Methods to estimate the NICE cost-effectiveness threshold

Lead Research Organisation: University of York
Department Name: Centre for Health Economics

Abstract

The decision to approve a health technology for use in the NHS requires an assessment of whether the heath that is expected to be gained from its use exceeds the health that is expected to be forgone elsewhere as other NHS activities are curtailed to accommodate the additional costs. NICE uses explicit methods to estimate the health expected to be gained from use of a technology and the expected additional costs to the NHS. However, it?s assessment of what might be forgone, the cost effectiveness threshold, is less well founded. A body like NICE cannot and does not necessarily need to know what specific services and treatments will be displaced in particular localities or who will actually forgo health. What is required, however, is an assessment of the health that is likely to be forgone on average across the NHS. The aim of this research is to develop methods of analysis that can be applied to data the NHS already collects (or could collected in the near future) to provide an estimate of the threshold which would be suitable for the type of decisions NICE makes. The research will build on work that has already be done, which examines data already collected about local NHS spending in 23 broad programmes of care. This work looks at the relationship between local spending on particular types of care and health outcomes. Additional work is needed to analyse all these programmes together and establish how particular types of spending changes with overall budget and how overall spending is related to overall outcomes. This work may allow changes in the threshold over time to be identified as well as the effects of decisions which could have a large impact on the NHS budget. Measures of improvements in health outcome need to capture increases in the length and quality of life. Additional work is needed to identify and use other sources of evidence which are published or routinely collected in the NHS that can be used to estimate the quality of life gains within the different programmes of care. Also, additional work is needed to better understand which services and treatments are added or cut back when spending changes. Therefore, we will work with local NHS organisations to identify and use other routine data and design new data collection which will give a more detailed picture of changes within key programmes of care.

Technical Summary

Cost-effectiveness analysis used by NICE is essentially an assessment of whether the health expected to be gained from the use of a new medical technology exceeds the health likely to be forgone as other NHS activities are displaced to accommodate the additional costs of the new technology. The cost-effectiveness threshold represents an estimate of the health forgone as services are displaced and has implications for patients, local decision makers, Government and manufacturers. Currently the threshold used by NICE has little empirical basis.

The aim of this research is to develop and to demonstrate methods for threshold estimation which make best use of routinely available NHS data, allowing scrutiny by a range of stakeholders, improving accountability and predictability. Methods should also capture the effects on length and quality of life, estimate changes in the threshold over time and indicate the impact of ?non-marginal? changes. This research will focus on complementary methods which can make best use of those data that are already available, where there are already plans to make data available or where additional data could feasibly be made available at reasonable cost.

The research plans fall into the following 4 complementary areas of activity, all of which will be evaluated at a user impact workshop. Following a comprehensive literature review, econometric methods will be developed and applied to NHS programme budgeting data which allows examination of the relationship between local spending and health outcomes. Previous work in this area will be developed in a number of ways: i) simultaneous estimation across programmes will provide an overall threshold for the NHS; ii) examination of the relationship with local budgets will inform the impact of non marginal changes; and iii) the possibility of constructing a panel will allow an assessment of the feasibility of periodically re-estimating the threshold. Health outcomes need to be expressed in terms of quality as well as length of life. Therefore, the econometric analysis will be complemented with an analysis of quality of life within and between programmes of care using various sources of evidence including data currently routinely available, evidence likely to be come available in the future as well as other published evidence. Finally we will identify and evaluate other routinely available evidence of local investment and disinvestment to complement the more aggregate level analysis. We will also design and pilot the collection of additional data which are considered potentially the most useful.

Publications

10 25 50
 
Description Health Select Committee
Geographic Reach National 
Policy Influence Type Participation in a national consultation
 
Description Methods for the Estimation of the NICE Cost Effectiveness Threshold. Departments of Business Innovation and Skills, Department of Health, Treasury
Geographic Reach National 
Policy Influence Type Implementation circular/rapid advice/letter to e.g. Ministry of Health
 
Description Methods for the Estimation of the NICE Cost Effectiveness Threshold. Seminar at Department of Health
Geographic Reach National 
Policy Influence Type Implementation circular/rapid advice/letter to e.g. Ministry of Health
 
Description Methods for the Estimation of the NICE Cost Effectiveness Threshold. Seminar at the Department of Health
Geographic Reach National 
Policy Influence Type Implementation circular/rapid advice/letter to e.g. Ministry of Health
 
Description NICE Cost Effectiveness Threshold: Issues. Meeting at Department of Health.
Geographic Reach National 
Policy Influence Type Implementation circular/rapid advice/letter to e.g. Ministry of Health
 
Description Reference in value based pricing consultation document
Geographic Reach National 
Policy Influence Type Citation in other policy documents
Impact Change to value based pricing in UK scheduled for 2014.
 
Description Estimating cost-effectiveness thresholds
Amount £25,000 (GBP)
Organisation Bill and Melinda Gates Foundation 
Sector Charity/Non Profit
Country United States
Start 12/2015 
End 12/2016
 
Description Estimating cost-effectiveness thresholds (further work)
Amount £395,000 (GBP)
Organisation Bill and Melinda Gates Foundation 
Sector Charity/Non Profit
Country United States
Start 10/2016 
End 03/2018
 
Description International Decision Support Initiative (iDSI)
Amount £725,000 (GBP)
Organisation Bill and Melinda Gates Foundation 
Sector Charity/Non Profit
Country United States
Start 01/2014 
End 12/2015
 
Description Policy Research Unit in Economic Methods of Evaluation in Health and Social Care Interventions
Amount £5,000,000 (GBP)
Funding ID PR-PRU-1217-20401 
Organisation University of York 
Sector Academic/University
Country United Kingdom
Start 01/2019 
End 12/2023
 
Description Updating estimates of health opportunity cost (cost effectiveness threshold) for the NHS
Amount £200,000 (GBP)
Funding ID Not known 
Organisation Department of Health (DH) 
Department Policy Research Programme (PRP)
Sector Public
Country United Kingdom
Start 04/2016 
End 06/2017
 
Description Economic Evaluation of Health and Care Interventions Policy Research Unit 
Organisation University of Sheffield
Department School of Health and Related Research (ScHARR)
Country United Kingdom 
Sector Academic/University 
PI Contribution In return for approximately 40% of funding we provide staff input into a range of research projects to support the Policy Research Programme at the UK Department of Health. One aspect of this research has related to the NICE cost effectiveness threshold as part of policy developments relating to value based pricing of prescription pharmaceuticals.
Collaborator Contribution In return for approximately 60% of funding they provide staff input into a range of research projects to support the Policy Research Programme at the UK Department of Health.
Impact Short report to Department of Health.
Start Year 2011
 
Description Working with policy makers in Malawi on resource allocation challenges 
Organisation Government of Malawi
Country Malawi 
Sector Public 
PI Contribution Economic analysis to support decisions by Malawi for their 2016 Essential Healthcare Package.
Collaborator Contribution Using our economic analysis to suppport ultimate decisions about the package,
Impact Economic analysis report at https://www.york.ac.uk/media/che/documents/papers/researchpapers/CHERP136_EHP_Malawi_interventions.pdf
Start Year 2016
 
Description May 2011 workshop 
Form Of Engagement Activity A formal working group, expert panel or dialogue
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Policymakers/politicians
Results and Impact Approximately 50 professionals providewd feedback on our methods over the first 10 months of the project.

We received good feedback.
Year(s) Of Engagement Activity 2011