Consultation: How Should High Cost Medicines be Funded? (text extract)

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How should high cost medicines be funded?

Paper for public consultation December 2006

HOW SHOULD HIGH COST MEDICINES BE FUNDED? PAPER FOR PUBLIC CONSULTATION DECEMBER 2006 Summary How and on what basis should PHARMAC make decisions on funding “high cost” medicines? In particular, do high cost medicines require a different approach to their funding? High cost medicines are those medicines that, unless subsidised by the Government, would be unaffordable for most New Zealanders. Government funding may also be unaffordable if other medicines or health interventions are a better investment. However it is not just the total cost that is important: an equally important consideration is whether it is appropriate to fund high cost medicines for a few people (assuming funding is available) at the expense of lower cost medicines that benefit many more people. PHARMAC’s work to date, including independent input from a range of experts, suggests that high cost medicines should be treated no differently to other medicines. In other words, the higher cost of some medicines is not justification in itself to adopt a different funding approach. To further test this view, PHARMAC is now seeking public submissions by Monday 5 March 2007. PHARMAC will report on the submissions and any further steps. This is work in progress: the dialogue about social choices between decision-makers and those affected by decisions needs to continue. PHARMAC acknowledges the Government’s work on developing a medicines strategy – where the strategy work may touch on issues of relevance to this paper, and vice versa. Description of the problem Over recent years, an increasing number of medicines have carried a very high cost – some to the point (unless Government-funded) of being unaffordable for most New Zealanders.1 For some medicines, even Government funding (given limitations and other priorities) may not be possible. This is not an issue unique to New Zealand: it is a challenge confronting all medicines funding systems worldwide (Appendix One illustrates one approach2). PHARMAC is a public agency that currently funds a number of high cost medicines, through a variety of different mechanisms, including Special Authority, specialist panel management and named prescribers. There is no formal dollar value at which a pharmaceutical is termed “high cost”, as over time what constitutes high cost has and will change. Funding of a medicine 5 years ago at $20,000

There are other reasons why a medicine may appear to be ‘high cost’: (1) a high cost in aggregate for the budget (but possibly the result of a large number of users); (2) limited health gain compared with existing medicines (such that the cost for the incremental benefit seems high); (3) a wide range of cost-effectiveness estimates. This paper focuses on the classic definition: where the cost of the medicine as such is high.

For example, the United Kingdom’s National Institute for Clinical Excellence (NICE) document on social value judgments contains 13 principles to use when developing NICE’s guidance (National Institute for Clinical Excellence. Social value judgements: principles for the development of NICE guidance. December 2005. URL: http://www.nice.org.uk/page.aspx?o=283494). The extensive literature internationally reflects the ongoing debate in this area – see for example Mortimer D. The value of thinly spread QALYs. Pharmacoeconomics. 2006;24(9):845-53.

for each person over a year was very high cost, while now it is much more in the order of $20,000 to $100,000. In future, “high cost” could be much more. High cost medicines are often used to treat rare medical conditions, or conditions for which no effective alternative treatments are available, and some for conditions affecting only a very small number of people. While a small number of patients can, in some cases, make Government-funding of high cost medicines affordable (assuming such investments are good value for money), on other occasions the cost can be tens of millions of dollars each year. Novel treatments, for cancers in particular, are likely to increase the cost of such medicines in the future. The funding challenge will therefore remain and, if anything, become greater. However, it is not just the total cost that is important. An equally important consideration is whether it is appropriate to fund high cost medicines for a few people (assuming funding is available) at the expense of lower cost medicines that benefit many more people. The difficulty in making these decisions can be highlighted by the often very public debate surrounding individual, high profile cases. To what extent should a public agency consider the needs of the many compared with the needs of the few? And how and on what basis should it make such decisions? These are by no means easy questions, but ones that PHARMAC has no choice but to address. PHARMAC has been reviewing how it goes about assessing and funding high cost medicines. The cost of these medicines can be so high that the health gain, even if relatively large, is swamped by the cost of the medicine and so becomes, by some definitions, “poor value for money”. Positive decisions, therefore, rely on other decision factors and judgements. PHARMAC’s early work in this area also identified the increasing range of new medicines falling into the ‘high cost’ category. Advances in technology suggest there will be increasing numbers of genetically targeted and other new medicines developed to treat small numbers of patients at very high cost. Were such medicines funded, an increasingly significant proportion of the pharmaceutical budget would be devoted to a relatively small number of patients (without necessarily maximising the ‘value’ from available funding). Having your say Having reflected on this paper and the expert reports (described later), PHARMAC would welcome public submissions by Monday 5 March 2007. PHARMAC will then consider submissions and report on them and further steps, if any, in relation to this work. The following questions may provide a good focus for submissions: 1. How should PHARMAC approach the trade-off between funding the treatment of very small numbers of patients with very expensive medicines (for very rare conditions) against the treatment of large numbers of patients with less expensive medicines (for more common conditions)? 2. Do you agree with PHARMAC’s preliminary conclusion (see the end of this consultation paper) that there are no persuasive arguments for treating the funding of ‘high cost medicines’ differently to other medicines? If you disagree, then: • What information do you think should have been presented by the expert reports and considered by PHARMAC? • Which additional particular considerations and/or criteria, specific to assessing and funding high cost medicines, should PHARMAC take into account? or explicitly not take into account? • What evidence supports your views?

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Please send your submission by e mail to highcostmedicines@pharmac.govt.nz, or mail to: High Cost Medicines Review PHARMAC PO Box 10-254 Wellington PHARMAC is open to hearing about wider issues about PHARMAC’s operations (a number were raised in independent reports commissioned as part of PHARMAC’s work), to the extent that submitters feel these are relevant to considering how to fund high cost medicines. For the avoidance of doubt, this is not a review of PHARMAC’s overall operations, although PHARMAC acknowledges that a range of issues may be considered relevant. Background New Zealand has a national health system where people are funded irrespective of their ability to pay. Pharmaceutical subsidies have been part of this universal scheme – in existence since 1938 – from the outset; they have been managed by PHARMAC since 1993. PHARMAC’s principal duty is to secure the best health outcomes achievable from pharmaceutical treatment for the population of New Zealand, within the amount of funding it is allocated to manage (see the New Zealand Public Health and Disability Act 2000). The vehicle for this funding is the New Zealand Pharmaceutical Schedule, which identifies all community medicines that are funded in New Zealand and the criteria under which they are funded. In deciding which medicines to fund, on what terms and to who they should be made available, PHARMAC makes a decision on behalf of New Zealand. That decision involves weighing up decision criteria, including assessing the benefits and costs of particular medicines. Nine Decision Criteria are considered.3 PHARMAC’s process for making decisions is based on a strong core of clinical advice (sought from its clinical advisory committee, PTAC) and sophisticated methods of critically appraising evidence and assessing pharmaceutical cost-effectiveness.4 Decisions cannot, however, be made on the basis of a technical assessment alone: they always involve explicit and implicit value judgements. This inevitably includes particular judgements about the needs, rights and privileges of the many against the needs, rights and privileges of the few. As such, PHARMAC has always had to grapple with the issue of whether to fund medicines that are more expensive than others. The high cost dilemma is no different conceptually to what it has always been, but the magnitude of what is “high cost” has changed and looks to be changing further. External input Process In addition to PHARMAC’s own thinking, reports were commissioned from national and international experts. These reports are now available to help inform public submissions.

PHARMAC’s Operating Policies and Procedures, the document that sets out PHARMAC’s role and objectives, and which contains the details of the nine Decision Criteria, is available at www.pharmac.govt.nz.

Cost effectiveness is determined by economic analysis, which at PHARMAC usually involves a cost-utility analysis (CUA). CUA is a technique widely used internationally, designed to provide information on the relative value for money of a pharmaceutical – that is, whether the health gains associated with a treatment are greater than the health gains from alternative options that could have been funded with that money. A CUA provides information on the additional quantity and quality of life gained, and resources freed up in the pharmaceuticals budget and elsewhere in the health sector, to the additional cost of the medicine. The methods used when undertaking CUA are outlined in PHARMAC’s Prescription for Pharmacoeconomic Analysis (PFPA), available at http://www.pharmac.govt.nz/pharmo_economic.asp. Cost effectiveness is one of PHARMAC’s nine decision criteria.

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There were two central reports to the review – by Professor Raanan Gillon, emeritus professor of medical ethics at Imperial College (London) and Dr. Paul Hansen, Associate Professor at the Department of Economics, University of Otago. At the core of the reports was the question: should high cost medicines be funded differently from other medicines competing for the same public funding and, if so, for what reasons? The two lead reports were reviewed by nine external (including two international) peer reviewers representing a range of perspectives and expertise (see Appendix Two for details). The two lead authors were then offered the opportunity to revise their papers in light of reviewers’ comments. All of these reports are released with this paper (Appendix Three). Key findings There were a number of common themes in the lead reports, as well as the subsequent commentaries: • ultimately, all decisions are value judgements and entail many considerations beyond technical data and analytical assessments; there is no universally accepted mechanism for funding high cost medicines and decisions will depend on the set of values used. There is no single, universally accepted ethical theory on which PHARMAC should base its decisions or which would dictate a particular approach to ‘high cost medicines’ funding decisions; there was consensus that it is appropriate and justifiable to make funding decisions in the context of a finite budget, and an acknowledgement that some difficult moral choices were unavoidable; support for a framework (that is, decision criteria) for making such decisions; there is a very broad range of competing and sometimes contradictory values, ethical norms and theories of social and distributive justice. All enjoy considerable social standing and acceptance and could legitimately be used to inform the social choices to be made in medicines funding decisions; because resources are limited, not all competing claims can or will be met. No matter how carefully and robustly resource allocation decisions are made, it is highly likely that there will be some dissatisfaction with any decision. This is because any decision will generally involve the over-riding of claims with some moral justification in favour of other claims, with other moral justifications, but judged stronger in the particular circumstances; it is important that the value judgments that inform social choices are made as explicitly and transparently as possible; and it is particularly important to be aware of possible implicit or hidden value judgements embodied in particular decisions; and overall, there is no justification, whether in ethics or economics, for assessing ‘high cost medicines’ any differently from other pharmaceuticals.

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Ancillary issues raised in reports To restate, PHARMAC’s main question at this time is whether the funding of high cost medicines – assuming PHARMAC’s processes and decision-making criteria are as they are – need to be treated in a different way to other medicines. On this particular point, the reviewers generally agreed there was no reason for treating these differently. The authors felt there were a number of other matters related to PHARMAC’s activities that were interesting to consider. There were also suggestions about clarifying the value judgements embodied in PHARMAC‘s decision making processes (including patient “need”), increasing public

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understanding around PHARMAC’s decisions; and getting better dialogue about social values and choices. A summary of our understanding of many of the ancillary issues raised in the external reports is set out below, along with a brief PHARMAC comment. The commentary is preliminary in nature: many of the issues are significant policy considerations that, for any change to be contemplated, require further detailed assessment.

Issue raised PHARMAC inevitably makes value judgements when funding. There is a large number of value judgements to choose from, some potentially conflicting (that is, ‘best health outcomes’ can mean different things). Preliminary PHARMAC comment

This is the basis of PHARMAC’s nine decision criteria. This, in PHARMAC’s view, is a key reason why the same approach should be used to assess high cost medicines, as for other medicines. The same issues are at play, albeit with a different magnitude of cost. As noted by some commentators, the principles are relevant not just to high cost medicines but to all pharmaceutical funding.

PHARMAC needs to be more explicit and transparent about what value judgements are made.

