We will take evidence on value-based pricing from Katy Peters, who is head of prescriptions, pricing and supply in the medicines, pharmacy and industry group in the United Kingdom Department of Health. Welcome. I invite you to make opening remarks before we move to questions.
Thank you, convener, and thank you for giving me the opportunity to make a short opening statement to set the scene. I hope that the committee will find it useful.
Thank you very much. I invite Richard Simpson to ask the first question.
My question arises from your very last comment. January 2014 is not very far away and this committee, and others like it, have no idea what is going to happen with value-based pricing. Will you explain to me the advantages of value-based pricing over a combination of the PPRS as revised—I think that it was revised in 2009—and patient access schemes, which seemed a rational and reasonable modification of the PPRS? That system has served us well for well over 50 years, and not only in terms of the supply of medicines. Until recently, innovative medicines were very expensive, which was the reason for PAS coming in. There is also a recognition that stability is necessary to maintain an industry that is one of the few that has a balance of payments surplus for the United Kingdom. This is a very important industry for the United Kingdom, so we must achieve a stable situation whereby its role in providing the economy with substantial benefits is maintained. My central question is this: what are the advantages of VBP over the PPRS, combined with PAS?
I apologise for the acronyms. The PPRS has provided stability and predictability over time. However, it has not always provided access to medicines. The way that medicines are appraised in the English system occasionally means that not all aspects of their value are rewarded. For example, the current system does not always take systematic account of certain effects that we think should be reflected more systematically. We mentioned wider societal benefits in our consultation document. Currently, we do not systematically appraise medicines according to the impacts that they have on aspects such as employment, tax revenue and spending. Medicines can bring a set of benefits that are broader than health benefits, which we are not appraising consistently.
That is very helpful indeed. We are having a review of the Scottish Medicines Consortium, part of which is about greater public involvement and looking at issues such as the effect on carers, for example. I entirely agree with what you are saying: the social and societal elements need to be considered.
As we set out in the consultation document, the system that we are looking to introduce has value-based pricing for new medicines and a successor to the PPRS for existing medicines. In August last year, we published a joint statement with the ABPI, in which we set out that the new PPRS would evolve from, but would be similar to, the current PPRS. One of the reasons why we put out the joint statement was to create greater stability with regard to what was likely to be included in the future arrangements.
That is very helpful.
The role and remit of the SMC are determined by the Scottish Government.
There will not be a separate VBP structure. That will be part of NICE—NICE will take that on board.
Yes, we have announced that NICE will be—
That gives me a problem, because the SMC is faster than NICE is. It is highly regarded around the world. Speed is of great importance to us up here. If we will have to wait for a VBP assessment from NICE, even with the new requirements that the minister in England has placed on NICE, that will still be a much slower process than the current one in Scotland, as far as I can judge. I have significant concerns about that.
I will address the point about the speed in Scotland, in so far as it is my place to do so.
Thank you.
The ministerial foreword to the English Department of Health’s consultation document on value-based pricing says that
We have done a lot of modelling on VBP in which we have covered a much broader range of values. Indeed, at the very heart of value-based pricing is the idea that we need to take account of a broader set of effects. I have already mentioned employment effects but we should also take into account the effect not only on the social care system but on carers and the amount of informal care that is provided. When a medicine can affect the amount of informal or social care in the system, that should be reflected in the price.
Have you solicited the views of the Convention of Scottish Local Authorities on value-based pricing?
I am not explicitly aware that COSLA is one of the organisations that we have had discussions with. However, the website contains a list of all the organisations that expressed a view on value-based pricing in the consultation.
Given that COSLA is the umbrella organisation for Scotland’s 32 local authorities, I would hope that it would be a statutory consultee so that you could get an accurate picture of how value-based pricing fits with the Scottish policy context. It might be useful if you could tell me whether the Department of Health in England has contacted COSLA directly on this matter. You will have to forgive me—I do not know the name of the umbrella group for local authorities in England—but have you directly discussed value-based pricing with that organisation? I feel that, if we are to get this right, it is essential that you have those discussions.
