October 19, 2016

Consultation on Revision of NICE Appraisals and Arrangements for Funding of NICE Approved Technologies


On 14 October 2016, a joint consultation was issued by the National Institute for Health and Care Excellence (NICE) and NHS England, intended to introduce substantial changes to the obligation placed on NHS England to make funding available for technologies recommended by NICE, and to revise the methodology for evaluating highly specialised technologies (HST) for rare diseases.

The consultation focuses on three areas:

  • the introduction of a requirement to consider affordability (budget impact) as a criterion to determine whether implementation of NICE's recommendations should be delayed in cases where the budget impact exceeds a proposed threshold;
  • a new fast track procedure for technologies that are viewed as being highly cost-effective, based on an appraisal of robust data; and
  • the application of a cost per quality adjusted life year (QALY) methodology to HSTs, in circumstances where such an evaluation has, up until now, not been viewed as appropriate for such products.

The effect of these changes, if introduced, would potentially reduce NHS expenditure on medicines assessed by NICE. However, this will seemingly be achieved through delaying or limiting patient access to new medicines, including those that are innovative and cost-effective.

Consultation responses in relation to these proposals must be submitted by 13 January 2017 and NICE and NHS England intend that the new arrangements should apply from 1 April 2017.1

Consideration of Budget Impact

NHS bodies are placed under a legal obligation to comply with NICE's technology appraisal recommendations and HST recommendations as a result of the National Institute for Health and Care Excellence (Constitution and Functions) and the Health and Social Care Information Centre (Functions) Regulations 2013 (the NICE Regulations). The NICE Regulations require that NHS bodies should make funding available to cover the costs of recommended treatments within a period specified by NICE. The implementation period will be three months from the date of publication, unless one or more of certain defined factors are present, namely:

"(a) The health technology cannot be appropriately administered until -

(i) training is,

(ii) certain health service infrastructure requirements including goods, materials or other facilities are, or

(iii) other appropriate health service resources, including staff, are, in place; or

(b) the health technology is not yet available in England."

If any of these factors are applicable, NICE may agree that the three-month period for implementation of its recommendations should be extended.

However, under the new proposals, provision to make funding available for technologies recommended by NICE would potentially be delayed beyond the standard three-month period in every case where the estimated budget impact associated with use of a technology exceeds £20 million per annum in any of the first three financial years of its use. The consultation document states that around 80% of new technologies recommended by NICE between June 2015 and June 2016, fell below this threshold, but no other explanation is provided for the £20 million figure, save that this has been set by NHS England. For every technology where the estimated budget impact exceeds the threshold, NICE will invite the company to negotiate a commercial agreement with NHS England, so that, by reducing the effective price of the technology, the estimated budget impact will fall below the threshold amount. If such an agreement is reached, the standard three-month funding requirement will remain in place. If however, no agreement is reached, or if this does not sufficiently reduce budget impact, NHS England may ask NICE to extend the period for implementation of its recommendations "to allow a longer period of phased introduction". While the funding requirement will still apply, but on a deferred timetable, what this will mean in practice, in terms of patient access to treatment, will be determined on a case by case basis.

The consultation proposal represents a substantial shift in the role of NICE, whose technology appraisal guidance has not, up until now, been based on any direct assessment of the affordability of the product under consideration. While previous NICE technology appraisals have considered whether use of the relevant technology would constitute an effective use of NHS resources—an assessment which seems challenging if the extent of those resources is not known—determinations on affordability have, in the past, been regarded as political decisions to be made by Government rather than by NICE. So far as we are aware, a direction that a particular technology should not be viewed as affordable, has never been given by the Department of Health to NICE.

However, NICE was reconstituted as a result of the Health and Social Care Act 2012. Its general duties, as now defined at Section 233, provide that, in exercising its functions, NICE must have regard to factors including "the broad balance between the benefits and costs of the provision of health services or of social care in England". While such a duty clearly requires NICE to consider clinical-effectiveness and cost-effectiveness in formulating its recommendations, the view expressed in the current consultation is that Section 223 also requires assessment of affordability. (Interestingly, the Interim Process and Methods of the Highly Specialised Technologies Programme, introduced in 2013 following the 2012 Act, included a requirement for NICE to consider the impact of the new technology on the budget available for specialised commissioning, in the context of its consideration of whether the particular HST constitutes "value for money"—see further below.)

The consultation document also suggests that the factors listed in the NICE Regulations that allow NICE to extend the time for implementation of its recommendations, already cover affordability issues:

"NICE considers that 'resources' as referred to in this criterion, includes the availability of funds and that application of the criterion in this way is consistent with its duty to have regard to the broad balance between the benefits and costs of the provision of health service or of social care in England [as provided at Section 233 of Health and Social Care Act 2012]".

