Andrew Lansley proposes paying drug companies by results

The Shadow Health Secretary writes for The Telegraph about a new way of paying drug companies through NICE, the National Institute for Health and Clinical Excellence.  These are his key messages:

The general problem: "In Britain, we have among the leading cancer research institutes in Europe. It is, frankly, a scandal that NHS patients are among those in Europe least likely to have access to the latest cancer medicines. The doubling of the NHS budget has not delivered the results we deserve, because across the board Labour have refused to make the changes we need to spend money more wisely."

One solution to drug unavailability: " Instead of the NHS denying access to drugs because they say it’s not cost-effective - as Nice has done recently with four kidney cancer drugs – we should encourage the NHS to use new medicines which are clinically effective, and agree subsequently to pay the drugs companies according to the therapeutic benefit. In other words, drugs companies should only be paid according to the benefits that a drug brings to patients. NICE should be involved in this process, working with drug companies to set fair prices for new medicines – rather than refusing new treatments which it deems too expensive."

Not all drug companies will like this change of policy: "Moving to the new system that I propose would be tough; it will mean payment by results for drug companies. Many existing drug treatments will get a lower price from the NHS. Really innovative drugs with good clinical benefits will do better. "

Comments

[Sally Roberts]

This seems a logical step! Yes, the drug companies won't like it but anything has got to be better than the present appalling system where the unfortunately-named NICE denies treatment to deserving Cancer patients.

[James Maskell]

Sounds great on paper but not convinced it will work in practice.

[Norm Brainer]

Sounds wrong to me unless it works some way that I'm missing?
First, that's the buyer (even if they are a big buyer) dictating what price they are going to pay, which the drug companies can't allow as if they sell to the NHS for one price, others will ask for that price too.

Next, "Really innovative drugs with good clinical benefits will do better" but they will be less inclined to be innovative as the risks would be even higher.

[John W]

James it's about making it work in practice.

[John W]

Norm Brainer: "but they will be less inclined to be innovative as the risks would be even higher."

This completely rejects the idea that the market can produce efficient outcomes - paying a drug company by results will make them produce more effective products.

I agree that the details of this policy's implementation will be key in making it work.

[Letters From A Tory]

I am extremely nervous about any move away from cost-effectiveness. Paying by results could still result in huge payments relative to the drugs being used now, even more relatively marginal gains in effectiveness.

[passing leftie]

Another smashing idea, Andy! Instead of determining how effective drugs are then allowing them to be used (putting the burden of proof on the drugs company), you use them, and then see if they work. You are my favourite member of the shadow cabinet.

NICE does a brilliant and under-appreciated job. The drugs they don't allow are hardly worth having, and it encourages drug companies to lower their prices to reflect their true effectiveness.

[Londoner]

He seems to come up with a different (unconnected) snippet a day. I must say he started to lose my sympathy in the first sentence. I hope his thinking is better informed than his grammar.

If it's just come out in an article rather than a comprehensive policy document I too worry whether the practicalities have been worked through. I can see that the price of subsequent orders of a drug could be related to their effectiveness (I'm a bit surprised they are not if the NHS is negotiating its prices properly) but I am not sure how keen drug cos and pharmacists will be to supply large runs of drugs when they don't know what they'll be paid for them. Also what happens if one drug is more effective than another but on this system the better drug is so effective that the NHS can no longer afford it (so the patients land up getting the less effective one)?

[Teck Khong]

Drug A works in for a particular condition and 85% of the people treated this way are living 5 years longer. Drug B also works but 50% of the people treated for the similar condition lives more than 7 years, something that Drug A doesn't offer.

Clinical criteria have been rigorously decide the choice of drug.

How do you price them? Even worse, what if a drug that fails to command a higher price from the government becomes commercially unviable because its development costs are higher? Good drugs sometimes take longer to discover, let alone refine.Does an innovative company that spends more and probably has a promising pipeline face the prospect of shutdown?

Subverting the inventiveness of science by undermining the principles of sound business does not really resonate with fundamental Conservative principles somehow.

A left lurch after a right sway?

[Lindsay Jenkins]

Teck is right.

Conservatives should take the government out of medicine and limit its role to 'lender of last resort' for those unable to afford insurance.

[GB£.com]

Why doesn't he propose to offset the cost of the drugs with a non-dom levy... lol.

Is there a drug to treat Mr Lansley's tourette-like NHS announcements?

[Teck Khong]

[Apologies for earlier typo omission/grammar]

A thought came to my mind on electoral prospects after having viewed "Sarah Palin is a warning to David Cameron" on the front page.

It would be really stupendous if our Party and David Cameron became a 'Usain Bolt' with a really compelling and wholesome policy for health that even copycat Labour cannot emulate!

Hey, let's do it!

[C List and Proud]

The National Institute for Horribly Cynical Economics is a waste of space. Doctors should decide what treatments they want to use and the social insurers should pay - sorry, I forgot, we don't have social insurers - if they have agreed to fund that treatment.