We have engaged with many colleagues in social care in the UK on this issue. When I am back in London, I will check the details of the public organisations we have consulted, but I point out that, in England, the UK Government’s Department of Health deals with social care and that is where we have been channelling those discussions. Organisations had an opportunity to raise those issues in the consultation and the modelling work has definitely covered those matters. We have also discussed value-based pricing with NICE, whose remit now covers social care.
I thank you for that answer but, with genuine respect, I get the feeling that you are missing out the Scottish policy framework and the vital role played by Scottish local authorities. I would have expected the Department of Health to have made direct representations to the authorities and it could be a fundamental flaw in trying to get value-based pricing and its impact on Scotland right. Nevertheless, I am sure that the committee would welcome more information on that matter.
The modelling work that we have done has been discussed at various technical workshops that the ABPI and member companies were invited to and attended. They have seen that work.
I genuinely appreciate that, but I am trying to understand how you can feed the numbers on the social care bill in Scotland into any modelling that you have unless you speak to Scotland’s local authorities and ask them what their social care bills are. I am not trying to be awkward; I am just trying to make sure that you are taking specific account of the Scottish public policy situation. For example, we have a national carer strategy, free personal care for the elderly and a change fund for older people. All across the board there is a different policy framework in Scotland. I want to make sure that, when you look at the on costs—or on savings—of social care and feed those numbers in, you speak to Scotland’s local authorities and use numbers in a Scottish context. I am unsure how you are able to achieve that.
I am happy to discuss—partly through my colleagues in the Scottish Government—what the appropriate forum is for such a dialogue. It will continue to be for Scotland to decide how it funds and what arrangements it makes for social care. However, we are happy to discuss with Scottish colleagues in the Government the appropriate way for such a dialogue to take place.
I may come back in later with some more questions. I have a feeling that my colleagues will want to ask some.
In some of the evidence that the committee has taken in our inquiry into access to new medicines, there have been concerns about the implications of the value-based pricing system for the SMC’s appraisal system. What discussions have you had with the SMC and what contribution has it made? I understand that, when Professor Angela Timoney of the SMC spoke at a recent meeting, she closed with a slide of the Loch Ness monster, which she claimed she might find before she found value-based pricing.
As I said, there have been on-going discussions about value-based pricing with colleagues from Scotland and the SMC. We have had a series of meetings, at which different organisations have been present, and we have had a series of workshops on things such as how the research that underlies the assessment of some of the components, such as burden of illness and therapeutic innovation and improvement, could be measured. There have been invites to the SMC on those issues, it has attended a lot of the technical workshops, and follow-up material has been presented to it.
There has been consultation with the NHS in England, but what role has the NHS in Scotland had in the consultation so far? How has its involvement been working in terms of the discussion?
We have routed the discussion through Scottish Government officials. We have had a lot of discussions about the issues around how value-based pricing will be taken forward and also the negotiations on price—both about the value-based pricing aspects of the negotiation and about the successor to the PPRS. There has been a lot of dialogue and discussion and it has primarily been routed through Scottish Government officials.
One of Professor Routledge’s review recommendations was that citizens juries and citizens panels should be set up. Which of the patient groups in Scotland have you been consulting?
We have had a large engagement with patient groups. Some of them present themselves as UK groups. An example is Myeloma UK, although it is based in Edinburgh. We have had a huge amount of engagement with patient organisations. First, there were a large number of consultation responses from them. We have also had individual meetings with individual organisations. We have met some of the broader alliances. One of the workshops that we set up was specifically to engage with patient organisations. We also had a workshop specifically on inequalities issues, on which we thought that it was particularly important to engage with patient organisations. They have been helpful in making us understand the impact of the policy and the questions that we need to debate.
Thank you.
Ahead of today’s meeting, we received a briefing paper from Prostate Cancer UK. To summarise, it says that the Department of Health at Westminster has not consulted patient organisations meaningfully on the proposed changes. It states that few details are available about how VBP will work in practice and how the proposed weights for wider societal benefits, burden of illness and therapeutic innovation will be combined, which continues to prevent meaningful engagement.
