July 22, 2016

New Arrangements for Funding of Cancer Medicines in England

Arnold & Porter Advisory

On 8 July 2016, NHS England issued guidance setting out a new procedure for funding cancer medicines in England.1 The arrangements create a revised Cancer Drugs Fund (CDF, or the Fund), with provisions for patients to obtain early access to promising cancer medicines where the manufacturer is willing to agree to certain conditions. In contrast to previous versions of the CDF, the new framework also introduces a mechanism for removal of cancer medicines from the Fund, either because they can enter routine baseline commissioning, or because they are not deemed cost-effective for routine use within the national health service (NHS).


The CDF was established in 2010 as a temporary fund, in order to allow patients to access cancer medicines that were not routinely available through the NHS in England, either because they had not yet been appraised by the National Institute for health and Care Excellence (NICE), were indicated for the treatment of rare cancers and would not qualify for appraisal by NICE, or because NICE had determined that they were not cost-effective. The CDF was initially established with an annual budget of £200 million, and products where included in the Fund based on an assessment focused on the clinical benefit of treatment, with limited account taken of cost. Following indications in 2014 that the Fund would overspend, the annual budget for the CDF was increased to £280 million in August 2014; nevertheless, the CDF exceeded its revised 2014/2015 budget by £136 million, with a total expenditure of £416 million. Cost cutting measures were instituted, with a revised procedure that included a cost element as well as the assessment of clinical benefit. As a result, a number of products were removed from the list of products that were available through the CDF, known as the CDF List. The budget was increased again to £340 million from April 2015, but despite these measures, the Fund again overspent in 2015/2016, with a total expenditure of £466 million, an excess of £126 million.

Against this background, and in circumstances where the premise underpinning the CDF, namely that cancer medicines should be treated differently from other medicines, had been widely criticised, it was accepted that the Fund was not sustainable even in its revised form. Following a consultation procedure initiated in November 2015, a new CDF was proposed that involved early appraisal of new cancer medicines by NICE, and the possibility of a new "recommended for use within the CDF" outcome of this procedure. The new arrangements were approved by NHS England's Board in February 2016 and subsequently, revisions to NICE's procedures were approved by its Board in March 2016.2 The previous version of the CDF closed on 31 March 2016, having benefitted more than 95,000 patients since its inception.

The CDF Standard Operating Procedure (SOP), issued by NHS England on 8 July, provides the final part of the framework required for implementation of the new arrangements, which commence on 29 July 2016.

The New Framework for Cancer Medicines

NICE's revised procedures provide that all new systemic cancer medicines and existing products developed for use in new indications, that are expected to be the subject of a marketing authorisation, will be appraised by NICE prior to approval. The draft guidance will be issued prior to a new product/ indication receiving its marketing authorisation, with final guidance being published within 90 days of a marketing authorisation being granted. The recommendations by NICE have been extended from the previous "Recommended for routine commissioning" or "Not recommended for routine commissioning" to add a new category of "Recommended for use within the CDF". This third type of recommendation is to be used when NICE considers that there is plausible potential for a medicine to satisfy the criteria for routine commissioning, but where there is currently significant clinical uncertainty regarding the magnitude of the benefit. Some of the key elements of the new arrangements are considered below. Transitional arrangements have been put in place to support access to cancer medicines or indications that are currently funded via the CDF, until they can be appraised by NICE.

The Fund covers the costs of products supplied following NICE appraisal on an interim basis before final guidance is published, or following a NICE recommendation for CDF usage. In addition, it covers products supplied through the CDF following an individual funding request (approved for individual patients on grounds of clinical exceptionality), certain off-label usage supported by the CDF and continued usage by patients previously commenced on treatment with cancer medicines removed from the CDF List before 29 July 2016.

Interim Funding

For all new systemic cancer medicines or indications recommended in draft guidance by NICE (i.e. in an Appraisal Consultation Document (ACD) or a Final Appraisal Document (FAD) either for routine commissioning or for use within the CDF), interim funding will be available via the CDF to allow patients to access those medicines or indications from the date of grant of a marketing authorisation; this is in contrast to the current situation whereby funding of new cancer medicines is often delayed for 6-12 months after approval pending completion of NICE's standard procedures. However, under the new rules, the provision of interim funding will be conditional upon the manufacturer agreeing to the expenditure control mechanism discussed below. Where final guidance recommends that a product should be funded under routine commissioning, the product will, at that stage, be removed from the CDF. However, if final guidance recommends access to the medicine via the CDF, the product will remain subject to the expenditure control mechanism.