While the decision criteria themselves are explicit, it is important– for the general acceptance of decisions – that PHARMAC’s decisions are also understood. PHARMAC is aware that some stakeholders would like more information regarding PHARMAC’s decisions. There are pros and cons with doing this that need careful assessment. As decisions will depend on a wide range of factors at any time, it is possible that decisions – if explained in significant detail - may be perceived as inconsistent when in fact the best decision in the circumstances was made. This is a broader issue than decisions related to high cost medicines (and, as noted above, is a complex issue requiring careful assessment). Some of the commentators suggest that this does not necessarily mean the most quality-adjusted life years (QALYs) gained from the pharmaceutical budget. In terms of PHARMAC’s legislative objective, in trying to secure the “best health outcomes”, ‘best’ does not necessarily have to mean the most QALYs for the money spent. All nine decision criteria considered by the PHARMAC Board are important. In essence, the issue is whether the trade-offs made by the PHARMAC Board accord with the trade-offs that stakeholders would make, and what the general public would find acceptable. Stakeholder interests, while well intentioned, may not always align with the public good which the decision-making process is intended to protect. It is PHARMAC’s role to represent the public interest. All PHARMAC’s funding decisions are consulted on, with responses considered by the Board – accordingly, the Board takes into account the views of interested parties. Other opportunities for engagement – such as this consultation paper – further help PHARMAC to understand stakeholder views. The need for judgement is a practical reality of decision making in a complex environment. The PHARMAC Board is appointed to make these judgements with the best available evidence and information available to it, including through consultation with interested parties. If decisions were highly mechanistic or formulaic, decision-making judgements would still be required to set the formulae or algorithms, which, in themselves, are less flexible and still involve judgements. This is a variation on the issues and comments above. Decision criteria periodically need to be reviewed, whether their content or how they are applied. For example, PHARMAC has recently consulted on the revision to its Prescription for Pharmacoeconomic Analysis, which contributes to assessment under Decision Criterion Five.

‘Maximising value for money’ is at the heart of the issue. The question is “what does maximising value for money mean?”

PHARMAC needs to consider the values of its stakeholders, and these are likely to change over time.

Decisions invariably entail judgements by the decisionmaker; matters are not always “black” and “white” or technically clear.

There should be greater clarity and explanation around PHARMAC’s Decision Criteria and how they are used. Cost utility analysis (CUA) is an important tool, but CUA in itself does not promote particular values.

PHARMAC agrees that CUA is a tool and not a value in itself. Further, such analysis is one of many important inputs into funding decisions.

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PHARMAC should consider the use of Multiple Criteria Decision Analysis (MCDA) as a research tool (at this stage).

PHARMAC is always open to assessing new approaches to improve its systems and processes and is aware of this tool. As this is about the application of decision criteria generally, it is not specifically a matter related to funding high cost medicines. ‘Rule of rescue’ reflects a natural human instinct to helping people in peril regardless of cost. The range of arguments both for and against the use of this rule demonstrates the complexity of this issue. On one hand, helping people in greatest need is very understandable; on the other, the rule of rescue is not always underpinned by objective evidence to support action ahead of other alternatives.

There were arguments for and against using the ‘rule of rescue’ as a principle for pharmaceutical funding.

Some commentators noted that the lead reports did not deal with the local New Zealand situation and Maori and Pacific philosophies/kaupapa. The general point seemed to be that the approach taken in New Zealand needs to take into account features specific to New Zealand.

The existing Decision Criteria allow the PHARMAC Board to take into account a wide range of factors relevant to decisions, including New Zealand specific factors. There is a particular decision criterion related to the impact on Maori and Pacific health. As well as its clinical advisory committee, PTAC, PHARMAC will seek input from its Consumer Advisory Committee (CAC). There is Maori representation across CAC, PTAC, PHARMAC’s Board, and PHARMAC management and staff.

Mixed comments regarding an allocation advisory committee.

Such a committee would provide advice on value judgements and, in essence, what weight should be given to particular criteria in particular circumstances. This, however, is already the role of the PHARMAC Board. Such a committee may simply shift the decision making trade-offs to a separate body (the same issues in a different place, and possibly with additional administrative costs). Were that not the case, such a committee would have ‘all rights and no responsibility’ and it is difficult to see – given the role of the PHARMAC Board – how a separate committee (taking into account all other existing process steps) would add value to the decision making process. This relates to PHARMAC’s decision making generally, not specifically high cost medicines. PHARMAC’s decisions are subject to judicial review. Whether there should be a merit-based appeals process as well has been extensively debated in the past, both with reference to PHARMAC and other government decision making bodies (without extension to the right of judicial review). Regardless of what review mechanisms exist, there will always be the need to make social choices with regard to which medicines to fund. Even if a separate budget were established, all of the same issues related to funding high cost medicines would still exist (the same difficult judgements need to be made). The same problem remains, and does not answer at what level to set the ‘tithe’ and how this should be decided. Depending on its size, such a budget could also be used quickly given the cost of such medicines. Further, any stand-alone budget creates boundary issues, that is, incentives to choose a budget – for a funding application – best suited to commercial imperatives. A separate budget would also preclude PHARMAC from making funding trade-offs across all pharmaceuticals. This could mean that lower value investments are made from one budget than the other, with possible adverse equity implications.

Mixed comments regarding clarifying the process for reviewing PHARMAC decisions; some discussion about an appeal process.

An argument was made for a stand-alone budget for some medicines (a so-called ‘tithe approach’). Having such a budget could give comfort that at least some high cost medicines would be funded.

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Conclusion Work to date, including input from independent experts, indicates there are no persuasive arguments for treating the funding of high cost medicines differently to other medicines, that is, the same analytical tools and decision making framework are appropriate. PHARMAC now wishes to test this view with other interested parties and is seeking public submissions by Monday 5 March 2007. Having reviewed submissions, PHARMAC will report on them and any further steps related to this work. There are a number of ethical theories that can be applied to how high cost (or indeed any) medicines are assessed. How decisions are made will depend on the set of values used. The dialogue about social choices between decision makers and those affected by decisions does not, and should never, reach an end.

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Appendix One Social value judgements: principles for the development of NICE guidance. National Institute for Clinical Excellence, December 2005. URL: http://www.nice.org.uk/page.aspx?o=283494

National Institute for Health and Clinical Excellence

SOCIAL VALUE JUDGEMENTS

Principles for the development of NICE guidance

Thursday 8th December 2005

TITLE: PRINCIPLES FOR THE DEVELOPMENT OF NICE GUIDANCE DATE: 8 DECEMBER 2005

Contents

Preface ............................................................................................................3 Summary of principles .....................................................................................4 1 Introduction ..............................................................................................7 1.1 Background .......................................................................................7 1.2 Aim of these guidelines......................................................................7 1.3 Areas outside the remit of these guidelines .......................................7 1.4 Intended audiences for these guidelines ...........................................8 1.5 Who has developed these guidelines? ..............................................8 1.6 Methods used to develop these guidelines........................................8 2 Principles of bioethics ............................................................................11 2.1 Moral principles ...............................................................................11 2.2 Strategies for setting priorities .........................................................13 3 Applying principles through process ......................................................15 3.1 The Institute’s guidance programmes..............................................15 3.2 Legal requirements underpinning NICE guidance ...........................16 4 Cost effectiveness and setting priorities.................................................20 4.1 The Institute’s approach to economic evaluation.............................20 4.2 Efficiency versus equity ...................................................................22 4.3 Limits to cost effectiveness..............................................................22 5 Social value judgements – service users ...............................................24 5.1 Age ..................................................................................................24 5.2 Gender and sexual orientation.........................................................25 5.3 Socioeconomic status......................................................................25 5.4 Race (ethnicity)................................................................................25 5.5 Self-inflicted conditions ....................................................................26 5.6 Patient choice ..................................................................................26 5.7 Responding to criticism....................................................................27 6 Social value judgements – conditions ....................................................28 6.1 Quality and quantity of life ...............................................................28 6.2 Communicable diseases..................................................................28 6.3 Conditions associated with stigma...................................................28 References ....................................................................................................30 Glossary of terms...........................................................................................34

TITLE: PRINCIPLES FOR THE DEVELOPMENT OF NICE GUIDANCE DATE: 8 DECEMBER 2005

Preface

These guidelines have been produced to help the Institute and its advisory bodies in developing NICE guidance. It is a ‘living document’ that will be updated to reflect developments within the academic world, the work of the Citizens Council, and the Institute’s own emerging experience as it continues to develop guidance for the NHS and the wider public health community. The guidelines will be formally reviewed in 2007 but earlier if the need arises. At that time we anticipate that important additional areas will be incorporated. These include the problem of comorbidity, the so-called “rule of rescue”, approaches to the trade-off between risk and benefit within the interventional procedures programme, and the question of how NICE should approach the requirement to foster innovation. In addition, future editions will examine the social value judgements that should inform NICE’s public health guidance.

TITLE: PRINCIPLES FOR THE DEVELOPMENT OF NICE GUIDANCE DATE: 8 DECEMBER 2005

Summary of principles

These guidelines describe the social value judgements that should, generally, be incorporated into the processes used to develop NICE guidance and be applied when preparing individual items of NICE guidance. The Institute recognises, however, that there will be circumstances when – for valid reasons – departures from these general principles are appropriate. When departures from these principles are made, the reasons should be explained (section 1.2).

Principle 1

The fundamental principles that underpin the processes by which NICE guidance is developed should be maintained for current, and applied to future, forms of guidance (section 3.3).

Principle 2

For both legal and bioethical reasons those undertaking technology appraisals and developing clinical guidelines must take account of economic considerations (sections 4.1 and 6.1).

Principle 3

NICE guidance should not support the use of interventions 1 for which evidence of clinical effectiveness is either absent or too weak for reasonable conclusions to be reached (section 4.1).

Principle 4

In the economic evaluation of particular interventions, cost–utility analysis is necessary but should not be the sole basis for decisions on cost effectiveness (section 4.1).

Principle 5

NICE guidance should explain, explicitly, reasons for recommending – as cost effective – those interventions with an incremental cost-effectiveness ratio in excess of £20,000 to £30,000 per QALY (section 4.3).

Principle 6

NICE clinical guidance should only recommend the use of a therapeutic or preventive intervention for a particular age group when there is clear evidence of differences in the clinical effectiveness of the measure in different age groups that cannot be identified by any other means (section 5.1).

The term ‘intervention’ is used in these guidelines to encompass health technologies and any other measure used to influence the course of a particular condition.

TITLE: PRINCIPLES FOR THE DEVELOPMENT OF NICE GUIDANCE DATE: 8 DECEMBER 2005

Principle 7

In setting priorities there is no case for the Institute or its advisory bodies to distinguish between individuals on the basis of gender or sexual orientation unless these are indicators for the benefits or risks of preventative or therapeutic interventions (section 5.2).

Principle 8

In developing clinical guidance for the NHS, no priority should be given based on individuals’ income, social class or position in life and individuals’ social roles, at different ages, when considering cost effectiveness. Nevertheless, in developing its approach to public health guidance, NICE wishes its advisory bodies to promote preventative measures likely to reduce those health inequalities that are associated with socioeconomic status (section 5.3).

Principle 9

NICE clinical guidance should only recommend the use of an intervention for a particular racial (ethnic) group if there is clear evidence of differences between racial (ethnic) groups in the clinical effectiveness of the intervention that cannot be identified by any other means (section 5.4).

Principle 10

NICE and its advisory bodies should avoid denying care to patients with conditions that are, or may be, self-inflicted (in part or in whole). If, however, self-inflicted cause(s) of the condition influence the clinical or cost effectiveness of the use of an intervention, it may be appropriate to take this into account (section 5.5).

