Nice deal for the drug companies

The NHS should exert its purchasing power

The NHS could quite easily consume the country's entire GDP. As more people survive into extreme old age, more drugs and technologies become available, and the population becomes more hypochondriac, the potential for spending is limitless. The service is plagued by shrill pressure groups, all clamouring for more resources. Newspapers that normally demand lower taxes and spending cuts weep over 90-year-old grannies denied expensive treatments that might give them a few extra years of bedridden, incontinent life.

If that sounds harsh, so be it. If we genuinely believed the NHS should meet every need at all times, regardless of cost, we would all volunteer to pay 95 per cent tax. This month, the National Institute for Health and Clinical Excellence (NICE) caused consternation by issuing draft guidance - though, from the commotion, you would think it was a final decision - that four new drugs for kidney cancer should not be available on the NHS. On average, the drugs extend life by five to six months. That's a long time if you've been given only a year to live. However, NICE's judgement, put crudely, is that it's too little to be worth spending, at the minimum, £75.74 a day.

In reaching this and similar conclusions, NICE uses a complex formula to work out how many quality-adjusted life years (qalys) a patient gets for the money spent. Anything that costs more than £30,000 per qaly is unlikely to get the green light; about 5 per cent of new drugs fail this test. In other words, NICE puts a price on human life. Similar pricing practices underpin other public policy decisions, such as whether a road junction should be improved to make it safer.

You can argue about whether £30,000 is too low and, in the case of the kidney cancer drugs, whether the data used to reach an estimated minimum of £71,500 per qaly was sound. But there should be no argument that some calculation is needed. We would do similar sums, in a less sophisticated way, if we paid privately. Would we make ourselves homeless and penniless to allow a spouse or child an extra few months of life? Would we pay high insurance premiums to ensure we got any treatment we ever needed? (Standard private medical cover does not include, for example, organ transplants and kidney dialysis and it is by no means comprehensive for cancer care.)

We have the NHS partly to avoid such agonising personal decisions. But the decisions still have to be taken, collectively for a collective service. Inevitably, some will seem arbitrary and unfair; you can't expect terminally ill patients and their relatives to view them dispassionately.

But why should the odium be directed against NICE rather than the drug companies? It takes two to make a deal and, if one side thinks the product is too expensive, the other can consider lowering its price. Instead, drug companies crank up their lobbying operations, and prompt oncologists to write emotive press articles. The companies reckon NICE has got its figures wrong on the kidney cancer drugs and that the cost per qaly could, in one case, be only £28,500. Let them prove it. The NHS could buy the drugs, assess their value-for-money in practice, and then receive reimbursement if they don't deliver as promised.

Alas, the system doesn't allow this "payment by results". Nor does it have an adequate mechanism for assessing the continued value of established drugs. "Some drugs currently prescribed in large volumes are up to ten times more expensive than substitute treatments that deliver very similar benefits," the Office of Fair Trading reported last year.

As a purchaser, the NHS is in a uniquely powerful position. Yet it seems reluctant to use its muscle. Ministers, afraid as usual of making enemies in big business, are reluctant to encourage it.

But, however the system is reformed, some patients will still be denied treatments which, they believe, could benefit them. Should they be allowed to buy them privately as top-ups without losing rights to free NHS treatment? Shouldn't patients and their families make their own decisions about what a few months of extra life are worth? There are several reasons why not. First, some privately purchased drugs may reduce the effectiveness of NHS treatments. Second, the nurse going round the ward administering drugs according to patients' means would have a devastating impact on the ethos of the NHS. Third, top-ups for NHS treatments would set a precedent affecting other public services, notably schools, where the right has long wanted parents to receive vouchers, equivalent to the cost of a state education, that could be supplemented to buy private schooling.

Unfortunately, this government has always been weak in proselytising for the merits of collective provision. I am not optimistic that it will resist the clamour for allowing wealthier patients to buy their own drugs.

Peter Wilby was editor of the Independent on Sunday from 1995 to 1996 and of the New Statesman from 1998 to 2005. He writes the weekly First Thoughts column for the NS.

This article first appeared in the 18 August 2008 issue of the New Statesman, Superpower swoop