The economics won’t go away: NHS Cancer Drugs Fund to consider cost-effectiveness

This week, NHS England published its revised process for operation of the cancer drugs fund.  Of particular interest is the requirement to take into account both costs and effects of treatments.

NICE was set up in 1999 with the remit of considering the value for money, or cost-effectiveness of new and existing treatments.

It is important to consider what this actually means: the fundamental principle of economics is that resources are finite. In the health care sector this means that a decision to direct resources to treat one patient means that another cannot be treated with those same resources.

To say that a treatment is not cost-effective means that the loss to that untreated patient is greater than the gain to the patient that does benefit, so the net effect is a reduction in ‘health’ generated by the system. In this way, adopting a non-cost-effective treatment represents an indirect harm to the population as a whole.

The CDF was set up in 2010 with a budget of £200m per year to provide access to drugs that NICE deemed not to be cost-effective (representing about 2/3rds of applications for funding. The remainder are for drugs either currently under review or for which no review is planned). Whilst this undoubtedly has given benefit to those patients who, by the play of chance, have the diseases covered by these drugs, we hear a lot less about the loss to patients who would otherwise have benefited. What we do know from the economic evaluations produced by NICE is that greater benefit would have been had for the NHS budget by investing in alternative, more cost-effective, treatments.

So it is absolutely no surprise that that CDF quickly overspent and had to be shored up recently with an additional £80m per year. Even less of a surprise is that the principles of economics cannot simply be waived away with ring-fenced funds.

The most equitable solution would be to scrap the CDF entirely, and judge all treatments on the same level playing field, that is, pricing by their ability to improve quality and/or quantity of life irrespective of the disease they tackle.

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