Principle 11

Although respect for autonomy, and individual choice, are important for the NHS and its users, they should not have the consequence of promoting the use of interventions that are not clinically and/or cost effective (section 5.6).

Principle 12

It is incumbent on the Institute and its advisory bodies to respond appropriately to the comments of stakeholders and consultees and, where necessary, to amend the guidance (section 5.7). The board is aware, however, that there may be occasions when attempts are made (directly or indirectly) to influence the decisions of its advisory bodies that are not in the broad public interest. The board requires the Institute, and members of its advisory bodies, to resist such pressures (section 5.7).

TITLE: PRINCIPLES FOR THE DEVELOPMENT OF NICE GUIDANCE DATE: 8 DECEMBER 2005

Principle 13

Priority for patients with conditions associated with social stigma should only be considered if the additional psychological burdens have not been adequately taken into account in the cost–utility analyses (section 6.5).

TITLE: PRINCIPLES FOR THE DEVELOPMENT OF NICE GUIDANCE DATE: 8 DECEMBER 2005

1.1

Introduction

Background

When developing advice to the National Health Service (NHS) and, since 1 April 2005 to the wider public health community, the Institute bases its conclusions on the ‘best available’ evidence. The best available evidence is not always very good and is rarely (if ever) complete. It may be of poor quality, lack critical elements, or both. Those responsible for formulating the Institute’s advice about efficacy, effectiveness, cost effectiveness and safety are therefore inevitably required to make judgements. These judgements fall broadly into two categories. Scientific value judgements are concerned with interpreting the significance of the available scientific, technical and clinical data. Social value judgements relate to society rather than to basic or clinical science: they take account of the ethical principles, preferences, culture and aspirations that should underpin the nature and extent of the care provided by the NHS. Nevertheless, the distinction is not absolute: there is a scientific dimension to the measurement and understanding of social value judgements, but this does not form part of this document.

1.2

Aim of these guidelines

This document describes the Institute’s approach to incorporating social value judgements into the processes used to develop NICE guidance, as well as the principles that should be applied in developing individual items of guidance. It is primarily, though not exclusively, concerned with those social value judgements that are involved in developing conclusions about cost effectiveness and particularly those judgements that have implications for priority setting and resource allocation. The Institute recognises, however, that there will be circumstances when – for valid reasons – departures from these general principles are appropriate. When this happens, however, the Institute expects the reasons for doing so to be explained in the guidance.

1.3

Areas outside the remit of these guidelines

There are four important areas that are not included in these guidelines. Firstly, the guidelines do not cover the social value judgements required in evaluating the balance between the risks and benefits of interventional procedures. The Institute intends to include such considerations in future editions of the guidelines. They have been omitted from this document, partly because the bioethical literature is generally weak in the area and partly because the Institute has not as yet undertaken (or commissioned) work relating to this topic.

TITLE: PRINCIPLES FOR THE DEVELOPMENT OF NICE GUIDANCE DATE: 8 DECEMBER 2005

Secondly, the guidelines do not, in the main, consider the social value judgements concerned with developing public health advice. This issue will also be addressed in future editions. Thirdly, the guidelines do not describe the social value judgements that should be applied in developing guidance on the use of ‘ultra-orphan’ 2 health technologies. NICE is currently formulating its position on the appraisal of these technologies and its conclusions are not yet available. Finally, the guidelines do not cover the social value judgements required of those undertaking the National Confidential Enquiries (1) because on 1 April 2005 the National Patient Safety Agency took over responsibility for this programme.

1.4

Intended audiences for these guidelines

These guidelines are intended for three audiences. They are addressed at those involved in constructing, or revising, the processes and procedures that determine the way NICE guidance is developed. The guidelines are especially relevant to the Institute’s advisory bodies (see the glossary) that are responsible for developing individual forms of NICE guidance. They also attempt to help the Institute’s stakeholders 3 and the wider public, to understand the social values that underpin NICE guidance.

1.5

Who has developed these guidelines?

Although the Institute’s board takes ultimate responsibility for the content of all NICE guidance, senior members of the Institute’s staff have devolved powers to approve documents on the board’s behalf. These guidelines, however, are unusual in being the direct responsibility of the board. They take account (as described below) of the views of the Institute’s advisory bodies and, in particular, of advice from its Citizens Council. They have also been revised in the light of comments on an earlier draft from a wide range of interested groups and individuals.

1.6

Methods used to develop these guidelines

These guidelines are based, primarily, on evidence from three sources – the published literature, two reports of the Citizens Council (2, 3), and the results of a survey (4, 5) conducted on behalf of the Institute.

So-called ‘ultra-orphan’ health technologies are defined by NICE as those used to treat conditions with a prevalence of less than 1 in 50,000 in the UK. 3 The Institute’s stakeholders include professional bodies, industries, patients/carers and their representative organisations relevant to particular forms of NICE guidance.

TITLE: PRINCIPLES FOR THE DEVELOPMENT OF NICE GUIDANCE DATE: 8 DECEMBER 2005

1.6.1 The literature The aim of the review of the literature was to identify, and synthesise, published material that might inform the board’s approach to developing its social value judgements. Publications relating to three particular areas were sought: • general principles of bioethics • bioethical considerations of resource allocation and priority setting • reports of relevant studies of professional and public attitudes to resource allocation, priority setting and rationing. Publications relating to all three areas were identified from the peer-reviewed literature (through Medline, Embase, Science Citation Index, Social Science Citation Index, Arts and Humanities Citation Index), books and monographs, as well as the ‘grey’ literature. 1.6.2 The Citizens Council The members of NICE’s advisory bodies are appointed for their competence in making scientific value judgements but neither they, nor the board, can legitimately impose their own social value judgements on the NHS and the patients that it seeks to serve. The Institute therefore established the Citizens Council as a formal committee of the Institute to help develop the broad social values that NICE should adopt in preparing its guidance. The 30 members of the Council reflect the age, gender, socioeconomic status and ethnicity of the people of England and Wales. Councillors serve for a period of 3 years, with one third retiring each year. They do not represent any particular section or sector of society; rather, they bring their own personal attitudes, preferences, beliefs and prejudices (6). They and their families have experience of the NHS as patients, but none of the members is a healthcare professional. At each meeting, the Council is asked for its views on an issue about which the Institute seeks advice. Meetings are facilitated by an independent organisation and members have the opportunity to hear, and cross-examine, expert witnesses as well as to engage in discussion and deliberation in both plenary and small-group sessions. The Council’s conclusions are contained in a report that is presented to the Institute’s board. 1.6.3 The ICM survey In March 2004 a telephone survey was conducted by ICM, on behalf of NICE, amongst a sample of 1010 people in the UK. The questions related to: • awareness of the existence and functions of the Institute (4) • attitudes about priority setting, particularly in relation to patients’ age (5). The ICM survey is a useful source of information about the public’s perceptions, but NICE recognises that polling, like all methods for seeking ‘public opinion’, has two major limitations. Firstly, the results are very sensitive to the way questions are ‘framed’. Secondly, responses are instantaneous replies without the benefit, necessarily, of learning about the underlying

TITLE: PRINCIPLES FOR THE DEVELOPMENT OF NICE GUIDANCE DATE: 8 DECEMBER 2005

issues. NICE therefore triangulates the results of polling data with the reports of the Citizens Council and the relevant literature. More information about the ICM poll can be found at www.nice.org.uk/page.aspx?o=268902.

TITLE: PRINCIPLES FOR THE DEVELOPMENT OF NICE GUIDANCE DATE: 8 DECEMBER 2005

2.1

Principles of bioethics

Moral principles

The Institute subscribes to the widely accepted moral principles (7–11) that are expected to underpin clinical and public health practice: • respect for autonomy • non-maleficence • beneficence • distributive justice. These so-called ‘four principles’ have been adopted by NICE because they provide a simple, accessible, and culturally neutral approach that encompasses most of the moral issues that arise in healthcare (12). In accepting these principles, the Institute also recognises (7) that there are tensions both within and between them; it also accepts that no one principle has an overriding priority over another. Indeed, these guidelines are, to a considerable extent, concerned with attempting to resolve the inherent tensions between these moral principles within the context of the social value judgements that the Institute and its advisory bodies have to make. 2.1.1 Respect for autonomy Respect for autonomy acknowledges the rights of individuals to make informed choices in relation to healthcare, health promotion and health protection. It is inherent in the concept of ‘patient choice’. It cannot, though, be applied universally. By virtue of mental or physical incapacity, for example, some people may be unable to make informed choices; public health measures must sometimes be necessarily imposed on whole populations (such as smoking bans in enclosed spaces); and providing a few people with very expensive treatments, on the basis of personal preference, could deprive many others of more cost-effective interventions. 2.1.2 Non-maleficence Non-maleficence asserts an obligation not to inflict damage (either physical or psychological) and has often been associated with the maxim ‘first, do no harm’. Yet no intervention 4 is free from the potential to cause adverse consequences: it is the balance between the benefits and harms that determines (at least in part) whether an intervention is appropriate. 2.1.3 Beneficence Beneficence, which is closely related to non-maleficence, refers to the obligation to benefit individuals. Moral philosophers distinguish between ‘positive beneficence’ and ‘utility’, with the former describing benefits that can be accrued and the latter attempting to balance benefits and harms. Yet no clinical or public health intervention is invariably beneficial for everyone; and,

The term ‘intervention’ is used in these guidelines to encompass health technologies and any other measure used to influence the course of a particular condition.

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in the context of the work of NICE, it is respect for utility that is usually more relevant. 2.1.4 Distributive justice ‘Distributive justice’, as it relates to healthcare, is concerned with the provision of services in a fair and appropriate manner in the light of what is due, or owed, to people. Problems of distributive justice have become particularly manifested in healthcare, because of the universal mismatch between demands and resources. It is one of the most debated topics in bioethics, and is probably the most culture-specific. The traditional, paternalistic approach to distributive justice has been the ‘need principle’ 5 . This claims that priorities should be set solely on the basis of clinical need as defined by the current degree of ill health (13); in practice, the need principle has largely been based on the premise ‘doctor knows best’. This principle, however, takes no account of other issues and provides no solution to problems relating to a healthcare system as a whole. The need principle, as defined here, has some relevance to the ‘rule of rescue’ but is not otherwise considered further. Of the other main theories of distributive justice (7), two are especially relevant to the British healthcare system 6 : utilitarianism and egalitarianism. Utilitarianism 7 seeks to maximise overall good (or public utility). In its purest form, the utilitarian approach considers distributive justice to be best served by maximising social utility. It is often expressed, in shorthand, as ‘the greatest good for the greatest number’. Egalitarianism seeks fairness either in equality of opportunity (the ‘fair opportunity’ rule) or in equality of outcomes. Egalitarians seek healthcare to be distributed, so far as is possible, so that each person can achieve a fair share of the opportunities available in the particular society. There is no consensus about which of these (and other) competing theories of distributive justice most appropriately captures the bioethical basis of the fair allocation of healthcare resources (7,13,14). Utilitarianism can allow the interests of minorities to be overridden by the majority, and it has little or nothing to offer in eradicating health inequalities. On the other hand, the notion of ‘utility’ places a premium on the ‘efficiency’ of a healthcare system, and provides a compelling warning about the dangers of ignoring opportunity costs (section 4). Egalitarianism emphasises fairness, and access to an adequate (though not necessarily maximum) level of healthcare. Its

The ‘need principle’ is sometimes described as the Marxist approach to distributive justice.

