July 14, 2011 / 2:50 PM / 8 years ago

NICE seen at heart of new UK drug pricing system

* CEO sees series of thresholds under new system

* Value-based pricing due to take effect from 2014

* Cost-effectiveness a global hurdle for drugmakers

By Ben Hirschler

LONDON, July 14 (Reuters) - Britain’s cost-effectiveness health watchdog NICE expects to play a central role in a value-based pricing system for new medicines due to take effect from 2014, according to its chief executive.

After a government rethink last month, the National Institute for Health and Clinical Excellence (NICE) will keep its authority to recommend which treatments should be used on the state-run National Health Service (NHS).

NICE boss Andrew Dillon said on Thursday he envisaged an “evolutionary” change as the current pricing arrangement, which caps the return on investment that drugmakers can make in Britain, is replaced with the new system based on value.

From January 2014, the new scheme — details of which have still to be finalised — will seek to reward manufacturers with higher prices for the most effective, innovative and badly needed new medicines.

This is likely to involve NICE using a series of cost-effectiveness thresholds, with more leeway given to drugs that represent a major advance in treatment or which tackle a condition where there is major unmet medical need, such as motor neurone disease or Alzheimer’s.

“The government wants a system that is as predictable as possible ... so that it will be very easy for companies to work out whether or not the NHS is likely to find their price acceptable,” Dillon told reporters.

“Provided a drug falls within its relevant threshold, my assumption is that will be acceptable. But if the price is beyond the relevant threshold, then my assumption is that would trigger negotiations between the government and the pharmaceutical company.”

The shift to value-based pricing has triggered some concerns in the pharmaceutical industry that Britain might become a more difficult market for manufacturers, having traditionally been one of the most industry-friendly.

But Dillon noted the need to prove value for money was a growing theme for drug reimbursement systems worldwide.

“All around the world the process of introducing a more objective, systematic and transparent set of arrangements for evaluating the benefits of new treatments are popping up — everywhere from China to Brazil,” he said.

NICE has been assessing which drugs should be paid for on Britain’s state health system for the last 12 years.

Its decisions recommending against reimbursement often spark controversy, as in the case of several rebuffs for cancer treatments from companies including Roche and GlaxoSmithKline . Overall, however, it recommends many more new medicines than it turns down. (Editing by David Cowell)

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