Friday, August 8, 2008

This is What a Real Cost/Quality Decision Looks Like

The UK's National Institute for Health and Clinical Excellence (NICE) has decided in a preliminary ruling that four drugs used for the treatment of advanced kidney cancer are not effective enough and they won't be paid for by the National Health Service.

Now before someone just claims this is what single-payer health care plans do all the time, let me be clear that NICE is an organization that has largely gained the respect of the world health community. Andrew Dillon, NICE's director, participated in a conference on technology evaluation I chaired a few years ago and the domestic audience from business and policy was more than impressed with their work.

These guys are trying to do the right thing and using extraordinary means to do it. They don't make arbitrary and bureaucratic decisions--they follow the science.

But here's the crux of their decision.

NICE concluded that the drugs extended some patients lives but not enough to justify their high price.

Using clinical trial results that were imputed into complex financial models, NICE concluded the drugs cost between about $150,000 and $350,000 for each year of life they gave patients. Britain's standard says that the Health Service shouldn't pay more than about $60,000 for a year of healthy life gained. They call that their "quality adjusted life year" (QALY).

The chief doc at Cancer Research UK, a non-profit, responded that, "These drugs have shown a small but definitive improvement in an illness where there are few alternative treatments."

Two things:
  1. If this was someone in my family, I would expect my U.S. health insurance to pay (today) or I would find the money to get them the drugs.
  2. This is what real cost/quality decisionmaking looks like.
The next time any of us suggest that making better cost/quality decisions is an obvious next step to take we should remember this example of a real cost/quality decision.
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