A third, widely held theory of distributive justice is ‘libertarianism’. This espouses a freemarket solution for the distribution of healthcare. Since, in the UK, over 90% of all healthcare is provided through the NHS and funded from general taxation, libertarianism is irrelevant to these guidelines. Since classical utilitarianism is concerned with maximising happiness (a concept which is not concerned solely with health) some (11) prefer to describe the approach, in healthcare, as the ‘maximising principle’ but the term ‘utilitarianism’ will be retained in this discussion.

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implications, though, remain uncertain (7). There is lack of clarity both in the definition of ‘adequate’ healthcare, and in the distinctions between what is fair and unfair or between what is unfair and what is unfortunate. Both theories of distributive justice clash, at some point, with the considered moral convictions of most people. Each, however, articulates ideas that most would be reluctant to relinquish; and where one theory is weak, the other is often strong and some compromise has to be found (9). This is uncomfortable and has been described, by one commentator (15), as ‘muddling through elegantly’. This compromise is not a synthesis of the conflicting demands of utilitarianism and egalitarianism but a procedural device that allows the resolution of divergent values in order to provide ‘accountability for reasonableness’. Decisions about social value judgements that are either implicit, or explicit, in NICE guidance should focus on the acceptable implications of each theory of distributive justice without necessarily, or invariably, choosing one over another. Inevitably, some people will be dissatisfied (16), for not everyone’s claims will be met. Procedural justice, however, places a premium on ensuring that the processes by which decisions are reached have legitimacy (14, 17– 20).

2.2

Strategies for setting priorities

There is a groundswell of opinion amongst bioethicists and political philosophers that, if there is to be confidence in the legitimacy of decisions, the procedures adopted should have all four of the following characteristics: • publicity • relevance • revision and appeals • regulation. 2.2.1 Publicity Decisions about limits on the allocation of resources must be public. This includes not only the decisions themselves, but also the grounds for making them. It does not, however, require that all the criteria for decision-making should be established in advance: rather, there should be room for the development of ‘case-law’. 2.2.2 Relevance ’Relevance’ means that the grounds for decisions are ones that fair-minded people would agree are relevant to meeting healthcare needs, especially when there are constraints on resources. In particular, ’relevance’ focuses on the importance of deliberation about the limits of the common good and acknowledges that such ‘deliberative democracy’ should involve both the decision-makers themselves and those whom the decisions may affect.

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2.2.3 Revision and appeals There must be opportunities for challenging decisions and mechanisms for resolving disputes. There should be systems in place for revising decisions when new, or additional, evidence becomes available or new arguments are put forward. 2.2.4 Regulation There should be either voluntary or public regulation of the process of decision-making to ensure that it has all three of the above characteristics (publicity, relevance and opportunities for revisions and appeals). 2.2.5 Accountability for reasonableness in decision-making Ensuring that procedures have all four of these characteristics makes decision-makers ‘accountable for their reasonableness’ (14, 17–20) (see section 2.1.4). Critics (7) claim that majority preferences – however well informed and fair – will sometimes lead to unjust outcomes, that deliberative democracy in action will ‘most certainly’ conflict with the principles of justice, and that ‘deep suspicion is warranted about procedural strategies for setting priorities’. Such criticisms have some merit: yet no reasonable theoretical or practical alternatives have been proposed to resolve the conflicting theories of distributive justice. For the NHS, there is a further reason for ensuring broad ‘accountability for reasonableness’ (14). The NHS is constructed on the principle of social solidarity. It provides healthcare for all UK citizens, at times of need, and irrespective of their ability to pay. Because the NHS is funded from general taxation, it must be right for UK citizens to have the opportunity to be engaged in the broad principles by which the NHS’s priorities are set. They are, after all, the ultimate providers – through their taxes – of the services that are available.

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3.1

Applying principles through process

The Institute’s guidance programmes

The National Institute for Clinical Excellence (NICE) was established in 1999 to offer NHS healthcare professionals guidance on providing their patients with the highest attainable standards of care 8 . It has done this through three major programmes (1). 3.1.1 Health technology appraisals programme The Institute advises on the use of individual, or classes of, health technologies. These include pharmaceuticals, devices, diagnostics, surgical and other procedures, and health promotion techniques. NICE’s advice is based on considerations of both the clinical and cost effectiveness of the particular technology (or class of technologies) under examination. 3.1.2 Clinical guidelines programme The Institute advises on the clinical management of specific conditions or disorders by developing and disseminating ‘clinical guidelines’ defined as: ‘Systematically developed statements to assist practitioner and patient decisions about appropriate healthcare for specific clinical circumstances’. As with its appraisals of health technologies, NICE’s clinical guidelines take account of both the clinical and cost effectiveness of various clinical management options. 3.1.3 Interventional procedures programme The Institute advises on the safety and efficacy of new and established interventional procedures for use within the NHS. The Institute defines interventional procedures as: ‘those used for diagnosis or treatment that involve incision, puncture, entry into a body cavity or the use of ionising, electromagnetic or acoustic energy’. In its assessment of interventional procedures, NICE takes account of the efficacy (rather than effectiveness) of the procedure and whether its safety (in relation to its efficacy) is compatible with its benefits. This programme, unlike the appraisals and clinical guidelines programmes, is not concerned with cost effectiveness although procedures that are regarded as safe and efficacious may undergo subsequent appraisals.

The National Institute for Clinical Excellence (NICE) was renamed on 1 April 2005, when it took on the functions of the Health Development Agency and became the National Institute for Health and Clinical Excellence. The organisation will produce public health guidance (on the promotion of good health and the prevention of ill health) for those working in the NHS, local authorities and the wider public and voluntary sector as well as the clinical guidance that it has been developing since its establishment in 1999. However, this document deals only with the clinical guidance for which NICE is responsible.

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3.2

Legal requirements underpinning NICE guidance

In developing its guidance, NICE is obliged, by law, to conform to the provisions laid out in its Establishment Orders (21–23), and in its Directions from the Secretary of State for Health (24). 3.2.1 NICE’s Establishment Orders The Institute’s original Establishment Order (21) provided that: ‘The Institute shall perform such functions in connection with the promotion of clinical excellence in the health service as the Secretary of State may direct’. To avoid any misunderstanding about whether economic considerations should be taken into account, the Order was later amended (22) to: ‘The Institute shall perform such functions in connection with the promotion of clinical excellence and with the efficient use of available resources in the health service as the Secretary of State may direct’. The Institute is thus legally obliged to take account of both clinical and cost effectiveness in developing guidance in its technology appraisals and clinical guidelines programmes. The Establishment Order restricts the perspective of NICE’s clinical guidance to the NHS and personal social services (PSS). In developing its public health guidance, however, the Institute’s perspective has been extended to include ‘other available public funds’ as well as the NHS and PSS (24). This recognises the fact that responsibility for implementing public health measures extends beyond the NHS (for example, to local authorities). These ‘cost-effectiveness’ provisions do not apply to NICE’s interventional procedures programme, which covers only safety and efficacy. 3.2.2 Directions to the Institute The Secretary of State’s Directions (24) to NICE require that, in appraising the clinical benefits and the costs of interventions, the Institute should have regard to the following factors. 1 The broad balance of benefits and costs. 2 The degree of clinical need of patients with the condition or disease under consideration. 3 Any guidance issued to the NHS by the Secretary of State that is specifically drawn to the attention of the Institute by the Secretary of State and any guidance issued by the Secretary of State. 4 The potential for long-term benefits to the NHS of innovation. 3.3 Essential features of NICE guidance

The Institute has adopted, and published, process documents for each form of NICE guidance (25–27). Although, inevitably, the process documents for each programme differ in detail they all have common features: • methodological robustness • inclusiveness • transparency • independence • appeals • review.

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NICE guidance should also be timely. This means that it should be available at a time when it is of greatest use to its intended audiences. 3.3.1 Methodological robustness The Institute’s guidance is invariably based on a systematic review of the relevant published, and unpublished, literature. Although NICE is prepared to accept unpublished data it does so with reluctance: it believes that the data on which its guidance is based should be in the public domain (that is, accessible in print or electronic formats). Only in this way can there be professional and public confidence in its guidance. Nevertheless, refusal to accept unpublished data might disadvantage patients and breach the principles of nonmaleficence and beneficence. In addition, rejection of relevant data would probably be unacceptable to the Courts. 3.3.2 Inclusiveness The development of NICE guidance involves all those who have, or might have, an interest as either ‘consultees’ or ‘commentators’ (for technology appraisals) or ‘stakeholders’ (for clinical guidelines). These include relevant professional bodies, patients and patient–carer organisations, and (in the case of manufactured technologies) healthcare industries. All are involved with determining, at the start of the process, the scope of the guidance; all have an opportunity to comment on initial drafts of guidance; and all have the opportunity to make representations about the proposed final version of the guidance. 3.3.3 Transparency The documentation supporting all NICE guidance is freely available on the Institute’s website apart from data submitted as ‘commercial in confidence’ or ‘academic in confidence’. Initial and final drafts of all forms of guidance are published, and interested parties may comment even if they are not registered as stakeholders or consultees. NICE guidance attempts to explain the reasons for the Institute’s advice and the interpretation that its advisory bodies have placed on the available data. 3.3.4 Independence All NICE guidance is developed by the independent members of the Institute’s advisory committees (the appraisals committee and the interventional procedures advisory committee) and guideline development groups. They are drawn from the NHS, academia, the industries and patient–carer organisations. Their conclusions are reached only after extensive deliberation. All members of the Institute’s board, its staff, and members of its advisory bodies are required to make annual declarations (25) of any financial links they may have with the pharmaceutical, devices or diagnostics industries (19). Members of the board and advisory bodies are asked, in addition, to declare again their relevant interests at the start of each agenda item in a meeting (28).

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3.3.5 Appeals All three programmes provide consultees and stakeholders with the opportunity to comment on draft forms of NICE guidance. In the technology appraisals programme, consultees have additional rights of appeal to a panel appointed by the board (25). As the Institute is a public body, its guidance can be challenged in the UK (and EU) courts. 3.3.6 Review When it is published, each of NICE’s appraisals and clinical guidelines has a review date, which is the date at which NICE’s Guidance Executive will consider the options for review of the guidance. These review dates are usually 3 and 4 years after publication (for appraisals and clinical guidelines, respectively) but if significant new data are anticipated or emerge the review dates may be brought forward. 3.3.7 Implementation At the time NICE was proposed (29) its role did not include responsibility for implementing the guidance it produced. Recently, however, the Institute’s Directions have been amended to provide a legal framework for an implementation programme (24). A number of practical measures have been introduced to support the implementation of NICE guidance. First, NHS trusts have a legal obligation (30) to make available resources to provide patients with technologies recommended in NICE’s appraisals guidance. Secondly, NICE guidance is highlighted in the Department of Health’s outline (31) of the standards that patients can expect to receive from the NHS. Thirdly, the Institute itself has established an implementation programme (32). 3.3.8 Legitimacy These arrangements, collectively, offer ‘accountability for reasonableness’ (15, 17–20) (see section 2.1.4). They provide NICE guidance with a legitimacy that would otherwise be lacking, and have been commended on both scientific and technical (33), as well as political (34), grounds. Daniels and Sabin (12) acknowledge that NICE’s processes embody key elements of accountability for reasonableness although they have reservations about the Institute’s engagement with the public 9 . Empirical evidence is now emerging to suggest that this approach is acceptable to the public (35). The principles that underpin the processes by which NICE guidance is currently developed should, therefore, be maintained and applied to future forms of advice (for example, public health guidance).