Several issues are important in understanding the role of the patient, even with the current system of value-based pricing. One thing that we have said about value-based pricing is that we will use the quality-adjusted life year in assessing a medicine. The QALY is drawn from the assessment of patients across a broad range of diseases. A great thing about the QALY is that it allows us to compare the impact on health across many different diseases. It is therefore absolutely at the heart of what we expect to be delivered through value-based pricing. That is a core role for engaging a broad range of patients and ensuring that the impact that a medicine has on patients is reflected in the future system.
During our conversation, it struck me that I should ask you whether the results that you are hoping to achieve with value-based pricing could not be achieved by altering, for instance, the modifiers or the criteria that the SMC uses when judging new medicines, without having to change the complete system?
Much of the way in which value-based pricing is likely to be implemented is through the HTA process. We are discussing with NICE what is appropriate for England. As I said earlier, in many ways, the system may not look that different from the current system, so much of this will be taken forward—certainly in the English context and in terms of how NICE plays its part—through changing the details of the HTA process. Whether the Scottish Government wishes the SMC to adopt a similar approach in making decisions about the use of and access to medicines in Scotland is a question for the Scottish Parliament and the Scottish Government.
I have a question about the confidentiality of the negotiations. I presume that the appropriate minister in the UK Government has been kept up to date about all the negotiations, including what stage they have reached, what progress has been made, what barriers there are and so on. Has there been any engagement between the UK Government minister and the Scottish and Welsh equivalents to bring them up to date, minister to minister?
That is a difficult question, because we are now getting into debates about confidential letters that are exchanged between ministers.
I am asking not about the detail, but about whether, given that the UK minister has the information, it has been seen as appropriate to share that, minister to minister, between the UK department and the equivalent ministers in Wales and Scotland.
There has certainly been an exchange of letters about medicines pricing.
Which—
Which discusses the issues that we are discussing here—yes, absolutely.
How recent was that exchange?
I do not have the data of the latest letters with me. As I said, there have also been discussions with officials in the Scottish Government. To some extent, it is for them to make decisions—
Within the past month?
Certainly not within the past month, as far as I am aware.
Within the past two months?
Are we planning to run an auction here? Certainly not within the past two months. There is—
Recently?
I would need to check what is appropriate for me to share with the committee with regard to internal communications with Scottish Government ministers. I understand that a meeting with your cabinet secretary has been set up for July.
Who requested that meeting?
My impression is that, as such things are arranged in correspondence between offices, a request for that specific meeting came from your cabinet secretary’s office.
Has the SMC raised any concerns or criticisms in the various workshops or in communications—given that it has concerns about Loch Ness monsters and whether the negotiations are going too fast or too slowly—about the delay and its lack of involvement in the process?
I would not say that the SMC has raised criticisms. It has raised a set of entirely sensible questions, which are about the process, the issues and the impact on Scotland rather than about the general principles and the impact that they might have on the Scottish system.
But no questions have been raised about the delay or the lack of information.
No, I am not aware of any.
Thank you.
The core of value-based pricing is the ability to pay higher prices for medicines that deliver value for patients. Explicitly adjusting for factors such as the wider societal benefits and the impact on the care system provides the scope for higher prices, which may encourage medicines to be made available in the UK that deliver high value, and which would not have been available under the current system.
NICE would operate that south of the border. Would you envisage the SMC taking the results of the work that you have done over the piece—such as the conclusions from the studies and the workshops—and using it in Scotland, or not?
We would be more than happy to share with the SMC—as I think we have done—the details of the technical work that we have done on developing a possible value-based pricing model. If the SMC did that with the Scottish Government’s support and the Scottish Government wanted to reflect that in its HTA process, we would have no objections whatsoever. As I said, that is a question for the Scottish Government and the Scottish Parliament.
Could the SMC take that work now, draw on the results and make progress itself if it wished to do so?
Yes. The SMC has attended a series of technical workshops and, if it wanted to use that information to develop its own system, we would have no difficulty with that.
