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Does NICE have a cost-effectiveness threshold and what other factors influence its decisions? A binary choice analysis

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Author Info
Nancy Devlin (City Health Economics Centre, Department of Economics, City University, UK)
David Parkin (City Health Economics Centre, Department of Economics, City University, UK)

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Abstract

The decisions made by the National Institute for Clinical Excellence (NICE) give rise to two questions: how is cost-effectiveness evidence used to make judgements about the 'value for money' of health technologies? And how are factors other than cost-effectiveness taken into account? The aim of this paper is to explore NICE's cost-effectiveness threshold(s) and the tradeoffs between cost effectiveness and other factors apparent in its decisions. Binary choice analysis is used to reveal the preferences of NICE and to consider the consistency of its decisions. For each decision to accept or reject a technology, explanatory variables include: the cost per life year or per QALY gained; uncertainty regarding cost effectiveness; the net cost to the NHS; the burden of disease; the availability (or not) of alternative treatments; and specific factors indicated by NICE. Results support the broad notion of a threshold, where the probability of rejection increases as the cost per QALY increases. Cost effectiveness, together with uncertainty and the burden of disease, explain NICE decisions better than cost effectiveness alone. The results suggest a threshold somewhat higher than NICEs stated 'range of acceptable cost effectiveness' of £20 000-£30 000 per QALY - although the exact meaning of a 'range' in this context remains unclear. Copyright © 2004 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/hec.864
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Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

Volume (Year): 13 (2004)
Issue (Month): 5 ()
Pages: 437-452
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Handle: RePEc:wly:hlthec:v:13:y:2004:i:5:p:437-452

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Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Bernie J. O'Brien & Kirsten Gertsen & Andrew R. Willan & A. Faulkner, 2002. "Is there a kink in consumers' threshold value for cost-effectiveness in health care?," Health Economics, John Wiley & Sons, Ltd., vol. 11(2), pages 175-180. [Downloadable!]
  2. John Hutton & Alan Maynard, 2000. "A nice challenge for health economics," Health Economics, John Wiley & Sons, Ltd., vol. 9(2), pages 89-93.
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  1. Stefan Greß & Jürgen Wasem & Dea Niebuhr, 2006. "Pricing and Reimbursement of Prescription Drugs in German Social Health Insurance," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 4(2), pages 39-47, 07. [Downloadable!]
  2. John Henderson & Katharina Janke & Carol Propper, 2007. "Are current levels of air pollution in England too high? The impact of pollution on population mortality," CASE Papers /128, Centre for Analysis of Social Exclusion, LSE. [Downloadable!]
  3. Richard Norman & Gisselle Gallego, 2008. "Equity weights for economic evaluation: An Australian Discrete Choice Experiment, CHERE Working Paper 2008/5," Working Papers 2008/5, CHERE, University of Technology, Sydney. [Downloadable!]
  4. Hugh Gravelle & Stephen Morris & Matt Sutton, 2006. "Are General Practitioners Good for Endogenous Supply and Health," Working Papers 020cherp, Centre for Health Economics, University of York. [Downloadable!]
  5. Joanne Lord & George Laking & Alastair Fischer, 2006. "Non-linearity in the cost-effectiveness frontier," Health Economics, John Wiley & Sons, Ltd., vol. 15(6), pages 565-577. [Downloadable!]
  6. Pedram Sendi, 2008. "Bridging the gap between health and non-health investments: moving from cost-effectiveness analysis to a return on investment approach across sectors of economy," International Journal of Health Care Finance and Economics, Springer, vol. 8(2), pages 113-121, June. [Downloadable!] (restricted)
  7. Diane Dawson & Hugh Gravelle & Mary O'Mahony & Andrew Street & Martin Weale & Adriana Castelli & Rowena Jacobs & Paul Kind & Pete Loveridge & Stephen Martin & Philip Stevens & Lucy Stokes, 2005. "Developing new approaches to measuring NHS outputs and productivity," Working Papers 006cherp, Centre for Health Economics, University of York, revised Dec 2005. [Downloadable!]
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