I was particularly interested in knowing how NICE makes its decisions. How does it determine where healthcare dollars should be spent and who benefits the most? NICE uses a metric called a QALY (quality-adjusted life years measurement) that assesses a drug’s effect on length of life and the quality of life it offers to the person receiving it. The metric takes into account that a treatment may help a patient live longer, but since it is adjusted for quality of life, it can also capture things such as side effects which put patients at risk for other illnesses. After NICE determines the quality of life a drug offers in terms of a person’s health, it also considers cost effectiveness—specifically, “the cost of using the drugs to provide a year of the best quality of life available,” which is then “expressed in pounds per QALY.” If a treatment costs more than 20,000- 30,000 pounds per QALY ($34,000-$51,000) it is not considered cost effective and is less likely to be approved for funding. The Institute considers whether the money is best spent healing one person with the disease or is better spent on other people getting other treatments or services (like, for example, paying for more nurses to make in-home post-partem visits to new moms). In April, NICE turned down the breast cancer drug Kadcyla made by Roche because its effectiveness did not warrant its cost of more than 90,000 pounds ($153,000) per patient. The Institute’s draft guidance said it didn’t work well enough to justify routine use in the National Health Service.
The US doesn’t have an oversight system like NICE, and Obamacare specifically prohibits the Patient-Centered Outcomes Research Institute, a new agency created under the health reform law, from considering the cost of treatments in its work. Medicare can’t consider cost either when it decides to cover a new drug or device. In Britain, drug prices are set through “discussions” between the government and drug makers which result in a pharmaceutical price regulation arrangement. Not so in the US, where compaines can generally charge what they want with no government oversight. As FiercePharma pointed out, “there’s not a lot payers can do [about costs] in the US without an official cost-effectiveness body to set paramenters and make tough choices.” Because of drug company power, it’s not likely we’ll get such a body anytime soon.
Last week, the Washington, DC-based National Coalition on Health Care, a group of healthcare employers, providers, and consumers, announced a “Campaign for Sustainable Rx Pricing,” an effort to “spark a national dialogue” about the high cost not only of Sovaldi but also of some 200 other expensive drugs in the pipeline. In a front page Washington Post piece Monday, Coalition president and CEO John Rother described a coming “tsunami of expensive medicines” that, the Post wrote, “collectively threaten to bankrupt the healthcare system.” Barry Werth, a journalist who has written about the pharmaceutical industry for decades, told the Post: “We’re heading for some kind of reckoning. I don’t know that anybody has thought through how that’s going to play out.” Rother said to me, “We’re trying to raise an issue for public discussion that could threaten the stability of the whole healthcare system. It’s fair to say it’s not being responsible when a company prices a drug so aggressively and doesn’t think of the needs of the healthcare system as a whole.” In other words, is a drug worth it no matter what its price? Will those expensive medicines crowd out other healthcare services? These are threads we continue to urge reporters to follow. (Putting Sovaldi’s high cost in perspective is a good start. Vox.com’s Sarah Kliff, for example, recently reported that California might have to spend more buying Sovaldi for the state’s Medicaid beneficiaries than it spends now for K-12 and higher education. If Kaiser Permanente gave Sovaldi to all its patients with hep C, The New York Times’ Elisabeth Rosenthal tweeted over the weekend, it would double the insurer’s pharmacy spending.)
Rother told me one of the goals of his Sustainable Rx Pricing campaign is to move the country toward a more systematic appraisal of costs, benefits, and, equally important, a discussion of who pays. Right now, insurance companies make those cost-benefit judgments—and, hardly in a systematic way. One company pays for a drug; another may not. Rother’s not sure what the solution might be in America’s private health system, and says he has no expectation that Gilead will drop the price of Sovaldi. But, at least, for the first time some pretty big stakeholders—insurers, employers, and unions— are publicly questioning specific costs in the system.