Such a construction of the NICE Regulations is likely to be controversial, if it is in fact correct. The circumstances in which time for implementation of NICE's recommendations could be delayed have, so far, been limited to situations where additional infrastructure or personnel were required. The interpretation proposed in the consultation, where implementation of NICE's recommendations may be deferred as a result of budgetary concerns, appears to defeat or at least substantially weaken the effect of the funding obligation.

Finally, while clearly NHS bodies, including NHS England, have an obligation to manage their budgets, the proposed delay in introducing cost-effective treatments appears to represent a short term solution. Postponing implementation of NICE's recommendations could relieve pressure on budgets in the immediate future, but will potentially result in higher costs and increased expenditure overall, as a result of disease progression and increased patient morbidity in the medium term. It is unclear from this consultation how such matters have been considered either by NHS England or by NICE in formulating the current proposals.

A Fast Track Process for NICE Appraisals

The consultation also proposes the introduction of a fast track appraisal process for technologies that NICE can be "confident" will fall below £10,000 per QALY and whose estimated budget impact is below the threshold set by NHS England. Based on experience between 2007 and 2014, apparently around 15% of NICE's technology appraisals fall below £10,000 per QALY gained and might therefore benefit from the new approach.

Companies would be invited to indicate that they would like their product to follow a fast track appraisal and NICE would then determine whether this was appropriate after consideration of the company's submission. Criteria for entry to the fast track procedure would be:

  • the availability of strong evidence with a low degree of uncertainty that the product is cost-effective at or below £10,000 per QALY; and
  • an estimate of the budget impact of the technology that falls under NHS England's threshold.

Products that do not meet these requirements will be "re-routed" through the standard appraisal process. The fast track methodology would mean the following stages of the standard review process are excluded:

(a) attendance of clinical, patient, and commissioning experts, evidence review group and the company at the Appraisal Committee meeting (on the basis that the process is built on a clear and convincing case for clinical- and cost-effectiveness);

(b) the issue of an Appraisal Consultation Document and therefore consultation on draft recommendations; and

(c) a second Appraisal Committee meeting.

The standard Single Technology Appraisal process generally takes around 43 weeks, and the estimated duration for the fast track procedure is reduced by some 25% to around 32 weeks, with associated savings on costs.

It is proposed that the new fast track procedure will incorporate the abbreviated technology appraisal process, currently under development, which is intended to be applied to technologies that provide similar or greater health benefits compared with existing NICE recommended technologies, at a similar or lower cost.

Evaluation of Highly Specialised Technologies

Finally, the consultation envisages the introduction of a new methodology for NICE's evaluation of HSTs, on the basis that NHS England also carries out its own specialised commissioning prioritisation process of such treatments and it is "important that the two processes are properly linked".

The current HST methodology, introduced in 2013, differs from NICE's approach to technology appraisals and does not involve a formal evaluation of cost-effectiveness based on calculation of the cost per QALY of the relevant product. NICE has previously recognised that the cost per QALY methodology is not appropriate for HST products and therefore currently conducts an evaluation of "value for money" (based on incremental benefit of the HST, requirement for other resources, and budget impact). Similarly, NHS England's prioritisation process does not involve any assessment of the cost per QALY of products under consideration, but an assessment of patient benefits and cost per patient.

The consultation however proposes a wholesale divergence from the methodology applied now, with introduction of standard cost-effectiveness assessments by NICE based on calculation of the cost per QALY associated with use of the product, and a £100,000 per QALY threshold value (five times greater than the lower end of NICE's standard threshold range). Technologies that meet these requirements will be subject to the standard funding requirement, subject to the budget impact assessment described above. Technologies with a QALY value above the threshold will not be subject to the funding requirement, but will be considered for use in the NHS through the NHS England process for prioritising HSTs.

The consultation states that the proposed changes are "supplemental" to NICE's current Interim Process and Methods of the Highly Specialised Technologies Programme. However, they appear materially different to the existing approach. Therefore, if the current consultation proposals are implemented, there will need to be development of the Interim HST Process or amendment of the Guide to the Processes of Technology Appraisal to incorporate assessment of HST products.

Finally, the consultation document includes no explanation for NICE's apparent U-turn on the application of a cost per QALY assessment to HST products for very rare diseases or for the use of a £100,000 per QALY threshold. Assuming that this new approach is adopted, it seems unlikely that many HSTs will fall within the threshold range, with the consequence that treatments for rare diseases will, in practice, revert back to consideration outside NICE and the mandatory requirement for funding by NHS bodies will be lost.


The proposals included in this consultation are far-reaching.

In particular, if implemented, the mandatory funding requirement under the NICE Regulations will be substantially eroded, and short term gains to the NHS in terms of budget management will apparently be permitted to override use of even highly cost-effective medicines.

The fast track procedure appears sensible, although it will remain to be seen how many technologies are deemed suitable for this route in circumstances where a low degree of uncertainty is required.

NICE's apparent about-turn in relation to the methodology to be applied to HST products requires explanation and the proposed thresholds require justification in the context of complex and highly specialised products indicated for a handful of vulnerable patients.

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