Regulatory Focus™ > News Articles > Value-Based Pricing Scheme Moves Forward as NICE Given Program Assessment 'Blueprint'

Value-Based Pricing Scheme Moves Forward as NICE Given Program Assessment 'Blueprint'

Posted 20 June 2013 | By Alexander Gaffney, RAC

Companies seeking market access in EU member states, and in particular the UK, have long known a simple truth: It is not enough to have obtained approval from the European Medicines Agency (EMA) or the Medicines and Healthcare products Regulatory Agency (MHRA) for a product. While both regulatory agencies can grant preliminary market access, wider access can only be granted by obtaining approval from health technology assessment (HTA) bodies like the National Institute for Health and Care Excellence (NICE).

Now, in a nod to long-running concerns by industry that NICE is too rigorous in its assessment of new medicines, the UK Department of Health's National Health Service (NHS) has unveiled new changes that could be more beneficial to those seeking market access.

Value to Society

The changes, made under a broader plan meant to advance so-called value-based pricing, include a new "blueprint" meant to take into account the "benefits drugs bring to patients and wider society."

As part of its new remit, NICE will be charged with linking a drug's value with a price starting in January 2014. Currently, a drug's "value" is generally understood in narrower, patient-centric terms (and in terms of quality-adjusted life years, or QALYs). However, under the new system NICE is set to engage with patient groups and the pharmaceutical industry to determine if additional value, such as the value of a treatment to society as a whole, is present and should be accounted for in the price paid for a drug.

"For example, when NICE looks at the value of a drug, it might consider whether that treatment may mean patients need less support from carers," NHS explained in a statement. "This could reduce the impact of their condition on their family or carers, which is a wider societal benefit. It may also mean NICE can look in greater depth at how serious a condition is with the current best available treatment and place a higher priority on helping patients with the greatest unmet needs."

Cost Considerations

But if the changes would seem to help industry by allowing it to showcase additional value, statements made by NHS indicate that they see the changes as ultimately cutting costs for the government.

"We cannot simply spend more and more on drugs - this would mean spending less and less elsewhere," said Lord Howe, the UK's health minister, in a statement. "That's why we have asked NICE to look at the impact that drugs can have on people's ability to work or contribute to the economy and society. A drug that brings a lot of extra benefits may justify the NHS paying more, but equally the NHS might pay less for a drug that does not deliver wider benefits."

Howe added that the government had worked "extensively" with the pharmaceutical industry to develop a framework to better reflect societal value.

The content of that framework - the blueprint given to NICE - had not yet been made public.

As part of the announcement, NHS also unveiled plans that would place further downward price pressures on other members of industry at the same time. Under a new consultation announced on 20 June 2013, NHS plans to strengthen the statutory pharmaceutical pricing scheme and the voluntary Pharmaceutical Price Regulation Scheme (PPRS). NHS said it will seek price cuts of between 10% and 20% on the former, and negotiate prices with industry under the former based on NICE's assessments for the latter.

NHS Statement

NICE Statement in March 2013

Tags: UK

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