So, if the SMC was concerned that you were not going to meet your date of January 2014, could it take matters into its own hands?
The January 2014 date relates not simply to the HTA aspects of value-based pricing but to broader issues, such as the negotiations on the successor arrangements for the PPRS.
This is probably a daft question. The procurement process—the buying of drugs—is a matter for the health service, is it not?
The decision about whether to buy a medicine at a given price is a decision for Scotland, yes.
Thank you. If committee members who have not yet spoken do not want to come in, I will bring Richard Simpson back in.
One of the difficulties that I have is to do with the difference between the proposed approach and the modifiers that are developing in Scotland, which take account of issues that Katy Peters has talked about, although there has perhaps not been the same emphasis on employability and tax take, which are interesting—I am thinking particularly about employability, in relation to the expensive new biological drugs for rheumatoid arthritis.
As I said, pricing negotiations take place between the industry and Government, but issues to do with core societal judgments about what matters and what we should be prepared to pay for—critical questions, such as whether we are prepared to pay more for people towards the end of their life—have been addressed, in part through the technical workshops and through broad engagement. We commissioned research into society’s views on the issues from the University of Sheffield.
In a sense, we have been here before. A similar approach was taken in Oregon, where the public were asked for their views. One of the interesting responses was that HIV drugs should not be purchased, because of what was almost a moral judgment that money should not be spent on a particular group.
The role of the patient is key, I think, in the context of the quality-adjusted life year. That is why the QALY is so useful; it is a systematic way of assessing what a broad range of patients want to see reflected.
Have you tried out a citizens jury system, or equivalent, involving the participation of the public?
We have not taken a citizens jury approach. We did a large survey of the public to get a take on their views on such issues as burden of illness and therapeutic improvement and innovation.
The advantage of a citizens jury approach is that the juries are properly briefed. A proper analysis and an evidential basis are presented to the jury before it makes its decision. Is that system being considered, or not?
It is not one that we are actively considering. The research that we commissioned endeavoured to set out quite a lot of information for the people participating in the survey, through the type of questions that we asked. There was an attempt to brief the people who participated in the survey. We wanted quite a large sample, and that is why we went for the survey methodology.
I would say that a combination of those is probably the way to go.
I would not rule that out for the future, but it is not something that we have done so far.
Returning to the point about consultation, have you had face-to-face meetings with representatives of institutions in England that are interested in the issue?
Yes.
Can you tell us about the organisations with which you have been involved?
There are a lot of organisations involved.
One or two would be fine.
We have engaged with pharmaceutical firms and with patient organisations—both representative bodies and individual interest patient organisations. We have engaged extensively with the NHS. We have engaged with and discussed the issue with NICE. I have been up to Edinburgh previously to discuss the matter with the Scottish Government and get its views on how the arrangements might operate.
To be frank, when it comes to consultation with the same interested parties in Scotland, I find your answers a bit sketchy. Perhaps I am wrong. Could you inform us about exactly when and with whom you have engaged in Scotland? Did you do so to the same degree here? This is a reserved matter. In many ways, we are very much in Westminster’s hands. My expectation and the committee’s expectation is that you would duly consult to the same degree here, but it is not coming over that way, to be honest.
A lot of the patient organisations with which we discuss the issue are UK organisations. One point that comes up a lot in relation to the consultation is how the system works in the different devolved Administrations. We have regularly discussed with the UK reps how it might operate. We have explained the system as being one in which pricing is a reserved question, whereas the aspects relating to how Scotland spends Scottish money are, of course, for the Scottish Government and Scottish Parliament to determine.
Which do they include? You have talked about UK institutions. This is the UK, in that regard. I am asking about people with whom you have engaged, specific to Scotland, pro rata. I recollect that you said in your introductory remarks that you have many meetings with officials in Scotland involving the matters that we are discussing.
