NICE Responsible for UK’s Value-Based Pricing of Medicines

The UK government has confirmed that from 2014 onwards, the National Institute for Health and Clinical Excellence (NICE), which is the country’s cost-effectiveness watchdog, will play a central role in the new value-based pricing system for assessing the costs and benefits of medicines. This announcement, made by the Department of Health in response to the Health Select Committee’s report on the future role of NICE, marks a broadening of responsibility for NICE “beyond its current drug evaluation processes.”

“We have already made it clear that NICE will have a central role in the value-based pricing system, including undertaking an assessment of the costs and benefits of different medicines, drawing on its world-leading expertise,” said the Department of Health in a statement. “We can now go further and confirm that NICE will be responsible for the full value assessment of medicines under the future system.”

The new system that was first unveiled in 2010 will replace the current pharmaceutical price regulation scheme (PPRS) that allows drugmakers to set their own prices within the constraints of a profit cap, with terms opened for renegotiation every five years. PPRS will expire in January 2014 and under the new value-based pricing system, the prices of medicines will be set based on new criteria and definitions of value.

According to the Department of Health, the aim of this move is to ensure that the National Health Service (NHS) pays for new medicines that are more closely linked to their value to patients and society. The government believes that although the current pricing system for medicines seeks to achieve a balance between reasonable prices for the NHS and a fair return for the industry to develop new medicines, it does not promote innovation or access. NHS has often had to pay high prices for new medicines that are not always justified by the benefits or restrict access.

However, there are concerns that this scheme is being adopted as a means to dramatically reduce the NHS drug bills. Earlier this year, the House of Commons Health Committee criticised the government for not revealing details on its new value-based drug pricing regime, stating that such inactivity is not only having a detrimental impact on the pharmaceutical industry, but also on patients groups and clinicians. The Department of Health claims to have responded to the concerns raised in full.

“We are delighted to announce the central role NICE will take in assessing the value of new medicines. This will allow us to draw on NICE’s world-leading expertise as we develop the value-based pricing scheme,” said health minister Lord Howe in a statement. “The role of NICE is developing and growing as it takes on new responsibilities in social care. We are grateful to the Health Select Committee for their detailed report and helpful recommendations covering various aspects of NICE’s work.”

Sir Andrew Dillon, chief executive of NICE, added, “We welcome the opportunity to take the central role in value based pricing and we look forward to working with the Department of Health and our stakeholders in developing the methods and processes for the new system.”

NICE is also preparing to extend its scope of responsibilities to assist in the development of better integration of services between different health and care organisations. From April, its remit will include social care, as well as the NHS and public health.