The U.K.'s NICE: A Model for the U.S.?
The New York Times has aired another episode of its “Evidence Gap” series, and it’s infuriating. This one is about the National Institute for Health and Clinical Excellence, the U.K.’s price-approval body for National Health Service drugs.
The purpose of NICE is to evaluate drug efficacy and prices, and to approve those drugs that are cost-effective for the benefits they provide. Conversely, NICE declines to give government funding for drugs that are expensive and provide little benefit. Drug companies hate this because they believe the NHS should be the Santa Claus of drugs, dispensing everything to everyone regardless of price.
The Times story starts by creating the impression that NICE’s job is to nickel-and-dime cancer patients. It uses the example of Bruce Hardy, a British man suffering from kidney cancer. He cannot get Pfizer’s Sutent for free on the NHS because of a NICE decision:
If the Hardys lived in the United States or just about any European country other than Britain, Mr. Hardy would most likely get the drug, although he might have to pay part of the cost…at that price, Mr. Hardy’s life is not worth prolonging, according to a British government agency, the National Institute for Health and Clinical Excellence.
Is this really true? Hardy is, arguably, in exactly the same position in the U.K. as he would be in the U.S. He could pay for the drug himself, like Americans do. Or maybe he would be one of the 40 million without health insurance, and he wouldn’t get the drug, the position he’s in now. Sutent isn’t banned by NICE, it just isn’t provided free of charge because it is so expensive and shows so little benefit. (Notice Hardy isn’t complaining about all the free cancer therapy he received on the NHS up until the NICE decision.)
The drug is, in fact, available to Hardy and other U.K. patients (as this story shows), he just doesn’t want — or can’t — pay for it.
The Times doesn’t give any indication of Hardy’s prospects for survival. We don’t know his age, although the story says he has been married 45 years. We don’t know his condition, although the Times says Mrs. Hardy speaks for him. I’ll ask the unpleasant question: Is it worth bankrupting a free national healthcare system in order to throw $54,000 — the cost of Hardy’s Sutent — at patients who are going to die anyway?
Despite the scary stories, U.S. healthcare could probably improve if we had a NICE-like body. As the Times notes:
At the present rate of growth, medical costs will increase to 25 percent of the nation’s gross domestic product in 2025 from 16 percent, with half of the increase coming from new drugs and devices, according to the Congressional Budget Office … paying for costly treatments [for terminal cancer patients] means less money for, say, sick children.
I felt the lead in the Times story was buried. Why are these drugs so expensive? Here’s one clue:
Take the case of Celgene, the maker of Revlimid, a drug for multiple myeloma, a bone-marrow cancer, that in a preliminary ruling on Oct. 28 the institute [NICE] said was too costly. Celgene’s first big seller was thalidomide, a decades-old medicine now used as a cancer treatment, which is so cheap to manufacture that a company in Brazil sells it for pennies a pill.
Celgene initially spent very little on research and priced each pill in 1998 at $6. … the company raised the price 30-fold to about $180 per pill, or $66,000 per year. The price increases reflected the medicine’s value, company executives said.
In 2005, the company introduced Revlimid, a derivative of thalidomide that is supposed to be less toxic, but may be no more effective. Celgene priced it at about $260 per pill, or $94,000 per year.
Moreover, NICE has actually been successful in bringing down the cost of drugs and thus extending their benefits to more patients. Pfizer already agreed to cut the price of Sutent. And Roche agreed to cut the rice of Tarceva. Even better, NICE has gotten drug companies to actually put their money where their mouths are:
It has also been revealed that manufacturers of kidney cancer drugs have held talks with the Department of Health about introducing a pricing arrangement that might persuade Nice to approve their products. One scheme being discussed is to ‘cost-share’, a scheme that would see the NHS paying for a drug if it extended a patient’s life by an agreed time, while the pharmaceutical company would refund the cost if the patient experienced no benefit and died.
Bottom line: NICE isn’t perfect but it’s better than runaway costs triggered by ineffective drugs. Which is what we have in the U.S., where Medicare is banned by law from negotiating drug prices.
Image by Flickr user ZanaStardust, CC.
Jim Edwards, a former managing editor of Adweek, has covered drug marketing at Brandweek for four years, and is a former Knight-Bagehot fellow at Columbia University's business and journalism schools. Follow him on Twitter or send him an email.
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