Principle 1

The fundamental principles that underpin the processes by which NICE guidance is developed should be maintained for current, and applied to future, forms of guidance.

At the time that Daniels’ and Sabin’s comments were made, the Citizens Council had been planned (32) but not yet implemented.

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4.1

Cost effectiveness and setting priorities

The Institute’s approach to economic evaluation

The Institute accepts that, for both legal and bioethical reasons, in undertaking technology appraisals and developing clinical guidelines it must take account of economic considerations. Decisions about the total resources available for healthcare are, rightly, the responsibility of parliament and inevitably compete with other demands such as education, defence and transport. Within the allocations made by parliament, the resources for the NHS are finite, and the use of cost-ineffective interventions in one area of practice will deny the availability of cost-effective interventions in another. The Institute thus recognises that both it, and its advisory bodies, have a responsibility to avoid issuing guidance that would incur ‘opportunity costs’ that would lead to the substitution of one form of inequality by another one.

Principle 2

For both legal and bioethical reasons those undertaking technology appraisals and developing clinical guidelines must take account of economic considerations. Economic evaluation in healthcare requires that the particular intervention under consideration has been shown to be clinically effective. Although there are various ways in which clinical effectiveness can be established, the requirement to do so is not only intellectually compelling and essential for a quantitative approach to economic evaluation, but also strongly supported by the British public (5). The Institute recognises the distinction between ‘evidence of lack of effectiveness’ and ‘lack of evidence of effectiveness’, but nevertheless considers that, in general, NICE and its advisory bodies should avoid promoting the use of interventions for which evidence of clinical effectiveness is either absent or is too weak for reasonable conclusions to be reached. This expectation should not, however, be overinterpreted. There will be circumstances, particularly where evidence is weak or entirely lacking, where judgement and experience strongly suggest that particular strategies (such as ‘good clinical practice’) provide patients with benefits in a costeffective manner.

Principle 3

NICE guidance should not support the use of interventions for which evidence of clinical effectiveness is either absent or too weak for reasonable conclusions to be reached. The Institute’s preferred approach (25, 37) to the economic evaluation of clinical interventions is cost–utility analysis. In developing its clinical guidance, NICE is required (section 3.2.1) to confine its estimation of costs to those falling on the NHS and PSS. In its public health guidance, however, the

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Institute is expected to expand the cost base to include other available public funds as well as those of the NHS and PSS. The principal measure of health outcome adopted by the Institute is the quality-adjusted life year (QALY). This embodies the important social value judgement that to count only gains in life expectancy, without considering the quality of the additional life years, omits important dimensions of human welfare (37). Value judgements embodied in health-related quality-of-life measures can be reasonably captured in terms of: • physical mobility • ability to self-care • ability to carry out activities of daily living • absence of pain and discomfort, and • absence of anxiety and depression. There are also value judgements in the ways in which these elements are combined (37) and the scoring given to the various combinations of levels of functioning. The use of cost–utility analysis in resource allocation has aroused a substantial debate (7–9, 38–43). Charges of discrimination against children, elderly and disabled people, and people who are terminally ill, have led some to conclude that the use of QALYs leads to impermissible trade-offs in setting priorities. Nevertheless, most bioethicists and political philosophers are generally prepared to accept cost–utility analyses provided that they are used to inform, rather than direct, decisions about setting priorities, and that other considerations are available to constrain morally offensive trade-offs (7, 13, 14). The Institute’s own position is that while it endorses the use of cost–utility analysis in the economic evaluation of particular interventions, such information is a necessary, but not sufficient, basis for decision-making. Suggestions have been made that social value judgements in cost–utility analyses could be identified empirically, and embedded within mathematical models (43, 44). Equity weights for age and gender are, for example, included in the calculation of disability-adjusted life years (DALYs) (45). Equity weighting, though intellectually attractive, is premature in the light of the available evidence (43, 44). NICE does not include equity weighting in its approach to cost–utility analysis (25) but does not exclude the possibility for the future.

Principle 4

In the economic evaluation of particular interventions, cost–utility analysis is necessary but should not be the sole basis for decisions on cost effectiveness.

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4.2

Efficiency versus equity

The tensions between the utilitarian and egalitarian theories of distributive justice (section 2) are reflected in the debate amongst health economists about the balance between efficiency and equity (46). Cost–utility analyses provide measures of health benefits in terms of anticipated health gains, and their associated costs are assessed from estimates of resource expenditure. The goal is utilitarian: it seeks to ensure the greatest health benefits for the money expended; it unashamedly attempts to achieve efficiency. In its strictest interpretation it expounds a value judgement that seeks the most ‘efficient’ use of the resources available to the NHS and prizes the maximisation of the overall health of the population above all else. The limitations of the quest for pure efficiency were, for example, apparent in the initial (draft) prioritised list of healthcare services in the Oregon scheme (47). This was based on a rank order of cost utilities but produced unacceptable trade-offs: tooth-capping, for example, was ranked above emergency surgery for both acute appendicitis and ectopic pregnancy. The Institute’s rejection of both a strictly utilitarian (efficiency) approach to the economic evaluation of healthcare interventions and quantitative attempts to incorporate equity weighting into estimates of QALYs has important implications. Firstly, despite the Institute’s rejection of efficiency as the sole criterion for deciding cost effectiveness, NICE and its advisory bodies nevertheless require some indication of the range of cost per QALY values that are acceptable. Without such information, inconsistencies between different forms of NICE guidance, and different advisory bodies, would be inevitable. Secondly, if it is accepted that the Institute and its advisory bodies should have latitude in their interpretation of the cost effectiveness of particular interventions, some indication of the nature of the social value judgements they should adopt is necessary. Guidance on the nature of the social value judgements that should be adopted is essential to ensure fairness as well as, again, to avoid inconsistencies between the decisions of different advisory bodies (or even the same body on different occasions).

4.3

Limits to cost effectiveness

Where one intervention appears to be more effective than another, the Institute and its advisory bodies have to determine whether the increase in cost associated with the increase in effectiveness represents reasonable ‘value for money’. This is generally done by calculating the incremental costeffectiveness ratio. For the reasons already stated (see section 4.1) the preferred approach is the cost (£) per QALY (33), although in some instances it has been necessary to use the cost (£) per life year gained or (particularly for anti-cancer drugs) the cost (£) per disease-free life year. There is no empirical basis for assigning a particular value (or values) to the cut-off between cost effectiveness and cost ineffectiveness (37). The consensus amongst the Institute’s economic advisors is that the Institute should, generally, accept as cost effective those interventions with an incremental cost-effectiveness ratio of less than £20,000 per QALY and that

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there should be increasingly strong reasons for accepting as cost effective interventions with an incremental cost-effectiveness ratio of over £30,000 per QALY. These reasons (25,37) include the degree of uncertainty surrounding the estimate of the incremental cost-effectiveness ratio and, where appropriate, reference to previous appraisals. The Institute and its advisory bodies will also wish to consider social value judgements, including consideration of the nature of the condition, the particular patient population, and the intervention itself. These are discussed in separate sections of these guidelines (section 5). The Institute is reassured by independent evidence (48, 49) that its advisory bodies have not adopted a rigid incremental cost per QALY ‘threshold’. NICE is aware, however, that some commentators have criticised the Institute’s range of acceptable incremental cost-effectiveness ratios as too generous. Williams (45), for example, has suggested that the ‘common sense’ approach would be to base the incremental cost-effectiveness ratio on the per capita gross domestic product. This, in the context of the UK, would represent an incremental cost per QALY ‘threshold’ value of £18,000 per QALY (50). Suggestions such as these, however, rely on ‘judgements’ that carry no more (or less) authority than the collective judgement of the Institute’s economic advisors. The Institute therefore wishes its advisory bodies to continue with the current range of acceptable incremental cost-effectiveness ratios, albeit with two provisos: first, that advisory bodies should explain, explicitly, their reasons for recommending – as cost effective – those interventions with an incremental cost-effectiveness ratio in excess of £20,000–£30,000 per QALY; and, second, that NICE will review this in the light of research currently being conducted through the NHS Research and Development’s Methodology Programme.

Principle 5

TITLE: PRINCIPLES FOR THE DEVELOPMENT OF NICE GUIDANCE DATE: 8 DECEMBER 2005

Social value judgements – service users

The NHS seeks to provide comprehensive healthcare for the population of the UK that is free at the point of need. Patients should not be denied access to NHS treatment simply because of their age, disability, faith, gender, sexual orientation, socioeconomic status or race, because their illness may be selfinflicted, or because of some other ‘non-health indicator’. However, for reasons previously discussed, on both bioethical and economic grounds, limits have to be placed on healthcare provision that take account of both efficiency and equity. The board is conscious that discrimination can sometimes occur inadvertently (51) and asks the Institute and its advisory bodies to be especially vigilant in avoiding all forms of discrimination.

5.1

•

Age

The issue of whether, or how, an individual’s age should be taken into account in allocating healthcare resources has roused considerable debate.

NICE’s Citizens Council concluded that (3): • health should not be valued more highly in some age groups than in others • individuals’ social roles, at different ages, should not influence considerations of cost effectiveness • however, where age is an indicator of benefit or risk, it is appropriate to take it into account. The Institute’s general principle is that patients should not be denied NHS treatment simply because of their age. NICE acknowledges that treatments can produce different benefits at different ages and that age itself may be the only identifiable indicator. Nonetheless, wherever practical, NICE’s advisory bodies should avoid issuing guidance that refers to age if this is being used as a presumed proxy for some aspect of patients’ health status. Where NICE guidance refers to age it should only occur when all the following conditions are met: • the evidence indicates that age is a good proxy for some aspect of patients’ health status and/or the likelihood of adverse effects of the treatment, and • there is no practical way of identifying patients other than by their age (there is, for example, no routinely available diagnostic test to measure the relevant aspect of their health status), and • it is logically and/or biologically plausible that, because of their age, patients will respond differently to the treatment in question. In such instances NICE and its advisory bodies should explain within the guidance the reasons for using age as an indicator. The use of arbitrary age

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cut-offs intended to indicate (for example) ‘old age’, ‘childhood’ or ‘adolescence’ should be avoided. Where it is necessary to indicate an age cut-off, and where the treatment is appropriate only for people in a particular age group, then a reason for using this specific cut-off should be provided.

Principle 6

NICE clinical guidance should only recommend the use of a therapeutic or preventive measure for a particular age group when there is clear evidence of differences in the clinical effectiveness of the measure in different age groups that cannot be identified by any other means.

5.2

Gender and sexual orientation

Principle 7

5.3

Socioeconomic status

The Citizens Council considered that no priority should be given based on individuals’ income, social class or position in life (2). Nor did the Council consider that individuals’ social roles, at different ages, should influence considerations of cost effectiveness (2, 3). The Institute supports these conclusions, as they relate to NICE’s clinical guidance, and wishes its advisory bodies to take note of them in developing advice for the NHS. Nevertheless, in developing its approach to public health guidance, the Institute wishes its advisory bodies to promote preventative measures likely to reduce those health inequalities that are associated with socioeconomic status.

Principle 8

In developing clinical guidance for the NHS, no priority should be given based on individuals’ income, social class or position in life, and individuals’ social roles, at different ages, should not influence considerations of cost effectiveness. Nevertheless, in developing its approach to public health guidance, NICE wishes its advisory bodies to promote preventative measures likely to reduce those health inequalities that are associated with socioeconomic status.

