The main thing NICE focuses on when making decisions is the ‘incremental cost effectiveness ratio’ or ICER, sometimes referred to as the cost per QALY (quality adjusted life year).
This estimates how much a medicine costs to provide one QALY, which is one additional year in perfect health.
NICE will usually decide a medicine is value for money for the NHS if it costs between £20,000 and £30,000 per QALY.
Modifiers are factors that affect NICE’s decisions on health technologies. A modifier implemented in a quantitative way (as proposed for the new severity modifier) increases the value of the QALYs provided by the medicine.
It means NICE is prepared to pay more for a medicine if it treats, in this case, patients with a severe disease. By applying a QALY weighting, it decreases the ICER making the medicine more cost effective.
The proposal to introduce a severity modifier was supported in NICE’s first Methods Review consultation, reflecting views that the value of QALYs provided to patients with severe diseases should be more than those with less severe diseases.
NICE’s committees also consider other factors that are important beyond the ICER, but the severity modifier will have a direct impact on the committee’s view of the cost-effectiveness of a medicine.
NICE will consider two measures of severity to decide whether the modifier is applicable: proportional shortfall and absolute shortfall.
Proportional shortfall looks at the quality and quantity of life lost because of a disease, considering the existing treatment available to the patient, relative to the expected quality and quantity of life the patient should have without the disease. It gives a score between 0 and 1.
In a simplified example…
If a person is expected to have 10 QALYs but gets a disease which means they will only have 5 QALYs, the proportional shortfall is the number of QALYs they have lost because of the disease divided by the number of QALYs they were expected to have without the disease. In this case that gives us a proportional shortfall score of 0.5.
If the disease means the patient will lose more QALYs, the proportional shortfall score gets higher and closer to 1. The more life threatening the disease, the higher the proportional shortfall score will be.
Absolute shortfall also measures the severity of the disease by considering QALYs lost, but it does so in an absolute way. It is a positive number that is not bound between 0 and 1. Going back to the simplified example, the absolute shortfall is just the number of QALYs the person with the disease loses, also considering the existing treatment available to the patient.
So, if they lose 5 QALYs the absolute shortfall is 5. If they lose more QALYs the absolute shortfall number increases.
The absolute shortfall will be high when the loss of QALYs over the patient’s life is large – so for example, conditions that are not immediately life threatening but have a significant impact on the health of a patient over time.
NICE is proposing that both the absolute and proportional shortfall scores for the medicine and disease are considered.
If the scores sit within NICE’s proposed ranges, a weight is applied that increases the QALYs gained by using the new medicine.
This is essentially placing more value on the health gains provided by medicines that treat severe diseases.
Both absolute and proportional shortfall characterise the severity of a disease, however they both have limitations.
Absolute shortfall may be relatively small for older people with severe diseases, even those that are life threatening. And proportional shortfall may be relatively small for younger people with severe and debilitating diseases that are not immediately life threatening but experienced over many years.
Considering both measures enables NICE to capture and recognise a full picture of the severity of the condition in all types of patient.
The new severity modifier is a positive change that provides a broader definition of severity than the current end of life modifier. It will benefit patients with a wider range of severe diseases – NICE has stated for example, musculoskeletal, inflammatory and mental health conditions and childhood genetic diseases, in addition to cancer (which the current end of life modifier mostly focuses on).
NICE has proposed the severity modifier is implemented in a way that is “opportunity cost neutral”, prior to additional research being done to understand by how much society attributes more value to severe diseases.
We consider the guarantees on spending afforded by the Voluntary Scheme for Branded Medicines Pricing and Access, and other cost containment policies already in place, should allow for greater ambition than this, and for the new modifier to benefit more medicines than is currently being proposed.
This would better align with the Prime Minister’s Life Sciences Vision and make a positive impact for patients with the most devastating diseases.