The cost of new drugs on the NHS

By Emma Wilkinson
BBC News, health reporter

Drug watchdogs decide whether the NHS should fund new treatments

It seems the NHS drugs watchdogs are constantly under the spotlight as hugely public rows over funding for new drugs, such as Herceptin, play out in the media.

But how do bodies decide how to spend limited funds and do patients throughout the UK get the same treatment?

In the past few years there has been much controversy about patients in England and Wales missing out on new drugs from which patients north of the border benefit.

But Professor David Webb, chair of the Scottish Medicines Consortium (SMC) - the equivalent of the National Institute of Clinical and health Excellence (NICE) in England and Wales - is adamant this is not the case.

"Of 34 SMC decisions looked at by NICE, 30 came to the same decision," he said

"Four were different but they were rejected by the SMC and accepted by NICE."

However, the SMC can come to conclusions faster as they use modelling from the drug manufacturer to make their decision whereas NICE do their own calculations.

Value for money

To decide what is good value for money, health economists carry out a fairly complex calculation which puts a number on what increased life expectancy and quality of life may be gained from a particular treatment.

This can then be divided by the cost of the drug.

The resulting cost per 'quality of health-related life years gained' or QALY is the starting point for an appraisal committee.

Dr Andrew Walker, senior lecturer in health economics at the University of Glasgow said contrarary to popular belief there was no absolute cut-off when accepting of rejecting a drug.

"Up to £20,000 it's OK as long as there's a good case, between £20,000 and £30,000, if it's innovative and other factors about the disease or patient group can be taken into account, it's OK, and over £30,000 it's never say never but the supporting case has to be stronger."

Other countries had set lower limits, with a cut-off of about £15,000 in Canada and £10,000 in Australia.

Professor Mike Rawlins, chair of NICE said the most expensive drug they had agreed was for certain patients with chronic myeloid leukaemia and cost £48,000 per QALY.

NICE recommendations on new treatments and best practice for specific diseases have cost the NHS £2 billion - around 10% of the additional money that's been pumped into the health service.

But as money becomes tighter, NICE decisions become more difficult.

"There are a number of things that we are doing to try to offset that," said Professor Rawlins.

"Quite clearly not everything in the health service is worth doing and we need to look at that.

"Also we're helping commissioners commission more effectively."

Affordability

Professor David Barnett, professor of clinical pharmacology at the University of Leicester said when people criticised NICE or SMC decisions, arguments of affordability versus value for money were often completely confused.

"If you buy a kilo of apples for £2.50 and you can afford it you will be happy with that but if when you take it home you find half of them are rotten you will decide that's no value for money."

He added that assessment of QALY was the "best that NICE could do" at the moment.

"The calculations are made on a level playing field," he said.

It may seem to the outsider that a simple solution for drugs would be for manufacturers to reduce the price of drugs that had been rejected so that the QALY becomes more attractive to the NHS.

However drug prices are set globally, often on the basis of what the US can afford and also need to be uniform across Europe.

This may have to change in the future.

Professor Rawlins said: "A number of companies realise they're moving into a world where price of drugs is becoming a grave problem and companies are looking at ways of meeting the needs of people."