There have been a large number of meetings between officials from the UK Government and the Scottish Government specifically on pricing. At those meetings, a lot of time has been spent discussing value-based pricing, the impact on Scotland and the successor arrangements for the PPRS, although other issues have been discussed, such as the security of supply of medicines. I would say that the vast majority of the time in the meetings so far has been spent on the issues of value-based pricing and the successor arrangements for the PPRS.
It might be helpful if the committee could have a summary of the meetings. The previous cabinet secretary expressed confidence that the engagement would happen. I do not know whether there has been a recent tapering off. We sometimes start off with good intentions and then there is a lot of engagement, but it tapers away. I do not know whether that is what has happened, but it would be helpful for the committee to have a summary of the meetings and the range of subjects that have been discussed, so that we can establish whether there has been consistency and commitment. That would be helpful.
That would be fine.
It would also be helpful if we could have a link to the survey that you mentioned, if we do not have it already. In evidence on access to medicines, we have heard about society’s opinion, and that issue is in the recommendations that are before the committee. It would be interesting to have that, as well.
Of course.
We are talking about a consultation, and it is right that we should ask about the details of it. It might be useful if you could give the committee a list of not just the respondents to the consultation, but the statutory consultees that the Department of Health contacted directly, so that we can see whether there were any omissions. Perhaps we could have got that information before today, but we did not. We would find it helpful if you could provide it.
Clearly, the SMC is a hugely respected organisation. We respect its views and it has been involved in many of the events. We are more than happy to have additional conversations with it. It is a little tricky for me to come along from London and lecture the SMC on what it should and should not do, which is why I am slightly nervous. However, we are more than happy to engage with the SMC and we strongly encourage it to engage with NICE about the specific HTA issues.
Maybe I did not clarify my question. It was not a substantive question; it was just based on an impression that I got when I made other comments. NICE is going to deliver value-based pricing in England and it is directly part of the process of developing value-based pricing. The SMC will deliver value-based pricing in Scotland, but it is not an integral part of the development of value-based pricing. Therefore, will the SMC be starting from behind in terms of preparation? Could the SMC have been a more integral part of the process? I do not know the SMC’s views on that—I am merely asking the question.
It will always be possible to reflect afterwards on whether we could have done something different. That is true of any policy.
I am sure that the Scottish Government would be up for partnership working if it were asked.
Drugs companies will maintain freedom of pricing at launch within the constraints of the pricing agreement. The SMC will have the opportunity to make an assessment of that price based on the current Scottish system. I do not see why anything to do with value-based pricing would change that.
Let us say that a drugs company launches a drug. The drug is available and safe to use and, if someone can pay for it, they can use it, but we would like it to be available on the NHS in the various nations and regions of the UK. What happens if the drugs company goes through a value-based pricing system, whatever the mechanisms are within it, but thinks that that could take six months whereas it could get a decision from the SMC in two months?
The drugs companies have not raised that explicit issue about the SMC with us. However, we have said that there will still be freedom of pricing, as set out in the joint statement, so the system will not change that much. The SMC will be able to take that price and assess whether it represents good use of Scottish money to buy the medicine at that price.
Yes—but that will be before the medicine has been through the modelling work of value-based pricing at UK level. I would be surprised if the matter did not come up in discussions with the industry. If a new drug is launched that people can get privately, but which we would like the NHS also to have, will the drugs company make a submission to the SMC and to the UK value-based pricing model at the same time, knowing that the SMC decision could be three, four or five months quicker and that, therefore, the drug could be made available across Scotland more speedily? Have drugs companies said that they are likely to do that?
We have not had that sort of debate. We do not anticipate a UK value-based pricing authority—I think that you used that expression.
I can only apologise if my terminology is wrong.
There is no need; it is a complex issue, so the question is worth asking. We do not envisage an HTA being imposed on a UK basis. We envisage that, for England, NICE will undertake the full value-based pricing assessment. Therefore, the system will not look much different from the current system.
I want to check whether I have misunderstood. The reference price of drugs is reserved to the UK and the value-based pricing model will be a UK model, which will go through NICE. An element of pricing will have to be determined through value-based pricing, as laid down by the Department of Health in conjunction with NICE.
