Why the American NICE Will Not Be Like the British NICE

DrRich | June 22nd, 2010 - 8:26 am

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The United Kingdom’s National Institute for Clinical Excellence (NICE) has now issued its final ruling on the new cancer drug, Nexavar, which has proven effective in treating liver cancer. NICE will not cover Nexavar “because its high cost could not be justified by its marginal benefit.”

In a well-designed randomized clinical trial, Nexavar significantly prolonged the survival of patients with liver cancer, by an average of 2.8 months. Prolonging survival by a little less than 3 months may not seem like much, except for two things. First, that’s only the average. Some liver cancer patients treated with Nexavar have survived a year or longer, a result which is at least a little remarkable. And second, Nexavar represents a true and long-awaited breakthrough in the effort to find an effective treatment for hepatocellular carcinoma. Until Nexavar came along no chemotherapy had ever been shown to significantly prolong the survival of patients with liver cancer. For the first time, thanks to Nexavar, these unfortunate patients have been offered a real glimmer of hope.

But alas, Nexavar is expensive. Very expensive. It was a difficult drug to develop and test and bring to market, and it is expensive to make. So to recoup its costs, and to make the sort of profit that justifies its risk, the Bayer company is charging about $5000 a month for Nexavar. This means that any insurance company or government that agrees to pay for this drug is going to be out some big bucks.

The UK’s NICE was not being evil when it declined to pay for Nexavar. NICE simply did the math, and determined that spending money for the marginal benefit provided by Nexavar would create too high an opportunity cost – that is, that money would be better spent elsewhere, on other patients, for greater gain.

This is what open healthcare rationing looks like. It’s ugly, all right. But because it is open and transparent, making clear to everyone the rationale for its coverage decisions, NICE gives the British electorate all the information it needs to decide whether to accept the process, or to change it. This is far better – far more equitable and far less destructive to a society – than rationing healthcare covertly. DrRich tips his hat to NICE.

But DrRich notes that this recent decision by NICE has caused some of his conservative friends to descend into major bouts of caterwauling. Horrified that NICE has condemned liver cancer patients to an avoidable premature death, they insist we all notice that Obamacare creates an Outcomes Research Institute that is modeled after the British NICE, and so, we could soon have the same kinds of coverage decisions here in the U.S. American citizens, they demand, must consider how well they will like it when some government “panel” refuses to cover life-saving medical therapies because they are too expensive.

DrRich agrees that Americans will not like it much at all, but believes his conservative colleagues are overlooking an important difference between the British NICE, and any American NICE that might accompany our new healthcare system.

The Brits are plagued with a constant deluge of new medical products that are extremely expensive, and that, like Nexavar, offer real but only marginal improvements over current, cheaper therapies. Each time NICE has to render a coverage decision on one of these new therapies, the process is painful for everyone involved. But, being Brits, when faced with a difficult but necessary task they suck it up and carry on.

It is important to note, however, that the British NICE is required to deal with a constant stream of new medical products only because there is a ready market for those products elsewhere, and that market is in the U.S.

For, in the U.S., we have always recognized that medical progress usually occurs in incremental steps, and that to encourage continued medical progress we have to accept (and pay for) these incremental steps. That is, medical progress is much like all other forms of progress. Americans famously went to the moon, for instance, but did not do so all at once. Hundreds of incremental steps were required, several of which were seemingly trivial and expensive, and others of which involved catastrophe and tragedy. But we all understood that this is how one gets to the moon.

So a product like Nexavar, which does not cure liver cancer but gets us one step closer, would traditionally be viewed in the U.S. as an important incremental step toward the ultimate goal. And indeed, in contrast to the British NICE, the FDA has approved the use of Nexavar for liver cancer. This approval, in turn, encourages medical industry to keep going.

But consider: If a new American NICE steps in, and begins refusing to cover treatments that provide only incremental improvements, then the companies that invest hundreds of millions of dollars to achieve those incremental steps will simply stop doing so. After our new American NICE refuses to cover Nexavar-like therapies two or three times, medical industry will get the message loud and clear, and as a simple matter of corporate survival will change its business model. And the rapid succession of new medical therapies we have enjoyed will stop, or at least slow markedly.*

This means, of course, that if our new American NICE can just find the intestinal fortitude to make a few tough calls like the one the Brits have just made, and stick with those tough calls despite the firestorm that may ensue, then the hard part of their job will end. Forever. Pretty soon, they simply won’t be faced with any more Nexavars.

The healthcare bureaucrats in Britain and elsewhere around the world, whose jobs are made very difficult by the continual medical progress which is stimulated by the traditional American healthcare system, are cheering on our new reforms. Most especially, they are praying that the American NICE will have enough backbone to do what needs to be done. If the Americans can just make a few of the tough calls the Brits and others have had to make routinely, the job of healthcare bureaucrats will become vastly easier all over the world.

In any case, the prospect raised by conservative alarmists – of a NICE-like panel that is forever condemning American patients to an early death through their refusal to cover effective new therapies – will be only a very temporary phenomenon. After a very short time, such coverage decisions will no longer be necessary, and Americans will no longer be subjected to the anguish these decisions will provoke.

*If individual Americans are permitted to purchase with their own money medical products that are not approved for coverage by the government, then at least some stimulus will persist for continued medical progress. But as DrRich has documented in detail, the plan is to disallow such individual prerogatives.

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3 Responses to “Why the American NICE Will Not Be Like the British NICE”

  1. Rich says:

    Yep. Choices are much easier to make when there aren’t any. The real outrage over the direction of US healthcare reform should be by citizens of countries that have benefited from cost shift enabled development.

  2. Praveen says:

    Good post Dr. Rich. I would note that even if the Dems’ health plan doesn’t put a real NICE in place, our soaring budget deficits will probably soon do so.

    I feel compelled to share the link to an article related to this that I recently wrote:

    http://truecostblog.com/2010/04/23/the-end-of-government-subsidized-medical-innovation/

    I am actually happy at the thought of a strong American NICE making tough decisions and ending government-subsidized medical research. We Americans pride ourselves on being Capitalists, but health care innovation has not been subject to the tough realities of the market since the advent of Medicare.

    I welcome the day when the endless kitty of government money is gone, so that entrepreneurs can attempt to innovate health care solutions that are both effective AND cost-effective.

    Though you have documented instances in which the government attempts to squelch private-pay medical care, I think it will live on in the end, in some form. And solutions which fall below the QALY-line of the American NICE will still be innovated.

  3. Guiac says:

    You certainly hit the nail on the head. The other aspect of this will be a few well designed “comparative research” studies more or less designed to help prove that conventional(cheaper) therapy is as effective as more expensive surgical options. As you’ve pointed out before in this blog and as our friends at PLOS like to point out repeatedly trials can certainly be constructed to favor certain outcomes, specially if the desired outcome is no significant benefit. This will be the technique to help minimize if not eliminate some of the more expensive surgical options out there right now(esp. spine surgeries I suspect). I wonder if surgical options will be allowed for patients refractory to conventional therapy of for those subgroups that might derive benefit – somehow I doubt it.

    At any rate I have long suspected that the government is essentially going to accept a high rate of immediate deficit spending to try and curb medical growth in the long run – which will only be accomplished by styming the developed of new technologies.

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