale, and put into
practice in a system with a single payer.
Secondly, besides Canada and Australia,
no other technology assessment authority
employs the cost-per-QALY method as
extensively as NICE. Though superficially
similar to NICE, the German Institute for
Quality and Efficiency in Healthcare
(IQWiG) does not use QALYs, but instead
resorts to other evaluation methods. Its
mandate is to address benefits relative to
costs for a given indication, and not to set
funding priorities across the healthcare
system. Likewise, the French National
Authority for Health does not utilise the
cost-per-QALY method, and applies pricevolume agreements per newly approved
drug to contain costs.
Detractors point to the cost-per-QALY
method as befitting a one-size-fits-all
approach, which is tilted against
medications targeting life-threatening
conditions, such as cancer, in particular
when they are labelled for use in advanced
or metastatic disease. Indeed, we can
observe that the UK lags behind many
other European nations in terms of uptake
of new cancer drugs, which may have to
do with negative decisions by NICE (5).
Moreover, what is cost-effective in one
country is not necessarily cost-effective in
another, due in part to income differences,
but also the fact that healthcare priorities
inevitably differ. All this makes it
highly unlikely that a ‘Euro-NICE’
would be established in the short term.
While NICE has been mentioned
by policymakers in the US debating
comparative effectiveness, it is both
premature and inaccurate to suggest that the
US will follow NICE’s lead. Cost has not
(yet) been permitted to enter the comparative
effectiveness equation in the US, nor is any
entity entrusted to carry out analyses
allowed to make recommendations on
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About the author
Joshua Cohen investigates public policy issues that relate to
prescription drug reimbursement. He joined Tufts CSDD in 1999. His
specific areas of research include pharmacy benefits management as it
relates to the Medicare prescription drug benefit, formulary standards
established by the Centers for Medicare and Medicaid Services to
ensure adequate access to prescription drugs for Medicare beneficiaries, comparison
of formulary management and pharmacoeconomic assessment in the US and Europe,
prescription to over-the-counter switches, and the role of follow-on drugs on the World
Health Organization’s Essential Drug List. Prior to joining Tufts CSDD, he completed a
post-doctoral fellowship at the Veteran Affairs Medical Center in Philadelphia, while
simultaneously serving as a Research Fellow at the University of Pennsylvania’s
Leonard Davis Institute for Health Economics. He received his doctoral degree in
economics from the University of Amsterdam in 1997. Email: [email protected]
reimbursement and the use of products yet.
There is also an ideological difference.
NICE aims to have guidance that applies
equitably across NHS trusts in England and
Wales. This contrasts sharply with the
individualised US approach to formulary
management. The cost-per-QALY method
delineates an arbitrary cut-off between
technologies the NHS can afford for all, as
opposed to those it will fund for (virtually)
no one (6). As such, it represents an
approach, however controversial, to dealing
‘fairly’ with each group of patients, ensuring
everyone gets an equal share of the pie. This
approach to fairness does not resonate as
much in the US. In fact, policymakers may
see virtue in variation. To illustrate, if one
US insurer does not reimburse a certain
drug, a person can theoretically go elsewhere
for coverage. In one study we conducted,
concerning 71 drugs NICE has evaluated, all
nine drugs NICE recommended against were
on the formularies of at least one of the US
plans we examined (7).
CONCLUSION
The use of cost-effectiveness evidence
in decisions about the adoption of new
technologies, such as drugs and biologics,
has become widespread internationally
over the past decade and a half. The fourth
hurdle is seen by some as an onerous
barrier, while others see it as a facilitator
of equitable access. Its most prominent
executor, NICE, has extended its influence
beyond the borders of England and Wales.
NICE could have more influence if there
were less controversy, and, ironically, if
contestable decisions were more evidencebased. In this vein, it makes sense to allow
access to drugs while the real-world
evidence base for their use is augmented.
Such a ‘coverage with evidence
development’ model, as demonstrated by
the novel risk sharing arrangements, for
example, would mitigate NICE blight and
also expand patient access to potentially
innovative treatments.
References
1.
Raftery J, Review of NICE’s
recommendations, 1999-2005,
British Medical Journal 332:
pp1,266-1,268, 2006
2.
Dakin H, Devlin N, and Odeyemi I,
“Yes,” “No,” or “Yes, but”?
multinomial modeling of NICE
decision-making, Health Policy 77:
pp352-367, 2006
3.
Syrett K, A technocratic fix to the
legitimacy problem: The Blair
government and health care rationing
in the United Kingdom, Journal of
Health Politics, Policy and Law 28:
pp715-746, 2003
4.
Note: NICE has not accepted all
compromises offered by drug
sponsors. For example, in April 2009
NICE asserted that Tykerb was “not a
cost-effective use of NHS resources”
at £94,000 per QALY, despite
GlaxoSmithKline offering to pay for
the first 12 weeks of treatment
5.
Jonsson B and Wilking N, A global
comparison regarding patient access
to cancer drugs, Annals of Oncology,
supplement 3: pp1-75, 2007
6.
Personal communication, William
Looney, Pfizer Corporation
7.
Cohen J, Cairns C, Paquette C and
Faden L, Comparing patient access to
pharmaceuticals in the UK and US,
Applied Health Economics and
Health Policy 5(3): pp177-187, 2006
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