The issue is complicated. When I took up my role, I spent quite a lot of time thinking through the processes. The pricing aspect is reserved, by which I mean issues such as freedom of pricing and whether, under the PPRS, we have profit control or price profiles. The question of whether there is freedom of pricing at launch is a reserved matter.
My lack of clarity might be the result of there having been a bit of an information gap during discussions about the process. I suspect that the committee will want to return to that. There seems to be a lack of information in the public domain. Your assurances sound good, but we cannot really touch, feel or smell that, because we do not know what will happen. I think that many members share my nervousness.
We addressed the role of the devolved Administrations in the joint statement. We said, in essence, that we are not expecting much change. I will send you a copy of the joint statement, which you might find useful.
In England, patients have benefited from the cancer drugs fund, which we do not have in Scotland. How do you envisage value-based pricing affecting patients who would benefit from new drugs that would qualify under the cancer drugs fund? Will there be an impact on Scottish patients?
England introduced the cancer drugs fund. The fund has proved to be popular and more than 28,000 patients in England have benefited from it. The fund is time limited and we have made no statement of what will happen beyond the three years of its operation. Discussions are going on about the fund’s future.
That is interesting. I was not sure about patients currently benefiting from the cancer drugs, but you have clarified that role, as far as England is concerned. There is therefore the possibility that English patients could benefit while Scottish patients would not get those drugs, if we do not have a cancer drugs fund.
We have said that we are keen to ensure that individuals who currently benefit from the medicines in England continue to do so; I think that we set that out in the consultation document as one of the possibilities. We have said that the primary focus of VBP will be new medicines, but there is a question about whether any medicines that are currently available through the CDF would be assessed with a VBP assessment.
That is helpful.
Your last comment—that it has not been decided yet whether VBP will apply only to new substances—is very interesting. There is still a huge amount of uncertainty, with which the committee is trying to grapple.
I clarify that we do not expect an HTA assessment and then a value-based pricing assessment; we expect that it will all be undertaken as one assessment, with additional weightings being put in.
So we would end up with an HTA, which Scotland does as well, and a VBP assessment by NICE, which we would have to wait for before we would be able to go into a PAS, if we wanted to.
No.
I am sorry, but I am still not clear about this. The SMC operates at the moment within the PPRS, but we can modify it with the PAS. We will have a VBP assessment for new substances instead of the PPRS, but we will still be able to modify it with the PAS and will not have to wait for the VBP to be determined before we negotiate our PAS, if we want to do that. Is that the case?
The medicine will be licensed and get its price, and the SMC can then undertake an assessment as it currently does. Any debates about patient access schemes that the Scottish Government wants to take through that route would be a question for Scotland. The NICE assessment, which is a traditional HTA but includes a wider set of factors, does not really affect that timeline because the price is set and the SMC has its own role. That is how I understand the system, although I am not an expert on the Scottish system. The SMC can make its assessment, and those arrangements can continue at the determination of the Scottish Government.
Okay.
Thank you for increasing my confusion. Value-based pricing is apparently a reserved issue. We are looking at it and there seems to be an information gap, so we are delighted to have you here. Your last comment seemed to suggest that NICE will do its HTA and value-based pricing together, and will come out with an approval or otherwise for new drugs in England. Meanwhile, Scotland can just continue to do its own thing and completely ignore value-based pricing. Is that what you are saying?
NICE undertakes the HTA aspects of the system for England, so it may well not be that big a change, as NICE’s role relates very much to those aspects. Just as in the current system, there is freedom of pricing at launch in the context of PPRS, and the SMC makes a set of decisions and recommendations. The medicine may or may not be assessed by NICE, because we have a slightly different set of criteria to decide which medicines go to NICE. NICE then makes an assessment based on a wider set of factors in a more systematic fashion than it currently does.
For the part of that process that includes value-based pricing, who decides the framework for value-based pricing in Scotland?
If there is a pricing debate, the question whether there is freedom of pricing at launch is determined by the UK Government. It is for the Scottish authorities to make a decision on the bit of an HTA that relates to whether Scotland spends money on a particular medicine at a particular price.