5.4

Race (ethnicity)

There is no general case for limiting healthcare on racial (ethnic) grounds (51). NICE clinical guidance should only recommend the use of an intervention for a particular racial (ethnic) group if there is clear evidence of

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differences between the groups in the clinical effectiveness of the intervention that cannot be identified by any other means. For example, it would be acceptable to restrict the use of the combination of hydralazine and isosorbide dinitrate (BiDi) for heart failure to Afro-Caribbeans, because of the absence of benefit in other ethnic groups (53).

Principle 9

5.5

Self-inflicted conditions

The Citizens Council considered that in developing its guidance NICE should not take into consideration whether or not a particular condition was selfinduced (2). There were two reasons for reaching this conclusion: firstly, the Council believed it was impossible – at least in circumstances such as ischaemic heart disease – to decide whether an individual’s condition was ‘self-inflicted’ or due to some other factor(s); secondly, the Council rejected the notion of ‘deservedness’ in priority setting within the NHS (2). The board accepts that NICE and its advisory bodies should avoid denying care to patients with conditions that are, or may be, self-inflicted (in part or in whole). If, however, self-inflicted cause(s) of the condition influence the clinical or cost effectiveness of the use of an intervention, it may be appropriate to take this into account.

Principle 10

5.6

Patient choice

The Citizens Council emphasised in its first report (2) the importance of respecting individuals’ systems of values, as well as their cultural attitudes and religious views. The Council also drew attention to the importance of individual choice. However, it recognised that individual choice would sometimes be necessarily limited in the interests of the population as a whole. The Institute endorses the Council’s sentiments, which reach to the heart of the requirement to respect an individual’s autonomy. Nevertheless, while respect for autonomy and individual choice are important for the NHS and its users, this should not have the consequence of disadvantaging NHS users as a whole by having an unacceptable opportunity cost or promoting the use of interventions that are clinically and/or cost ineffective.

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Principle 11

5.7

Responding to criticism

The Institute’s processes both allow and encourage the involvement of consultees and stakeholders (section 3.3). The board considers it to be incumbent on the Institute and its advisory bodies to respond, objectively, to the comments of stakeholders and consultees and, where appropriate, to change their views. The board is aware, however, that there may be occasions when attempts are made (directly or indirectly) to influence the decisions of its advisory bodies that are not in the broad public interest. The board requires the Institute, and members of its advisory bodies, to ignore such attempts.

Principle 12

It is incumbent on the Institute and its advisory bodies to respond appropriately to the comments of stakeholders and consultees and, where necessary, to amend the guidance. The board is aware, however, that there may be occasions when attempts are made (directly or indirectly) to influence the decisions of its advisory bodies that are not in the broad public interest. The board requires the Institute, and members of its advisory bodies, to resist such pressures.

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Social value judgements – conditions

Just as there are social value judgements relating to users of the NHS (section 5) that the Institute and its advisory bodies should take into account when developing NICE guidance, so there are social value judgements relating to the condition.

6.1

Quality and quantity of life

As discussed previously (section 4), the board considers that NICE guidance should incorporate wherever possible in its cost–utility analyses the influence of particular interventions on both the quality and quantity of life. It is for this reason that the board’s preferred metric for health gain is the QALY. The Institute is conscious, however, that incremental cost-effectiveness ratios may not adequately incorporate important features. In particular, QALYs may undervalue or even ignore the effect of a particular disease on pretreatment health status or the prognosis of the condition. Equally, conventional cost– utility analysis, and its emphasis on ‘capacity to benefit’, may lead to treatments not being recommended for subcategories of patients or conditions for which they would be clinically effective and cost-effective treatments.

6.2

Communicable diseases

As recognised by the Citizens Council (1), treatments used to control, or cure, communicable diseases may have benefits that extend far beyond those affected by the condition. It may not always be practical to incorporate these into the cost–utility analysis of the particular intervention and where this applies, or if the estimates are subject to substantial uncertainties, the board suggests that the Institute and its advisory bodies consider taking a more generous view of cost effectiveness.

6.3

Conditions associated with stigma

Some conditions, especially mental illness and sexually transmitted diseases, are associated with a stigma. The Citizens Council considered that some priority should be given for the treatment of such disorders (2). Some diseases with attached stigmas have, in the past, been given a lower priority than they deserved within the NHS. There may therefore be a case for such interventions, particularly in the fields of mental health and sexually transmitted diseases, to be given some priority. The board, however, urges the Institute and its advisory bodies to be sparing in the use of special considerations and to do so only if there is reasonable evidence that those who suffer have additional psychological burdens, due to the associated stigma, that have not been taken into account in the cost–utility analyses.

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Principle 13

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References

1. National Institute for Clinical Excellence (2004) A Guide to NICE www.nice.org.uk/page.aspx?o=203748 2. National Institute for Clinical Excellence (2003) Report of the Citizens Council: determining clinical need. www.nice.org.uk/pdf/FINALNICEFirstMeeting_FINALReport.pdf 3. National Institute for Clinical Excellence (2004) NICE Citizens Council: report on age. www.nice.org.uk/pdf/boardmeeting/brdjan04item2.pdf 4. National Institute for Clinical Excellence (2004) Results of an ICM ‘omnibus’ poll: attitudes to NICE. Unpublished. 5. National Institute for Clinical Excellence (2004). Results of an ICM ‘omnibus’ poll: age. Unpublished. 6. Davies C, Wetherall M, Barnett E, Seymour-Smith S. Opening the Box: Evaluating the Citizens Council of NICE. Open University: Milford Keynes. 2005 7. Beauchamp TL, Childress JF (2001) Principles of Biomedical Ethics. Oxford and New York: Oxford University Press. 8. Gillon R (1985) Philosophical Medical Ethics. Chichester: Wiley. 9. Gillon R, editor (1994) Principles of Health Care Ethics. Chichester: Wiley. 10. Beauchamp TL (1994) The ‘four principles’ approach. In: Gillon R, editor. Principles of Health Care Ethics. Chichester: Wiley, p3–12. 11. Gillon R (1994) The four principles revisited. In: Gillon R, editor. Principles of Health Care Ethics. Chichester: Wiley, p319–334. 12. Gillon R. (1994) Medical ethics: four principles plus attention to scope. British Medical Journal 309:184-188. 13. Cookson R, Dolan P (2000) Principles of justice in health care rationing. Journal of Medical Ethics 26:323–329. 14. Daniels N, Sabin JE (2002) Setting Limits Fairly: Can we Learn to Share Medical Resources? Oxford and New York: Oxford University Press. 15. Hunter D (1993) Rationing dilemmas in health care. National Association of Health Authorities and Trusts (NAHAT): Research paper No. 8. Birmingham: NAHAT. 16. Gillon R (1994) Preface: medical ethics and the four principles. In: Gillon R, editor. Principles of Health Care Ethics. Chichester: Wiley, pxxi–xxxi.

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17. Daniels N, Sabin JE (1997) Limits to health care: fair procedures, democratic deliberation, and the legitimacy problem for insurers. Philosophy and Public Affairs 26:303–50. 18. Daniels N (2000) Accountability for reasonableness. British Medical Journal 321:1300–01. 19. Daniels N, Sabin J (1998) The ethics of accountability in managed care reform. Health Affairs 17:50–64. 20. Gutmann A, Thompson D (1996) Democracy and Disagreement. Cambridge, Massachusetts: The Beknap Press of the Harvard University Press. 21. Statutory Instrument 1999 No. 220 The National Institute for Clinical Excellence (establishment and constitution) order 1999 22. Statutory Instrument 1999 No. 2219 The National Institute for Clinical Excellence (establishment and constitution) amendment order 1999 23. Statutory Instrument 2005 No. 497 The National Institute for Clinical Excellence (establishment and constitution) amendment order 2005 24. Secretary of State for Health (2005) Directions and Consolidating Directions to the National Institute for Health and Clinical Excellence. 25. National Institute for Clinical Excellence (2004) Guide to the Methods of Technology Appraisal. www.nice.org.uk/pdf/TAP_Methods.pdf 26. National Institute for Clinical Excellence (2004) The Guideline Development Process – An Overview for Stakeholders, the Public and the NHS. www.nice.org.uk/pdf/GDP_An_Overview_for_Stakeholders_the_Public_ and_the_NHS.pdf 27. National Institute for Clinical Excellence (2004) The Interventional Procedures Programme: Programme Manual. http://www.nice.org.uk/pdf/ip/IPProgrammeManual.pdf 28. National Institute for Clinical Excellence (2002) Code of practice on declaration of interests. www.nice.org.uk/pdf/brdsep02item8.pdf 29. Department of Health (1998) A First Class Service: Quality in the New NHS. London: Department of Health. 30. Department of Health (2004) Directions to Primary Care Trusts and NHS trusts in England concerning arrangements for the funding of technology appraisal guidance from the National Institute for Clinical Excellence (NICE). www.dh.gov.uk/assetRoot/04/07/56/86/04075686.pdf 31. Department of Health (2004) Standards for better care. www.dh.gov.uk/assetRoot/04/08/66/66/04086666.pdf

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32. Rawlins MD (2004) NICE work – providing guidance to the British National Health Service. New England Journal of Medicine 351:1383–5. 33. World Health Organization (2003) The Technology Appraisal Programme of the National Institute for Clinical Excellence. Copenhagen: World Health Organization. www.nice.org.uk/pdf/boardmeeting/brdsep03itemtabled.pdf 34. Guttman A, Thompson D (2002) Deliberative democracy beyond process. Journal of Political Philosophy 10:153–74. 35. Dollan P, Edlin R, Tsuchiya A, Wailoo A (2005) It ain’t what you do. It’s the way that you do it: Characteristics of procedural justice and their importance in social decision-making. In press. 36. Department of Health (2000) The NHS Plan. London: Department of Health. 37. Rawlins MD, Culyer AJ (2004) National Institute for Clinical Excellence and its value judgements. British Medical Journal 329:224–6. 38. Harris JR (1985) The Quality of Life. London: Routledge and Kegan. 39. Brock D (1998) Ethical issues in the development of summary measures of health status. In: Summarising Population Health: Directions for the Development and Application of Population Metrics. Washington DC: National Academy Press, p73–86. 40. Nord E (1999) Cost-Value Analysis in Health Care: Making Sense out of QALYs. Cambridge: Cambridge University Press. 41. Ubel P (2000) Pricing Life. Cambridge, MA: MIT Press. 42. Johannesson M, Johansson P-O (1997) Is the valuation of a QALY gained independent of age? Some empirical evidence. Journal of Health Economics 16:589–99. 43. Powers M, Faden R (2000) Inequalities in health, inequalities in health care: four generations of discussion about justice and cost-effectiveness analysis. Kennedy Institute of Ethics Journal 10:109–27. 44. Williams A (1994) Economics, society and health care ethics. In: Gillon R, editor. Principles of Health Care Ethics. Chichester: Wiley, p 829–42. 45. Murray CJL, Acharya AK (1997) Understanding DALYs. Journal of Health Economics 16:703–30. 46. Williams A, Cookson R (2000) Equity in health. In: Culyer AJ, Newhouse JP, editors. Handbook of Health Economics (Volume 1B). Amsterdam: Elsevier, p1863–1910.