With a competitive market for insurance, the social insurers will have a vested interest in offering more services, ie drugs, not less. The dynamic tension that would exist between doctors, patients with their insurance vouchers and and the insurers would drive innovation.

The insurers could take a variety of approaches to newer/expensive drugs, eg partnering medical research bodies and drug companies, perhaps offering - heaven forfend - co-payment options.

I'm afraid Lansley knows he's got no power in the current set up as the masses, (and the BBC), will not allow the high priest even to rearrange the candles on the alter, let alone suggest a different god might be worshipped. All he can do is attack the sinners, NICE, and the unworthy, Fat/Smoker, to court the appreciation of the worshipping hordes.

[Lindsay Jenkins]

I fear Conservatives have got the state intervention bug or even worse the state knows best. At least that’s the way it seems.

We would all agree that health care is a critical component of everyone’s life but so is food – even more so.

We are not advocating nationalising shops, we are not advocating nationalising farms, we are no longer (pace Macmillan) advocating the means of distribution between the two. In fact we rail against interference such as the Common Agricultural Policy and the Brussels’ junketing it spawns.

We even privatised the distribution of that other staple of life – water.

So why we do we continue to advocate interfering in the supply of health care?

Commonsense suggests that we need a security blanket for those who cannot afford to buy what they need or to insure themselves adequately. But that should be it.

[Teck Khong]

C List and Proud, I share your frustrations and your view on the apparent lack of conviction. As one of my patients say, it's the nice poor blighters that suffer.

[Teck Khong]

Hot-off-the-Press:

"The DoH confirms that practices should only provide standard consultations during extended hours surgeries".

You can talk with your patient but you can't give him/her a flu jab; he/she has to come back during regular opening hours.

"But Doctor, I work during regular hours so I thought it's a wonderful idea that I can see you after work!"

"Well, yes. Now that you have seen me, go and book a regular appointment!"

So who do you think should be doing the doctoring? The DoH or the Doctor? Or is it the politician?

This is worse than the bleeding Third World for an unbelieveably astronomical cost!

[MDC]

Errr... what? NICE will just dictate at what price they may sell their drugs? Like, I go into a newsagent and decide to pay him by how much I like the news in the newspaper...? I, like NICE, will simply be shown the door, and rightly so.

Perhaps he could propose to end the farce of the NHS de-facto banning people from buying these treatments (which are often not very expensive) themselves. Oh no, that wouldn't be socialist enough...

[Julia Manning]

Teck is right - the impact on innovation could be drastic - both our economy and rare 'orphan' conditions would suffer. This is the value-based pricing idea that the NAO floated last year, but the cost to the NHS could rise if we changed to this approach. Added to which 17 out of the top 20 drugs used in the NHS will come off-patent in the next 4 years, potentially resulting in millions worth of savings to the NHS. If value-based pricing was in place, the bill could increase not decrease.

[Matt Wright]

We need to see the detail really. Its not anti-market. Industry enters into development partnerships and also buys components on the basis of their performance, calling them off for an assembly. If they don't prove beneficial enough to the product they either stop buying them or renegotiate. I suppose another angle is that in some cases if better drugs are being opened up for use quickly it could save costs. NICE not funding macular degeneration drugs has cost the country in social care as people go blind quicker for lack of a drug most developed countries prescribe.

[Teck Khong]

The pharmacology of drugs means that while some drugs are fine for many, intolerance by others requires that there should be a reasonable range of alternatives that provide the same therapeutic objectives.

For this and other reasons some of which are illustrated earlier (including Julia Manning @1749), there are therefore fundamental weaknesses to this approach.

[Lindsay Jenkins]

How much money would be saved by abolishing NICE?

Drug quotas and telling doctors how to do their job seem to be its key roles though it was set up by Labour to end postcode lottery - a failure.

Surely the EMA is sufficient protection without another body to 'interpret' its advice?

[anna calder]

How would you help a person like me who cannot get a diagnosis? all I am told is it is stress. I am in a great deal of pain and I feel like I am banging my head against a brick wall. Who is there to help the likes of me, as one gets older the NHS just wants to stuff you full of drugs and send you away, perhaps you might oblige them by dying so they can take you off their list.I do not expect your help in truth.no politician helps, just talk, Sorry if that sounds bitter, it is anger at the ;systtem; I am not cost effective,I have worked all my life and payed my dues but counts for nothing these days.

[anna calder]

How would you help a person like me who cannot get a diagnosis? all I am told is it is stress. I am in a great deal of pain and I feel like I am banging my head against a brick wall. Who is there to help the likes of me, as one gets older the NHS just wants to stuff you full of drugs and send you away, perhaps you might oblige them by dying so they can take you off their list.I do not expect your help in truth.no politician helps, just talk, Sorry if that sounds bitter, it is anger at the ;systtem; I am not cost effective,I have worked all my life and payed my dues but that counts for nothing these days.

Anna Calder.retired