Nationalizing Life and Death

This valuation lies at the heart of the work performed by NICE—which, since its inception in 1999, has adopted a cost effectiveness threshold range of £20 000 ( 29 500; $40 000) to £30 000 per quality adjusted life year (QALY) gained. NICE does not accept or reject healthcare technologies on cost effectiveness grounds alone,3 4 5 although it is undoubtedly a major deciding factor. But the uncomfortable truth is that NICE's threshold has no basis in either theory or evidence.

This is not a technical problem confined to the decisions made by NICE. That is just the tip of an iceberg of clinical, managerial, and policy decisions made daily in health care—decisions that, unlike those derived from NICE's transparent procedures, may not be based on an explicit threshold, or even consider cost effectiveness at all. Nevertheless, these decisions all imply that the value of the health benefits justify the costs—of the operation, the prescription, the new hospital, a reduction in waiting times, and so on.

The cost effectiveness threshold is emerging as a key factor in the House of Commons Health Select Committee inquiry into NICE, which has received evidence that the threshold may be too generous.2 6 If this suggestion is correct, the implications are profound. It means that NICE has recommended too many new technologies. It also means that when primary care trusts implement NICE's guidance, resources may be diverted from other healthcare services that are better value for money. By setting the hurdle too low (the cost per QALY threshold too high), NICE might be reducing the efficiency of the NHS. So, what should the threshold be?

Two approaches to setting a cost effectiveness threshold have been proposed.7 The first is to decide the worth or value of a QALY and set the NHS budget so that all health care is provided at a cost at or below that value. The second is to decide how much we wish to spend on the NHS, and let the value of a QALY emerge from the decisions made by NHS purchasers. If purchasers aim to maximise QALYs, and their budgets are set so that they can do so, these approaches converge. In practice these conditions are not met and there is currently no political or other mechanism to facilitate them. The danger is that purchasers are likely to make inconsistent decisions based on their variable, and often implicit, valuations of health gain.

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Why should NICE be required to set and defend what is an NHS wide cost effectiveness threshold? The factors that should determine this threshold—such as society's willingness to pay for health improvements, the size of the NHS budget, the level of health sector inflation, and the discount rate used for future costs and benefits—are beyond NICE's control. Moreover, as these factors are not constant the problem of thresholds can never be resolved. This means NICE has to keep the threshold constantly under review, although its main business and expertise is in appraising health technologies and producing guidelines.