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47. Hadorn DC (1991) Setting health care priorities in Oregon. Costeffectiveness meets the rule of rescue. Journal of the American Medical Association 265:2218–25. 48. Towse A, Pritchard C (2002) Does NICE have a threshold? An eternal view. In: Towse A, Pritchard C, Devlin N, editors. Cost-Effectiveness Thresholds: Economic and Ethical Issues. London: Kings Fund and The Office of Health Economics, p25–30. 49. Devlin N, Parkin D (2004) Does NICE have a cost-effectiveness threshold and what other factors influence its decisions? A binary choice analysis. Health Economics 13:437–52. 50. Williams A (2004) What Could Be Nicer than NICE? London: Office of Health Economics. 51. Bhopal R (1998) Spectre of racism in health and health care: lessons from history and the United States. British Medical Journal 316:1970–3. 52. Sassi F, Archard L, Le Grand J (2001) Equity and the economic evaluation of healthcare. Health Technology Assessment 5:1–138. 53. Food and Drug Administration (2005) FDA News: FDA approves BiDil heart failure drug for black patients. Press release 23 June 2005. www.fda.gov./bbs/topics/NEWS/2005/NEW01190.html 54. Culyer AJ (2005) The Dictionary of Health Economics. Cheltenham: Edward Elgar.

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Glossary of terms

Academic in confidence See ‘In confidence material’ (25). Advisory bodies The Institute’s advisory bodies involved in the construction of NICE guidance comprise the two technology appraisal committees, the Interventional Procedures Advisory Committee, the subject-specific guideline development groups and their guideline review groups. Technology appraisal committee A standing advisory committee of the Institute that develops guidance, for the NHS, on the clinical and cost effectiveness of individual (or groups of related) health technologies. Its members are drawn from the NHS, patient/carer organisations, relevant academic disciplines and the pharmaceutical and medical devices industries. Beneficence Beneficence refers to the obligation to benefit individuals (see section 2.1.3). Bioethics The ethics of medical and biological research and practice. Capacity to benefit In health economics this refers to the potential increase in the health of an individual or group (see also ‘Health gain’) that might be achieved through the use of health services (54). Carer (caregiver) Someone (usually a relative or close friend), other than a health professional, involved in caring for a person with a medical condition. Citizens Council The Citizens Council is a formal committee of the Institute consisting of 30 members drawn from the population of England and Wales. The council exists to help develop the broad social values that NICE should adopt in preparing its guidance (see section 1.6.2). Clinical efficacy The extent to which an intervention is active when studied under controlled research conditions (25). Clinical effectiveness The extent to which an intervention produces an overall health benefit in routine practice (25). Clinical guideline Systematically developed statements to assist practitioner and patient decisions about appropriate healthcare for specific clinical circumstances. Clinician A healthcare professional providing healthcare. Examples include doctors, nurses, pharmacists, paramedics and physiotherapists. Commercial in confidence See ‘In confidence material’. Communicable diseases An infectious disease due to an infectious agent (such as a bacterium, virus or parasitic worm) that arises through its transmission from another infected person, animal or reservoir (swamps, contaminated needles etc.) to a susceptible host (55).

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Consultees Stakeholders within the technology appraisals programme. They include relevant healthcare professionals, patients or patient advocacy groups, and representatives of the particular manufactured technology. Cost-effectiveness analysis An economic study in which the consequences of different interventions are measured using a single outcome, usually in ‘natural’ units (for example, life years gained, deaths avoided, heart attacks avoided, cases detected). Alternative interventions for the same condition are then compared in terms of cost per unit of effectiveness (54). Cost-effectiveness model An explicit mathematical framework that is used to represent clinical decision problems and incorporate evidence from a variety of sources so that the costs and health outcomes can be estimated (25). Cost–utility analysis A form of cost-effectiveness analysis in which the units of effectiveness are expressed as quality-adjusted life years (QALYs) (54). Declarations of interests The requirement for members of the NICE board, the staff, and the members of its advisory groups to indicate their financial interests any technology, or business, under consideration. Directions Legally binding instructions to the Institute (or other NHS bodies), from the Secretary of State, on the conduct of its affairs. Disability-adjusted life year (DALY) A measure of the burden of disabilitycausing disease and injury (54). Distributive justice A term used by philosophers to indicate how resources might be most appropriately be distributed in a society. For healthcare, it is concerned with the provision of services in a fair, equitable and appropriate manner in the light of what is due, or owed, to people (section 2.1.4). Effectiveness See ‘Clinical effectiveness’. Efficacy See ‘Clinical efficacy’. Efficiency In healthcare efficiency, at its simplest level, involves using the available resources in a manner that maximises the health of the population as a whole (37), but more complicated accounts are available (54). Egalitarianism An egalitarian considers that should get the same, or be treated the same, or be treated as equals. Egalitarian doctrines tend to express the idea that all human persons are equal in fundamental worth or moral status. Equity For NICE, equity refers to fairness in the ways in which the costs and benefits of available care are distributed among all those who use the NHS (37) but more extensive accounts are available (54). Establishment orders (NICE’s) The legal instruments establishing the Institute, authorising its legal powers, and indicating the arrangements for its governance.

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Evidence Information on which a decision or guidance is based. Evidence is obtained from a range of sources including randomised controlled trials, observational studies, expert opinion (of clinical professionals and/or patients) (25). Guideline development group A multidisciplinary group, usually involving 12 to 15 people, with responsibility for developing a clinical guideline for NICE. Grey literature Reports that are unpublished or have limited distribution, and are not included in the common bibliographic retrieval systems. Health economics The application of economic theory to phenomena and problems associated with health (54). Health-related quality of life A combination of an individual’s physical, mental and social well-being; not merely the absence of disease (25). Health technology Any method used by those working in health services to promote health, prevent and treat disease and improve rehabilitation and long-term care. Technologies in this context are not confined to new drugs or sophisticated equipment, but include surgical procedures, devices and other forms of therapeutic intervention such as physiotherapy and psychology. In confidence material Information (for example, the findings of a research project) defined as ‘confidential’ because its public disclosure could have an impact on the commercial interests of a particular company or the academic interests of a research or professional organisation (25). Incremental cost-effectiveness ratio (ICER) The ratio of the difference between the costs of two alternatives and the difference between their effectiveness (54). Interventional Procedures Advisory Committee A standing committee of the Institute’s board responsible for advising on the safety and efficacy of interventional procedures. NICE guidance NICE guidance includes technology appraisals guidance, clinical guidelines, and interventional procedures guidance. It will also, in the future, include public health guidance. Non-maleficence This asserts an obligation not to inflict either physical or psychological damage (section 2.1.2). Opportunity cost The opportunity cost of investing in a healthcare intervention is the other healthcare programmes that are displaced by its introduction. This may be best measured by the health benefits that could have been achieved had the money been spent on the next best alternative healthcare intervention. Outcome Measure of the possible results that may stem from exposure to a preventive or therapeutic intervention. Outcome measures may be intermediate endpoints or they can be final endpoints (25).

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Public health The science and art of preventing disease, prolonging life and promoting health through organised efforts of society. Quality-adjusted life year (QALY) A generic measure of health-related quality of life that takes into account both the quantity and the quality of life generated by interventions. Quality of life See ‘Health-related quality of life’. Social value judgement An ethical opinion made either implicitly or explicitly that a particular course of action, institutional arrangement or method of analysis ought to be implemented, or is itself good (54). Stakeholder Those with an interest in the use of a technology under appraisal or a guideline under development. Stakeholders include manufacturers, sponsors, healthcare professionals, and patient and carer groups (25). Synthesis of evidence A generic term to describe methods used for summarising (comparing and contrasting) evidence into a clinically meaningful conclusion in order to answer a defined clinical question. This can include systematic review (with or without meta-analysis), and qualitative and narrative summaries (25). Systematic review Research that summarises the evidence on a clearly formulated question according to a predefined protocol using systematic and explicit methods to identify, select and appraise relevant studies, and to extract, collate and report their findings. It may or may not use statistical metaanalysis (25). Technology See ‘Health technology’. Technology appraisals Recommendations on the use of new and existing medicines and other treatments within the NHS in England and Wales, such as: medicines (for example, drugs), medical devices (for example, hearing aids and inhalers), diagnostic techniques (tests used to identify diseases), surgical procedures (for example, repair of hernias), and health promotion activities (for example, patient education models for diabetes) (25). Technology assessment The process of evaluating the clinical, economic and other evidence relating to the use of a technology so that guidance on its most efficient use can be formulated (25). Utilitarianism This is an ethical doctrine which specifies ‘utility’ as the principal good characteristic of society: what humankind as a whole ought to maximise (54). Utility Utility is number assigned to entities (usually benefits or things presumed to be the objects of people’s preferences) according to a rule. This enables the entities to be quantified and ranked according to preference, desirability or choice (54).

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Appendix Two Authors of the two reports and nine reviews of those reports 1. Professor Raanan Gillon, emeritus professor of medical ethics at Imperial College, London, Chairman, Institute of Medical Ethics 2. Associate Professor Paul Hansen Department of Economics, University of Otago, Dunedin 3. Associate Professor Toni Ashton (School of Population Health, University of Auckland) 4. Sandra Coney (PHARMAC Consumer Advisory Committee) 5. Matiu Dickson (Ngaiterangi (Ngai Tukairangi); School of Law, University of Waikato; PHARMAC Consumer Advisory Committee) 6. Dr. David Hadorn (LECG; ex-US Panel on Cost Effectiveness in Medicine) 7. Dr. George Laking (Christie Hospital, Manchester) 8. Dr. Robert Logan (Hutt Valley District Health Board; ex-Chair National Health Committee) 9. Professor Nicholas Mays (London School of Hygiene & Tropical Medicine, University of London; New Zealand Treasury; co-editor Journal of Health Services Research & Policy) 10. Dr. Andrew Moore (Department of Philosophy, University of Otago; Chair National Ethics Advisory Committee; ex-National Health Committee) 11. Dr. Martin Wilkinson (School of Population Health, University of Auckland)

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Appendix Three The two full reports and nine reviews of those reports All of these reports should be read together 1. Report no. 1 (Prof. Raanan Gillon) 2. Report no. 2 (Assoc. Prof. Paul Hansen) 3. Review no. 1 (Assoc. Prof. Toni Ashton) 4. Review no. 2 (Sandra Coney) 5. Review no. 3 (Matiu Dickson) 6. Review no. 4 (Dr. David Hadorn) 7. Review no. 5 (Dr. George Laking) 8. Review no. 6 (Dr. Robert Logan) 9. Review no. 7 (Prof. Nicholas Mays) 10. Review no. 8 (Dr. Andrew Moore) 11. Review no. 9 (Dr. Martin Wilkinson)

