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U.K. Limits 'Quality of Life' Meds to £30,000 a Year

by: Michael Steinberg October 12, 2008 | about stocks: DNA / ONXX / PFE / RHHBY.PK / WYE    

Michael Steinberg

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Nature Reviews Drug Discover “NICE says no to kidney cancer treatments” reports that several approved novel drugs for renal cell carcinoma (RCC) are unlikely to pass the UK National Health Service’s cost effectiveness threshold. The UK National Institute for Health and Clinical Excellence (NICE) distinguishes between progression free survival and overall survival.

The four drugs studied showed “clinically relevant and statistically significant advantages” over the standard treatment (interferon [IFN]), but uncertainty in extending survival:

  • Avastin – Genentech (DNA) and Roche (RHHBY)
  • Nexavar – Bayer and Onyx Pharmaceuticals (ONXX)
  • Sutent – Pfizer (PFE)
  • Torisel – Wyeth (WYE)

The NHS threshold is £30,000 per “quality adjusted life year.” In "UK Provides No Public Funding for Genentech’s Avastin Users", I wrote that not only did the NHS refuse to pay for Avastin, but also refuses to pay hospital and doctor fees for patients that bought Avastin themselves. The UK is taking a hard line on proven results and appears to be the first country to put a monetary value on patient comfort.

In "The Politics of Healthcare Rationing", I wrote that all countries (including the United States) engage in healthcare rationing. It’s just that the UK, other European countries and Canada are far less opaque. American private health insurers have been reluctant to exclude high cost, limited benefit treatments – instead they simply raise premiums. Private health insurance policies often carry a lifetime cap, but don’t do enough to insure the policy holders’ allotment is allocated wisely.

The United States should take advantage of Britain’s lead in price discovery. The government should take a lesson from the Paulson/Bernanke financial debacle: the rules of game must be clearly laid out and understood by the citizens. The UK is doing that with healthcare and so far the United States has not.

I have great hope the next Administration will put cost effectiveness at the top of the list of healthcare reforms. After the financial crisis subsides, health insurance will become the number one issue. You can’t provide healthcare to all without eliminating reimbursement for marginally more effective drugs. With near universal healthcare in our future, the United States will no longer be able to subsidize the rest of the world’s pharmaceuticals.

Disclosure: Author is long PFE.

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This article has 3 comments:

  •  
    Oct 12 04:50 PM
    Can't wait for SocialObamism health care.

    How long does a patient have to wait for treatment? Six months when they are in their grave?
    Reply
  •  
    Oct 13 07:58 AM
    On one hand, this policy is a help in containing costs. But on the other hand, it results in less treatment - a reduction in overall health care for the public.

    And, does this policy reduce the incentive for companies to develop breakthrough drugs? Well, if sales cannot be obtained in some countries, the answer to that question in must be "yes", at least on some level. The policy puts pressure on companies to cut marginally beneficial drugs from thier piplines, which might have the unintended consequence of slowing the rate at which we advance treating disease. There will be improvements over Avastin, but they will occur more slowly now as it becomes riskier to develop therapies that might not get reimbursed. Only time will tell though.

    I'd prefer to see private health insurance. With that in place, people make the decision on how much healthcare they want, not the government. Private health insurance could also lessen the adverse selection problem you get with all-encompassing goverment healthcare by incentivizing people to live better, which, even if it only lowered the incidence of diabetes, would be a big help.

    It will be interesting to see what the positive and negative consequences of this policy turn out to be. I hope the U.S. watches closely before following along.
    Reply
  •  
    Oct 15 12:02 AM
    I would like to suggest that health care rationing is the only rational approach left to health care. It makes no sense that we, as a country, put our economic resources to bear on extending the life of a 75 year old. I am sure their loved ones appreciate it. I am very sure of that. However, that is not the government's business.

    There is no free market in health care. There never has been.

    Oh yes, if you are fat, smoke and have other bad habits - you can pay for the consequences of that yourself. Don't bother coming to me to subsidize your bad habits.

    Reply
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