The Edge

Richard Northedge takes on corporate finance

Overruling Nice bodes badly for the state sticking to spending cuts

Everything has a value – even life. That’s why the last government created Nice – the National Institute for Clinical Excellence – to decide not whether drugs work, but whether they are worth the cost. So why is this government launching a fund to override Nice?

Nice has just ruled that the while bowel-cancer drug Avastin is safe and effective, it is not worth the £20,800 cost of a 10-month course to add six weeks to the patient’s life expectancy.

To relatives of the sufferer, such a strict decision may seem insensitive rather than sense: they would think any cost is worth their loved one surviving that much longer.

That’s why Nice was created to give dispassionate decisions but it does not explain why in October 2010 a Cancer Drug Fund is being formed by government with a £50m budget to supply drugs such as Avastin to patients whose doctors recommend it, even though Nice says the spending is bad value.

The creation of a fund to override rational decisions bodes badly for a government that is making billions of pounds of spending cuts. Will it buckle at every protest from groups hit by its decisions?

Several charities that should know better have claimed Nice ought to be overruled too, and many more lobby groups can be expected to ignore common sense – nevermind facts – when they try to persuade the government to restore cuts.

Much of the problem is that the free-to-user National Health Service has left the public – its customers – with no sense of value. Even the people paying for prescriptions have no idea whether the medicines received are worth £8 or £80 – or just 80p.

And most people pay nothing for prescribed medicines or for hospital or clinic treatments so have no idea of the value of the services supplied – and almost no comparison in other sectors of spending to act as a benchmark.

So the public has not had to ask if £20,800 is a good price for six weeks’ extra life. They can compare it with the tax they pay or the cost of, say, private dentistry, but it requires Nice to make the hard decisions.

Compared with a similarly-priced drug that prolongs life for six months, Avastin is poorer value, and in a world of limited resources, it may be sufficiently poorer value to be not worth paying. Nice looks at that bigger picture. And if Roche, the manufacturer, is sufficiently worried at losing the NHS as a customer, it might reduce the drug’s price.

The relative of sufferers could pay the price themselves if they think it good value – though their decision may well be irrational and even regretted later.

But they are unlikely to be medical experts, financial specialists or even impartial. Nice has those qualities and so should governments. So what is the point of establishing a Cancer Drug Fund specifically to be nice when Nice is being nasty? It gives logical decision-making a bad name.



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