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PHARMAC AND THE FUNDING OF HIGH COST PHARMACEUTICALS Raanan Gillon, Emeritus Professor of Medical Ethics, Imperial College London PHARMAC has asked for responses to the following questions: a. What are the main economic/social justice/ethical theories relevant to how decisions on funding “high cost” pharmaceuticals could be made? b. What if any justification is there for assessing High Cost Pharmaceuticals [HCPs] differently from other pharmaceuticals considered for public subsidisation? c. What might be the downsides of valuing HCPs differently? d. Could cost utility analysis be used more effectively when considering HCPs ? If so, how? e. What if any changes do you recommend PHARMAC make to its current decision making process for HCPs ? f. What role should rule of rescue play in assessing HCPs ? g. What are the arguments for and against paying a higher price (per QALY gained for example) for pharmaceuticals for those who are worse off clinically with poor quality-adjusted life expectancy, but of arguably greater need (for example the terminally ill)? h. Are there any general comments that you wish to make ? In this paper I first respond to question a) and within that section briefly respond to question g). I then respond to questions b) c) and f). I end with a response to question e). I do not respond to question d) as it is not within my area of expertise to do so; and I make some general comments (question h) intermittently within the paper, and in the last paragraph. a) What are the main economic/social justice/ethical theories relevant to how decisions on funding “high cost” pharmaceuticals could be made? There is a wide variety of substantive ethical theories and principles of distributive justice with no one theory commanding even wide acceptance let alone universal acceptance. Ruefully noting this lack of agreement in 1985, I outlined Aristotle’s still widely agreed formal principle of justice and five potentially mutually inconsistent substantive theories of justice that nonetheless could conform to the Aristotelian principle (that equals should be treated equally and unequals unequally in proportion to the relevant inequalities). These were libertarian theories, utilitarian theories, Marxist theories, Rawls’s theory and desert-based theories11. Twenty years later Lamont, in the online Stanford Encyclopedia of Philosophy2 discusses a wider range of substantive principles of distributive justice, all potentially consistent with the Aristotelian formal principle but mutually inconsistent. The theories described by Lamont are those based on: strict egalitarianism (in which everyone has to have the same level of material goods and services); the difference principle (based on Rawls’s theory of justice in which everyone first has an equal claim to equal basic rights and liberties and secondly social and economic inequalities are considered just only if they are attached to positions and offices open to all under conditions of fair equality of opportunity and are such as to bring the greatest benefit to the least advantaged. An important application of Rawls’s theory of justice to health care is Norman Daniels’s theory of ‘Just health care’ in which ill health and disability are seen as impairing people’s fair equality of opportunity. An important variant on Rawls’s theory of justice is Nobel Prize-winning economist Amartya Sen’s theory of justice in which equality of capability to achieve what one values is the proper objective of justice); resource egalitarianism (based on the notion that justice requires equality of resources but that people’s use of their resources can be justly various and that those who for example work

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harder to build up their resources do not owe subsidies to those who choose to work less hard and thus obtain less income. Resource egalitarians such as Ronald Dworkin agree that compensation for natural disadvantages over which people have no control would be required by their theories of justice)- this group and the last group of principles of justice are sometimes called ‘egalitarian-liberal’ theories of justice; welfare maximisation (based on the utilitarian basic claim that maximising people’s welfare is the fundamental moral concern and that just distribution of scarce resources is whatever distribution maximises welfare- various types of welfare maximisation have been described including Bentham’s ‘greatest good for the greatest number’ and contemporary utilitarian concern to maximise people’s preference satisfaction)- utilitarian justice; people’s deserts (based on the notion that scarce resources should be distributed in proportion to what people deserve- typically because of their virtues and vices (Aristotle) or their ‘toil’ (John Locke) or in modern variants, their merits and demerits, their work effort and costs, their productivity and their retrospective and prospective contribution to society)desert-based justice; libertarianism (In Robert Nozik’s libertarian theory of justice it is not outcome that is morally relevant but the moral nature of individual transactions; if a person justly acquires a holding he or she is entitled to it and when a person justly transfers a holding to which he or she is entitled then the acquirer is entitled to that holding, and no one is entitled to holdings except by such just acquisitions, and overall distributive justice is achieved by exclusion of all transactions that are not based on such just entitlements and compensation for those that have been transacted contrary to just entitlements)- libertarian justice; feminism (Lamont points out that there is a wide range of feminist perspectives on justice but concentrates on liberal feminist perspectives that claim equal rights for women as for men, and a concern to remedy injustices against women that stem from liberal reluctance to allow the state to interfere in the ‘private’ sphere in which women are in practice unjustly treated. In addition feminist care and relationship perspectives such as those associated with the work of Carol Gilligan may be seen as supplanting impersonal principles such as the principle of justice)- feminist approaches to justice. To these broad categories of theories of distributive justice we should add: Kantian theories (in which justice is determined by application of Kant’s ‘categorical imperative’ according to which justice is obtained when people are treated never merely as means to an end but always as ‘ends-in-themselves’- as autonomous beings; when moral agents base their actions on maxims or rules of thumb that can be legitimately ‘universalised’ so that anyone in a similar situation could morally acceptably act on the same maxim; and when moral agents act on the basis that they are legislating for a kingdom of ends-inthemselves, or autonomous beings)- Kantian justice. Marxist theories (in which justice is most pithily summarised in the slogan ‘to each according to his need, from each according to his ability’) Marxist justice; Religious theories (in which, typically, differential concern favouring the poor, the suffering and those in need is emphasised)- various religious theories of justice Virtue theories (in which justice is the result of and determined by the attitudes and actions of virtuous people3)- virtue based theories of justice Pluralist theories of justice (in which a variety of potentially conflicting moral concerns are built into theories of justice)

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Anti-racism theories of justice (in which, as with many feminist theories, emphasis is placed on remedying systematic injustices to particular groups, in this case those experienced by oppressed racial groups) Environmental justice (whose emphasis is on justice based on environmental sustainability) Rights based justice (in which justice, increasingly including distributive justice, is based on people’s perceived human rights, and especially their human rights as enshrined in international and national conventions, declarations and laws. This approach to justice is, unsurprisingly, especially favoured in legal (as distinct from philosophical) perspectives on justice, and of course in poorer parts of the world, where so called positive rights, requiring assistance -including aid- from others, are often seen as more important that negative rights which simply require others to desist from actions (such as unjust oppression, torture, imprisonment, restriction of liberties such as political association and so on). Aspects of human rights conceptions of justice have increasingly been democratically incorporatedtypically through Human Rights Acts- into national laws including those of New Zealand. No single theory of justice commands widespread acceptance The huge range of substantive theories and principles of justice, briefly indicated above, demonstrates the fact that no one theory commands anywhere near universal acceptance. I believe that it also demonstrates the range of morally relevant concerns that an adequate substantive theory of justice would have to accommodate. In a paper4 for the UK Health Equity Network I outlined criteria, broadly reflecting a range of competing theories of justice, that would be plausibly necessary for a substantive theory of distributive justice to command widespread acceptance. The paper reiterates that while an underlying acceptance that justice requires equality in some sense or another is common to all theories of justice, as Aristotle pointed out so long ago equality is not necessarily just or fair. His underlying formal requirement for justice, that equals be treated equally and unequals be treated unequally in proportion to the relevant inequality (what contemporary health economists sometimes refer to as horizontal and vertical equity) remains widely accepted. However philosophers, politicians, theologians, amongst many other groups, have been arguing ever since about what are the relevant inequalities that justify treating people unequally (vertical justice), as well as what are the relevant equalities that justify treating people equally (horizontal justice). Equality remains the central concern, but as Amartya Sen emphasises, the crucial issue is ‘equality of what?’ 5. Equal health care resources for equal health care need In health care contexts variations in levels of health care need are widely accepted to be morally relevant inequalities such that the greater the need the greater the presumption of a moral obligation to try to meet that need6. This of course leads to morally required inequality of treatment. Unequal treatment in proportion to need is built in to PHARMAC’s existing overarching objective (1.1) and health needs are referred to in three of the nine decision criteria in PHARMAC’s operating policies and procedures document (2.2 a,b and e). A moral obligation to benefit people differentially (ie unequally) in proportion to their need is found in a variety of moral theories including those of the major religions and of Marxism. Doyal and Gough 7 are contemporary exponents of a needs based system for allocation of health care resources. Unfortunately for those who would like a relatively simple theory of distributive justice, (a) there are problems associated with the very concept of distribution of resources in proportion to health care need and (b) various other criteria morally relevant to just distribution of scarce resources can conflict with distribution in proportion to people’s need for them.

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Problems with the criterion of distribution in proportion to health care need These can be summarised as problems with the concepts of need in general and of health care need in particular; the potential incommensurability of different sorts of need, and of different sorts of health care need; the problems of unmeetable needs; and problems of needs that while they are meetable have either a very low probability of being met, or else can only be met at very high cost. So far as the concept of need goes, I shall simply assert that in a highly contended arena my own working account of a need is that without which one is harmed8. A health need is that without which one’s health is harmed, and a health care need is an element of health care without which one’s health is harmed. Can different sorts of needs be compared? The incommensurablility , or non-comparability, of needs is a subclass of the general problem of incommensurability of benefits and harms. How can one say that relieving severe itching is better or worse than gaining an extra day of life, let alone how much better or worse? Like chalk and cheese we simply can’t compare them- or can we? Suffice it summarily to say here that since people are in fact able to make choices between incommensurables, and indeed to give differential ‘weights’ to incommensurable alternatives this problem is in practice surmountable. The use of QALYs (quality adjusted life years) in the context of health care provision is one way of surmounting it. The use of QALYs is open to a variety of criticisms9,10 to some of which I shall return below, but in the context of health care need the main problem is that while they may provide a way of overcoming the incommensurabilty problem they afford no basis for distinguishing between QALYs gained in the context of meeting needs, and QALYs gained in the absence of need. A QALY gained as a result of my going to the South of France is equivalent to a QALY gained in relieving my pain or zapping my cancer. Even within the context of QALYs gained from health care the QALY gained by the insomniac is equivalent to the QALY gained by the patient in heart failure. Meetable and unmeetable needs Even if needs are graded in terms of severity of ill health/disability and made – at least de facto- commensurable (for example by measuring a QALY deficit from normal species functioning seen as equivalent to ‘adequate health’) not all needs can be met, and this would be true even were there to be unlimited resources (and of course there never are or will be unlimited resources). Thus as already noted6 a person dying from a disease for which there is no known cure has a need for such a cure- but that need cannot be met. There is no point in, and in the context of scarce resources no moral justification for, providing treatments that cannot provide benefit. On the other hand, (and to respond briefly to PHARMAC’s question g) above), people dying from incurable conditions remain in enormous health care need (primarily of cures for their fatal condition) and if this large degree of health care need would justify prioritising successful treatment, it seems reasonable to prioritise meeting their meetable health care needs even in cases when their major need for a cure for their condition can not be met. On this basis-in the context of pharmaceuticals- medications that are curative for other conditions but that are known to be ineffective for a particular patient’s fatal condition should not be provided in an ineffective and often deceptive attempt to ‘do something’. However medications that meet such patients’ meetable needs, for example by alleviating their distressing symptoms such as pain, nausea and vomiting, itching and other unpleasant sensory experiences, psychological disturbances of various sorts, auditory and visual disturbances and indeed any other distressing symptom- should be prioritised. As well as patients with very great needs that cannot be met there are also patients with very great needs for whom treatments might meet those needs but with only a low probability

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of doing so. And there are patients with very great health care needs that are clearly meetable but only at very high cost. In both cases there is obviously a major moral tension between on the one hand providing beneficial treatment for those who greatly need it and on the other hand the opportunity costs to those denied beneficial health care resources that are spent instead on meeting very few people’s needs at very high cost, either because the individual treatment though likely to be effective is very expensive or, in the case of low probability of successful treatment, because much resource will be wasted on providing nonbeneficial (and possibly harmful) treatments to most recipients. I shall return to these issues when considering high cost pharmaceuticals and ‘the rule of rescue’. Producing sufficient, let alone maximal, benefit can conflict with meeting needs Clearly, however, production of sufficient benefit, let alone production of maximal benefit (the moral basis of utilitarian ethical theories) can conflict with distribution in proportion to need and an adequate theory of justice must surely have some place for a concern to produce a sufficiency of beneficial outcomes in the use of scarce resources. It would be, to say the least, highly counterintuitive for a theory of distributive justice to advocate the use of scarce resources on treatments that produced very little benefit, or had very low probabilities of producing benefit, any more than it could plausibly advocate using most of the available resources on producing great benefits for just a few recipients, even if those few had very great needs for such treatments. And, of course, built into PHARMAC’s existing policy is exactly such an outcome concern to produce sufficient benefit per unit of resource used, notably its concern to limit the cost per unit of beneficial outcome (measured in QALYs) that it is normally prepared to pay for new pharmaceuticals. It is worth noting in this context that PHAR