NICE's Affordability Proposals: Legal Challenge Looms

When I wrote that the proposals to respond to affordability challenges from the National Institute for Health and Care Excellence (NICE) and NHS England (NHSE) were unpopular, I didn’t realise just how unpopular. The Association of the British Pharmaceutical Industry (ABPI) has taken the step of seeking permission for a Judicial Review (JR).

Introduction of budget impact test, fast track and a threshold for ultra-orphan drugs

NICE consulted on the proposals to introduce a budget impact test, a fast track appraisal and changes to the threshold for approving Highly Specialized Technologies (HSTs) back in October 2016. The original proposals were tweaked and approved by the NICE board in March 2017 and discussed by the NHSE board during their March 2017 board meeting. The Specialized Services Commissioning Committee endorsed the approach on behalf of the NHSE Board at their meeting on February 23, 2017.

Writ large was the need to keep the NHS spend on drugs within affordable limits, despite the presence of the 2014 Pharmaceutical Price Regulation Scheme (PPRS). Members of the voluntary scheme have paid £1.87 billion ($2.44 bn) to the Department of Health (DH). The DH then allocate this across the NHS, including to NHSE.

The NICE and NHSE changes were due to be implemented from April 2017. The key changes were:

• Introduction of what might best be termed a ‘yes but’ recommendation. Companies face the prospect of a negotiation with NHSE if a new medicine would be likely to go over £20 million ($26m) – the so-called budget impact test - in any of the first three financial years post launch. That process would add time with the potential for a formal request for delay of positive NICE guidance, delaying patient access and revenue. The rub is that this would apply even if NICE found the new medicine was cost effective, which could include a discount via a confidential Patient Access Scheme.

• A fast track for those new medicines assessed as being below £10,000 ($13,000) cost per Quality Adjusted Life Year (QALY)

• Automatic funding for HSTs that are less than £100,000 cost per QALY but a threshold of up to £300,000 ($392,000) if some jiggery-pokery was done with some weightings of the QALYs. The trouble with this is (aside from the makey-uppy numbers of the threshold and weightings) was that it would still not be high enough for many ultra-orphan drugs with the prospect of NICE saying no more often

Unpopular changes

Industry was predictably displeased by the proposals and the decision to take them forward, despite most respondents to the consultation disapproving too. It’s not just industry, patients aren’t happy – including the MS Society, the Alzheimer’s Society, Bloodwise, Action Duchenne as well as umbrella groups like Genetic Alliance UK, so concerns come from a cross-section of patient groups -  nor are some academics. Dr Annette Rid, Senior Lecturer in Bioethics and Society at King's and colleagues from the King's and University College London Social Values and Health Priority Setting group suggest that the NICE justification for taking forward the proposals because no alternatives were put forward is invalid. They point out that the consultation didn’t ask for other options.

Some of the great and the good have also expressed their concern, perhaps best summed up by Lord Hunt of Kings Heath, Shadow Spokesman for Health. He said in March 2017 that “we are now seeing the Government develop NICE as, in essence, a rationer of treatments. I ponder whether the restrictions being brought in really are true to the legal position of NICE as established, and certainly to its moral position.”

Changes not yet applied in practice

Since the NICE process takes a while, no drugs will have gone through the NICE process under the changes. There is little clarity over what the negotiation would really entail, nor the realistic timescales for reaching an agreement, if at all.

Industry is not aligned

The ABPI doesn’t represent all of industry. The BIA told me that, “the BIA is not party to this process nor have we been consulted upon it. As such it would be inappropriate to comment on the specifics of this action at this stage.”

Leslie Galloway, Chair of the Ethical Medicines Industry Group (EMIG) said, “I disagree with [the JR].” EMIG was not consulted by the ABPI either. For him at least, the problem is with the PPRS and the failure to spend rebates on new medicines in England-Scotland and Wales use some of the money for new medicines-whereas he says in England, “the PPRS rebates get to the NHS at the high level, but then they disappear into the ether.” Galloway fears that the decision taken by the ABPI will reflect badly on the whole industry.

The BIA point out, just as Galloway does too, that there are a number of key issues on the table with Government at the moment. Not least making the most of Brexit and keeping the UK on the global stage for life sciences. BIA added that, “this legal move must not impact or delay broader industry engagement with the UK government at a time of significant external change.”

One industry insider pointed out that the ABPI had been due to meet with NHSE to discuss multi-indication pricing (also termed indicated based pricing). Once news of the JR came out, NHSE-understandably-cancelled the meeting.

Whilst industry is at least saying something, NICE declined to comment as it’s an ongoing case. NHSE declined to comment too.

What next?

Paul Ranson, from Morgan, Lewis & Bockius UK LLP points out there are four recognised grounds for a JR. They include illegality, irrationality, procedural unfairness and legitimate expectation. The ABPI have only just started the first step-seeking permission for a claim for JR-which can take around 4 months or less. If the case proceeds to a substantive hearing, it could take place between 9 and 15 months of permission being granted. One to watch.

Leela Barham is providing input as a subject matter expert into medicines pricing policy development with a UK government client and for the duration of her involvement in that project, she is restricted on what she can write about.