Yes—but that is not the answer to the question that I asked you. I asked who decides. We know that there is a reserved aspect of pricing—although I must admit that I do not fully understand how it works—and we know that value-based pricing is being taken forward by the UK Government and that that aspect is reserved.
The bit that I would say is classically reserved is the pricing element. The SMC cannot say, “No, you don’t have freedom of pricing in Scotland.”
Right. Can the SMC say that value-based pricing in Scotland is completely unique to Scotland because we have our own health and social care system, prevalence of disease, life expectancy and multimorbidity, and that we will therefore decide on value-based pricing all by ourselves or just ignore it completely? Can it do either of those two things?
As I said, the PPRS document reflects the issues that are reserved. Scotland cannot say that there is no freedom of pricing, and that profit controls must be operated in a certain fashion and that there must be a certain profile for list prices. Those aspects of the system are reserved, and relate to the price.
That bit is crystal clear. What is not crystal clear—although I do not think that we will get any further this morning—is that although we know about pricing controls and the reserved aspects of those, which you have listed, none of that has anything to do with value-based pricing, from what I can see. We are here to discuss the reserved aspect of value-based pricing and how that will impact on Scotland. I am singularly unable to identify any aspect of value-based pricing, as you have outlined it, which is reserved.
There are debates about how we will price new medicines. The part of the debate that relates to the pricing framework for new medicines, and how that fits into the European Union transparency directive, is reserved. Because value-based pricing will be applied to new medicines, how they are priced will be affected. However, the HTA process is a debate for Scotland and reflects Scottish preferences and societal judgments. Debates about the pricing profile for drugs—such as whether there is a maximum price; whether, if the medicine is available at a price that is higher than the one that has been agreed at UK level, there is a blacklist; what its availability is—concern issues that are reserved.
Right. You just mentioned a blacklist, if a price is agreed that is higher than the UK level. Can you explain what you mean by that?
There are difficult questions around what exactly is the status of NICE’s approval. In the EU there are debates about the definition of a blacklist, where countries say, “You cannot have that medicine.” In England we have a system where NICE says, “You must have it”, and for medicines where NICE does not say that, it is up to individual commissioning authorities to make decisions.
I am grappling with this—I think that other committee members are, too. Thank you for your answers.
I am confused.com, as it were.
Yes, you have. The HTA looks at both the savings and the cost to the system over a person’s life.
If I may check that I have got it right, a drug that costs £30,000, let us say, may be expensive now, but in the new system that £30,000 will be assessed over the piece in terms of savings to the health service and the impact on the individual and communities. Is all that part of the value-based pricing method?
The value-based pricing method takes the current price and looks at the benefits over the course of an individual’s life, and then makes an assessment of whether that price is worth it, given the broader set of issues.
This is the bit that I struggle with. The system is based on measurements of what happens in England, which has a different system; the problem is that here we do business entirely differently. For instance, we are endeavouring to spend money up front, in the way that you have described. Our system is different, as is the energy and money that we are putting in with preventative spend, but decisions on drugs will be based on an English model, into which we in Scotland have no input. How do you evaluate what happens here in Scotland specifically, compared with what happens under a different model? You could be talking about Hong Kong, and coming up with a model for that country. That may sound ridiculous, but a system could be modelled on somewhere else that does not fit our way of operating, and brought into the UK.
It comes down to the distinction between the pricing part of the system and the HTA aspect of the system. The HTA aspect is taken forward by NICE in England and will be, I presume, by the SMC in Scotland. Those bodies can therefore assess what is the appropriate impact—how we value appropriately the price that has already been given by the company, based on the system with which they are dealing. If the Scottish Government wishes, the SMC can take account of the social care system in Scotland when it makes its assessment. That is a decision for the Scottish Government.
We will reflect all your evidence in our final report. Value-based pricing has been mooted for a long time now as some sort of panacea that would cure all the ills in the system. We seem to be waiting for tablets from the mount. From the evidence that we have heard, there will be no easy decisions here about the question of access to medicines.