The Expenditure Control Mechanism

The expenditure control mechanism operates to require manufacturers who agree that their products should be supplied through the CDF to underwrite the Fund. (Presumably, companies may decide which cancer medicines or indications they are willing to supply via the CDF subject to the Fund's conditions, although this is not stated explicitly). Accordingly, should the Fund exceed its £340 million budget in any year, participating companies will be expected to cover the excess by making rebate payments, calculated on a pro rata basis by reference to the amount of sales by that company through the CDF during the previous year.

The new SOP states that there is no upper limit to the amount of any rebate that may be required from a participating company, although presumably this would in practice be limited by the extent of the company's sales through the Fund in a given year. (Continuation-treatment with products removed from the CDF before 29 July 2016 is not underwritten by the manufacturer, but this element seems unlikely to exceed the CDF's £340 million budget.) Nevertheless, for any company considering whether the CDF offers an attractive route to market, in circumstances where the SOP does not provide details of any cost-control mechanisms that will be applied by NHS England in managing the Fund, it is highly uncertain what the effective price of any medicine supplied through the Fund will be, after any rebate has been taken into account.

Managed Access Agreements

The other key element of the new arrangements is that access to medicines subject to a "recommended for use within the CDF" recommendation, will be dependent upon an acceptable managed access agreement (MAA) being put in place by the manufacturer. This MAA will include a data collection element and a requirement to offer a commercial agreement (i.e., a reduced price) so that the product is viewed as being cost-effective based on the assumptions accepted by NICE at product launch, and also so that data can be collected with a view to addressing the remaining uncertainties surrounding cost/benefit. The arrangements for data collection must be acceptable to NHS England and will be funded by the manufacturer.

In general, the period of time that a cancer medicine or indication will remain within the CDF will be determined by the time necessary for the data collection exercise to generate data to address the clinical uncertainty identified by NICE – usually around two years. At the end of the data collection period, NICE will review its appraisal of the relevant product, and determine whether the product or indication should, at that stage, enter routine commissioning or whether it should be removed from the CDF and no longer funded, save in exceptional cases. If a product is not recommended for routine commissioning, any patients who have been prescribed the medicine while the product was in the CDF, will continue to receive the product at the company's cost, until it is considered appropriate to discontinue treatment.

Support for Off-Label Indications

The new arrangements include provision for assessment of off-label indications by NHS England; under its current terms of operation, NICE will not appraise unlicensed medicines or licensed medicines for off-label indications. The SOP provides that NHS England will follow a procedure similar to that operated by NICE, and will issue similar recommendations. A request for an off-label assessment will be made by clinicians, and there is no expectation that companies will propose products for off-label consideration. However, companies will be required to cooperate with off-label supply of their medicines through the CDF, by agreeing that such sales will be subject to the expenditure control mechanism.

Furthermore, the SOP provides that the rate of reimbursement for an off-label medicine will be set at the current (on-label) rate of reimbursement for that product within the NHS, which could be list price, a patient access scheme price or a price agreed as part of a CDF commercial agreement for another indication, whichever is the lowest. It is unclear how this requirement will function in circumstances where patient access schemes (and we assume CDF commercial agreements) are likely to be limited to specific indications so would not cover off-label use. The offer of favourable financial arrangements for off-label indications for cancer medicines is likely to be viewed cautiously by companies in circumstances where such offers could be viewed as unlawful promotion of an unlicensed indication.


Overall, the new arrangements raise a number of questions that require clarification by NHS England. The principle of early access to cancer medicines seeks to address some of the criticisms made in relation to delays in accessing new medicines, and is likely to be welcomed. However, the introduction of the rebate requirement, with the explicit absence of any ceiling figure that may be demanded from participating manufacturers, and the lack of reassurance regarding budget control mechanisms, raises a number of questions, and potentially exposes industry to substantial uncertainties. Finally, NICE's approach to data generated through MAAs for CDF medicines is currently unclear, and it remains to be seen to what extent such data will, in fact, resolve the inevitable uncertainty associated with the results of randomised controlled clinical trials in small patient populations at the time of product launch.

  1. See NHS England, "Appraisal and Funding of Cancer Drugs from July 2016 – A new deal for patients, taxpayers and industry" (8 July 2016).

  2. See Nice Technology and Appraisal Guidance, Cancer Drugs Fund.

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