Anthony J. Culyer

National Institute for Clinical Excellence and its value judgments.

NICE has to make both scientific and social value judgments when appraising health technologies and developing clinical guidelines for the NHS. Here, its chair and previous vice chair explain the rationale behind the decisions

The NICE cost-effectiveness threshold: what it is and what that means.

The National Institute for Health and Clinical Excellence (NICE) has been using a cost-effectiveness threshold range between £20 000 and £30 000 for over 7 years. What the cost-effectiveness threshold represents, what the appropriate level is for NICE to use, and what the other factors are that NICE should consider have all been the subject of much discussion. In this article, we briefly review these questions, provide a critical assessment of NICE’s utilization of the incremental cost-effectiveness ratio (ICER) threshold to inform its guidance, and suggest ways in which NICE’s utilization of the ICER threshold could be developed to promote the efficient use of health service resources.We conclude that it is feasible and probably desirable to operate an explicit single threshold rather than the current range; the threshold should be seen as a threshold at which ‘other’ criteria beyond the ICER itself are taken into account; interventions with a large budgetary impact may need to be subject to a lower threshold as they are likely to displace more than the marginal activities; reimbursement at the threshold transfers the full value of an innovation to the manufacturer.Positive decisions above the threshold on the grounds of innovation reduce population health; the value of the threshold should be reconsidered regularly to ensure that it captures the impact of changes in efficiency and budget over time; the use of equity weights to sustain a positive recommendation when the ICER is above the threshold requires knowledge of the equity characteristics of those patients who bear the opportunity cost. Given the barriers to obtaining this knowledge and knowledge about the characteristics of typical beneficiaries of UK NHS care, caution is warranted before accepting claims from special pleaders; uncertainty in the evidence base should not be used to justify a positive recommendation when the ICER is above the threshold. The development of a programme of disinvestment guidance would enable NICE and the NHS to be more confident that the net health benefit of the Technology Appraisal Programme is positive.

Value based pricing for NHS drugs: an opportunity not to be missed?

The policy debate about price, value, and innovation in pharmaceuticals is at a critical stage for the NHS. Claxton and colleagues describe the key principles of value based pricing and consider some of the concerns about such a scheme

Equity - some theory and its policy implications

This essay seeks to characterise the essential features of an equitable health care system in terms of the classical Aristotelian concepts of horizontal and vertical equity, the common (but ill-defined) language of “need” and the economic notion of cost-effectiveness as a prelude to identifying some of the more important issues of value that policy-makers will have to decide for themselves; the characteristics of health (and what determines it) that can cause policy to be ineffective (or have undesired consequences); the information base that is required to support a policy directed at securing greater equity, and the kinds of research (theoretical and empirical) that are needed to underpin such a policy.

Discounting and decision making in the economic evaluation of health-care technologies

Discounting costs and health benefits in cost-effectiveness analysis has been the subject of recent debate - some authors suggesting a common rate for both and others suggesting a lower rate for health. We show how these views turn on key judgments of fact and value: on whether the social objective is to maximise discounted health outcomes or the present consumption value of health; on whether the budget for health care is fixed; on the expected growth in the cost-effectiveness threshold; and on the expected growth in the consumption value of health. We demonstrate that if the budget for health care is fixed and decisions are based on incremental cost effectiveness ratios (ICERs), discounting costs and health gains at the same rate is correct only if the threshold remains constant. Expecting growth in the consumption value of health does not itself justify differential rates but implies a lower rate for both. However, whether one believes that the objective should be the maximisation of the present value of health or the present consumption value of health, adopting the social time preference rate for consumption as the discount rate for costs and health gains is valid only under strong and implausible assumptions about values and facts.

Deliberative processes and evidence-informed decision-making in health care: do they work and how might we know?

Evidence-informed decisions are conjectured to be better than un-evidenced ones. Evidence is classified into three types: context-free scientific, context-sensitive scientific and colloquial. A deliberative process provides guidance informed by relevant scientific evidence, interpreted in a relevant context wherever possible with context-sensitive scientific evidence and, where not, by the best available colloquial evidence. Some characteristics of an empirical approach to the evaluation of the impact of deliberative processes on the quality of decisions in healthcare are identified. These are centred on the selection of key outcomes, key characteristics and having explicit alternatives as comparator.

Some Economics of Hospital Waiting Lists in the NHS

The article concerns waiting for inpatient admission in the NHS and focuses on three aspects of this persistent problem. These are the merits or otherwise of rationing health care through waiting as opposed to pricing, the interpretation of waiting lists as a proxy for excess demand in the ‘market’ for inpatient care, including a critical examination of the logic and empirical evidence underlying the view that inpatients pay a time price for their admission, and the question of an admissions index to replace the largely inconsistent admission criteria currently employed in the hospital service. In particular the construction of an index incorporating the values of fairness and efficiency is discussed and the following characteristics suggested for inclusion: time already spent on the waiting list; urgency based on expected rate of deterioration of the patients condition; urgency based on the patients health status; urgency based on the ‘social productivity’ of the patient and the number of economic dependants; and urgency based on other social factors. The conclusions are that emphasis should be placed on waiting times rather than lists, that systematic admissions criteria should be developed and that the latter should incorporate social judgements which to date have been ignored or dominated by clinical judgements.

QALYs versus HYEs

This paper explores the claim that QALYs are liable to misrepresent consumer preferences and hence lead to decision-makers choosing options which are not those preferred by the public. It also considers the claim that HYEs do not suffer from this defect. We argue that none of the examples offered to date demonstrate the alleged tendency of QALYs to misrepresent preferences. We also show that HYEs are identical to QALY scores obtained from a time tradeoff experiment and therefore that the assumptions about preferences underlying HYEs are just as restrictive as those underlying TTO-based QALYs.

CAUSES FOR CONCERN: IS NICE FAILING TO UPHOLD ITS RESPONSIBILITIES TO ALL NHS PATIENTS?

Organisations across diverse health care systems making decisions about the funding of new medical technologies face extensive stakeholder and political pressures. As a consequence, there is quite understandable pressure to take account of other attributes of benefit and to fund technologies, even when the opportunity costs are likely exceed the benefits they offer. Recent evidence suggests that NICE technology appraisal is already approving drugs where more health is likely to be lost than gained. Also, NICE recently proposed increasing the upper bound of the cost-effectiveness threshold to reflect other attributes of benefit but without a proper assessment of the type of benefits that are expected to be displaced. It appears that NICE has taken a direction of travel, which means that more harm than good is being, and will continue to be, done, but it is unidentified NHS patients who bear the real opportunity costs.

Mark Pauly on welfare economics: Normative rabbits from positive hats

Mark Paulys (Pauly, 1994a) editorial comment on Labelle et al. (1994a) sows seeds whose harvest is a dangerous confusion of intellectual categories. Out of that confusion, he dismisses as irrelevant an approach to the evaluation of social arrangements in health care that we and many others consider a useful normative framework, and that is increasingly widely used.