Adrian Towse presentation at HTAi, Toyko - May 2016

1. Adrian Towse
Director of the Office of Health Economics
Visiting Professor London School of Economics
HTAi Tokyo May 2016
Operationalising Value-based Pricing:
Do we know what we Value and What
we are giving up to get it?

2. HTAi Tokyo May 2016
Background
In UK, decisions to approve/reject new
health care technologies taken by Health
Technology Assessment (HTA) agencies:
• National Institute for Health and Care
Excellence (NICE) in England
• All Wales Medicines Strategy Group (AWMSG)
in Wales
• Scottish Medicines Consortium (SMC) in
Scotland

3. HTAi Tokyo May 2016
England – NICE Threshold
Question asked by Claxton et al. (2015):
• On average, across PCTs in England, how
much does it cost to produce one QALY?
• Argued to represent opportunity cost of HTA
recommendations
• E.g. if NICE recommends new technology which
requires more NHS funds per QALY gained than
this average  overall decrease in QALYs produced
by health service (displacement effect)
“Best estimate” = £12,936 per QALY gained

4. HTAi Tokyo May 2016
England: Data limitations
Key issue = substantial data limitations
1. Absence of quality of life (QoL) data  authors use
mortality data and make series of transformations to adjust
for QoL
2. Incomplete mortality data – good quality data available for
only 4/23 Programme Budget Categories; poorer quality
data available for additional 7
3. Absence of time-series data  authors forced to use
estimated differences across PCTs as proxy for differences
within PCTs over time
Key consequence of data limitations = strong assumptions  high
degree of uncertainty

5. HTAi Tokyo May 2016
England: Key assumptions
Key assumptions:
1. Duration of effect of expenditure on mortality
2. Future mortality risk of patients saved due to increased expenditure
3. Future quality of life of patients saved due to increased expenditure
Best estimate of £12,936 is product of particular combination of
“conservative” and “optimistic” options for these assumptions
Different combinations give very different answers
Additional key assumption not tested: PCTs are as good at achieving QoL
gains as at achieving LYGs (DALY disease burden used to pro-rata QoL gains
based on LYGs)
DH is commissioning the Claxton team to collect new data and test
assumptions 1-3
OHE has a report of possible future research option (see Karlsberg Shaffer
et al., 2016b)

6. HTAi Tokyo May 2016
England: Combinations of three key
assumptions
In my view the £30,270 estimate is the most plausible, rather than the £12,936

7. HTAi Tokyo May 2016
Scotland: OHE Study Data
Two sources of data for identifying ‘marginal’ services:
1. NHS Budget Scrutiny (2012/13)
• Performed by Health and Sport Committee of
Scottish Parliament
• Data available for all 14 NHS Boards
2. Semi-structured interviews with Directors of Finance
of 12/14 Boards (89% of Scottish population)

8. HTAi Tokyo May 2016
Scotland: Data (2)
Relevant budget scrutiny questions:
• 4(b): “Please identify the three main
areas in which … savings will be made
… in 2012-13”
• 5(a): “Please give three examples of
service developments that you have
been able to fund in 2012-13”
• 5(b): “Please give three examples of
service developments that you would
consider priorities, but have been
unable to fund in 2012-13”
Threshold upper bound
Threshold lower bound
Threshold upper bound

9. HTAi Tokyo May 2016
Scotland: Results

10. HTAi Tokyo May 2016
Scotland: Implications
• Huge variation in £/QALY estimates – both within and between services
• If take median estimate across services, threshold = £1,516–1,017,844
per QALY
 Not possible to obtain reliable estimate of threshold in Scotland
• Cost per QALY evidence never used to justify marginal spending decisions
• Decisions driven by range of other factors, e.g.:
• Scottish Government initiatives
• Patient convenience
• Waiting time targets
• Benchmarking against other NHS Boards
• Explicit disinvestment occurs very rarely
• Savings generally sought from efficiency improvements

11. HTAi Tokyo May 2016
Wales: Methods
Semi-structured interviews with Medical and/or
Finance Directors of all 7 Local Health Boards
(LHBs) in NHS Wales
Key interview sections:
1. Procedures, policies & guidelines for prioritisation at
LHB
2. How in practice LHBs found funds to comply with
NICE TAs issued in study period (Oct 2010- March
2013)
3. How LHBs accommodated other financial “shocks”

12. HTAi Tokyo May 2016
Wales: Discussion/conclusions
Implicit in displacement assumption is that:
• LHB budgets are fixed and fully deployed
• Providers are not x-inefficient
Evidence in this paper that opportunity cost is
not wholly felt in terms of displacement of
other NHS services
Opportunity cost falls at least in part:
• Outside the NHS (other areas of public spending)
• By increased efforts to improve efficiency

13. HTAi Tokyo May 2016
References
Barnsley, P., Towse, A., Karlsberg Schaffer, S. and Sussex, J (2013). Critique of CHE
Research Paper 81: Methods for the Estimation of the NICE Cost Effectiveness
Threshold. OHE Occasional Paper at: https://www.ohe.org/publications/critique-che-
research-paper-81-methods-estimation-nice-cost-effectiveness-
threshold#sthash.xFhhxHHK.dpuf
Claxton K, Martin S, Soares M, Rice N, Spackman E, Hinde S, et al. (2015). Methods for
the estimation of the National Institute for Health and Care Excellence cost-
effectiveness threshold. Health Technol Assess;19 (14)
Karlsberg Schaffer, S., Sussex, J., Devlin, N., & Walker, A. (2015). Local health care
expenditure plans and their opportunity costs. Health Policy, 119(9), 1237-1244
Karlsberg Schaffer, S., Sussex, J., Hughes, D., & Devlin, N. (2016a). Opportunity costs
and local health service spending decisions: a qualitative study from Wales. BMC Health
Services Research, 16(1), 1.
Karlsberg Schaffer, S., Cubi-Molla, P., Devlin, N. and Towse, A. (2016b) Shaping
Research Agenda to Estimate Cost-effectiveness Thresholds for Decision Making. OHE
Consulting. Available at: https://www.ohe.org/publications/shaping-research-agenda-
estimate-cost-effectiveness-thresholds-decision-making#sthash.OuKI6Wjl.dpuf

14. Adrian Towse
The Office of Health Economics
Registered address Southside, 7th Floor, 105 Victoria Street,
London SW1E 6QT
Website: www.ohe.org Blog: http://news.ohe.org
Email: atowse@ohe.org
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