Why the NHS thinks a healthy year of life is worth £20,000

Kadcyla is a new treatment for breast cancer which can extend seriously ill women’s lives by almost six months on average. It has fewer side effects than current treatments and patients say it has given them precious time with their families.

But the NHS drugs watchdog, the National Institute for Health and Care Excellence (Nice), has suggested that it is too expensive to be routinely available on the NHS. They are not being callous: Kadcyla is very expensive, however you measure it. Nice says it is £90,000 for a round of treatment, while the drug’s manufacturer, Roche, says it’s more like £57,000.

At the moment Kadcyla is available through the Cancer Drugs Fund, but if Nice’s draft guidance is accepted, it will not ever be freely available through the main health system because the watchdog says it is not effective enough to justify its cost.

The drug provides women with valuable extra time with their loved ones – time you cannot put a price on. Professor Paul Ellis

It is a regular and highly emotive row, coming up whenever an expensive new treatment comes to the market, and this one has sparked an even more furious war of words than normal.

Nice’s chief executive Sir Andrew Dillon said: “We are very aware of the importance that people place on life-extending cancer drugs and a decision not to recommend a cancer treatment for routine NHS funding is never taken lightly…We hope the manufacturer will act in the best interests of patients and use this consultation period to look again at their evidence and consider if there is more they can do.”

For its part, Roche said it was “disappointed” in Nice’s decision, pointing out that it will be the eighth consecutive drug for advanced breast cancer to be rejected since 2011, and adding that the body did not approve any new cancer medicines at all in the last year.

In its press release, the pharmaceutical company also included a quote from consultant oncologist at King’s College, London, Professor Paul Ellis.

“The drug tackles the disease in a different way to any other breast cancer medicine and provides women with valuable extra time with their families and loved ones – time you cannot put a price on,” he said.

How much is life worth?

The problem is that, as treatments get more complex and niche, meaning that there will be fewer patients who need them – so less of a market – drug companies have to charge a lot to recoup the costs of developing the drugs. Pharmaceutical companies are not social enterprises after all – they are businesses.

But this means, in a world where money is not endless, that Nice and the NHS are in an increasingly tricky position, because they have to make hard-headed economic decisions about issues which are anything but hard-headed and economic: life and death.

So how are drugs approved? And how does Nice make the decision to effectively value a human life in pounds and pence?

The process is complicated, but Nice is open about how it works. When assessing a new drug, the body looks at treatments which improve the quality as well as the length of someone’s life, balancing this with ensuring the drugs are an effective use of NHS resources. To do this they use a method called “QALY” – the quality-adjusted life years measurement.

A QALY gives an idea of how many extra months or years of “reasonable quality” life a person can expect as a result of a treatment. The next step is to work out how much the NHS is willing to spend per QALY – and the verdict is this: “Each drug is considered on a case-by-case basis. Generally, however, if a treatment costs more than £20,000-£30,000 per QALY, then it would not be considered cost-effective.”

If that ultimately puts a price on human life, Nice says that’s just how it has to be in a world where resources are not infinite.

A spokesman told Channel 4 News: “There’s a limited pot of money the NHS has to spend and it has a duty to all the people who use it to spend that money in the best way.”

There’s a limited pot of money the NHS has to spend. Nice spokesman

He pointed out that when considering a new drug, Nice also considers “displacement” – for example, how many hip operations would have to be cancelled in order to fund the new drug.

The spokesman also pointed out that Nice was currently consulting on a new process which would look at increasing the threshold of cost-effectiveness to between £20,000 and £50,000.

“Sadly, in this case, Kadcyla still wouldn’t be cost-effective because it is so expensive,” he said, reiterating the call for more efforts from Roche to look at the cost.

It’s an incredibly difficult issue, and one which, under the current system, will struggle to ever please desperate patients and their families. But there is some good news, which is that the purchasing power of the NHS does sometimes mean drug companies will consider “patient access schemes” – effectively, discounts.

This has happened with, for example, a drug called nilotinib for chronic myeloid leukaemia, as well as another called ipilimumab for skin cancer.

“When you’re buying something for your home, you don’t just accept the cost someone wants to charge you. You make sure you’re getting the best deal. That’s what we’re doing with medicines. It’s complicated but we are making sure that the best value is achieved for patients, and for the taxpayer,” said Nice’s spokesman.