This study aimed to identify the actual opportunity costs of specific NICE decisions by interviewing Finance and Medical Directors from all seven Local Health Boards in NHS Wales. The study found that boards were able to plan for NICE decisions through horizon scanning and contingency funds. Boards made efficiency savings rather than disinvesting from existing services, implemented technologies gradually based on available infrastructure, and sometimes relied on the Welsh government as funder of last resort. The opportunity cost of NICE decisions is difficult to quantify and may lie outside the NHS, since boards accommodate costs through greater efficiency and expenditure rather than perfect displacement of existing services.

1. Opportunity Costs of Implementing NICE Decisions in NHS Wales
Sarah Karlsberg Schaffera, Jon Sussexa, Dyfrig Hughesb and Nancy Devlina
For more information, contact: Sarah Karlsberg Schaffer (sschaffer@ohe.org)
1. BACKGROUND
In Wales, as in England, when a technology is recommended by the National Institute for Health and Care Excellence (NICE), the National Health Service (NHS) is mandated to provide the funding to accommodate the guidance within three months.
Explicit in NICE’s approach to health technology assessment (HTA) is the assumption that the approval of a new, cost-increasing technology will result in the displacement of an existing, less cost-effective health care programme from elsewhere in the NHS.
To our knowledge, there has been no previous research to demonstrate that this type of displacement takes place in the NHS in practice.
Acknowledgements This study was funded by an unrestricted grant from the Association of the British Pharmaceutical Industry (ABPI). The authors would like to thank the interviewees from NHS Wales for their valuable input to this research.
2. AIMS
The objective of this study was to identify the actual opportunity costs of specific NICE decisions by documenting how in practice local commissioners in Wales accommodated financial shocks arising from technology appraisals (TAs).
3. METHODS
Interviews were conducted with Finance and Medical Directors from all seven Local Health Boards (LHBs) in NHS Wales. These covered prioritisation processes, as well as methods of financing NICE TAs and other financial “shocks” at each LHB. We then undertook a systematic identification of themes and topics from the information recorded.
4.RESULTS
•Study identified no examples of occasions where LHBs were forced to disinvest from health improving services in order to meet funding demands imposed by a specific newly published NICE TA.
•Demands of NICE TAs considered as one of many “cost pressures” that must be dealt with in-year.
•Financial impact of NICE TAs generally planned for in advance through horizon scanning activities.
•Horizon scanning linked to NICE contingency funds created specifically to accommodate expected financial burden of new NICE mandates.
•No respondent identified their LHB as yet using an explicit framework of criteria for prioritising expenditure decisions.
•Most common response to question of how cost-increasing NICE TAs are accommodated involved LHBs making efficiency savings – reductions in costs which are intended not to lead to reductions in benefits.
•As some NICE mandates require prior build-up of infrastructure which is not initially available in sufficient quantities, rate of implementation of mandate is less than immediate and speed of build-up is to a degree at the discretion of the LHB.
•When additional funds are required, some LHBs look first for offsetting savings within the same clinical programme area; others look first within the medicines budget.
•On occasion, the Welsh Government has acted as the funder of last resort.
•Opportunity cost might fall on some other part of the NHS or on a non-health care part of the Welsh Government’s expenditure.
5. DISCUSSION AND CONCLUSIONS
NICE makes its recommendations on the basis that newly mandated technologies will displace less cost-effective existing technologies, leading to an overall gain in health produced per pound spent in the NHS. Implicitly, LHBs are assumed to be perfectly efficient so that newly approved technologies will displace services currently in operation. In addition, their budgets are assumed to be fixed and fully deployed at the end of each time period. This research finds evidence that all of these assumptions are questionable. This is likely to arise from a mismatch in objectives between HTA bodies, which make decisions based primarily on cost-effectiveness, and the health service, which takes into account multiple factors when making spending decisions. As the additional cost pressures represented by new NICE TAs are likely to be accommodated by greater efficiency and increased expenditure, the true opportunity cost of HTA decisions is extremely difficult to quantify and may even lie outside the NHS.
aOffice of Health Economics bBangor University