When approving new drugs governments implicitly put a price on healthy ageing

Governments around the world must wrestle with the costs of a new drug. They must make an economic trade-off: cost against healthy ageing. In setting thresholds, they put a price on healthy ageing improvements. In a world of exploding health budgets, growth in life expectancy and healthy ageing becomes a question of money.

The UK Example

The logic is the same all over the world. The National Institute for Healthcare Excellence (NICE) is the regulator for approving drugs to be used in the UK National Health Service. One of the criteria they use is the “Incremental Cost Effectiveness Ratio” (ICER). This is an assessment of the incremental value of a new drug or technology compared to the existing treatment. The incremental cost is relatively easy to compute. This is divided by the incremental “Quality Adjusted Life Year “or QALY. One QALY is one year of life in perfect health. The assessment includes the incremental impact on quality of life which can range from 1 down to 0 and how long it lasts.

Dividing the incremental cost by the incremental QALY gives a cost per QALY. NICE sets a threshold for acceptance of £20,000 to £30,000. Above that the treatment is viewed as too expensive. There are modifiers that can be included. These are based on the severity of the disease, health inequalities, terminal diseases etc. This can raise the threshold to £70,000.

Improving life expectancy and healthy ageing is therefore dependent on a valuation of quality of life. This is not surprising in reality. Healthcare budgets may be growing but they are not infinite. There has to be rationing. Within a fixed healthcare budget there is an opportunity cost of approving new more expensive treatments. Costs elsewhere have to be cut.

Different drugs have Different “Values”

Different drugs have different ICERS. A recent survey showed that cancer drugs have a median ICER of £30,000 per QALY. End-of-life cancer treatments have a higher threshold and can be £50,000 per QALY. A typical anti-infective drug is very cost effective at £6,478. There is no ICER approved for an Alzheimer drug. The cost would be £1.4Bn for to add less than half a year QALY for 70,000 patients. At least that is the number quoted by the BBC. This was judged to be poor value even though the drug was medically approved.

The Case of Multiple Sclerosis

This is a auto-immune disorder of the nervous system. The body attacks the spinal cord and the brain. This can produce multiple disability symptoms. The most common manifestation is episodic. Symptoms appear but then fade only to return at some “random” point in the future. There is no cure. Each episode causes permanent damage to the nervous system. These cumulate.

It was only in the 1990’s that it became possible to offer some relief. Disease Modifying Drugs (DMDs) were developed. These succeeded in reducing the number of relapses and minimizing the impact of each relapse. Prior to the drugs, life expectancy with multiple sclerosis was up to ten years shorter. With the drugs that difference has virtually disappeared.

DMD’s are some of the most expensive drugs. Their price has risen well above drug inflation since they were first introduced. A US study suggested that the cost for a single patient over their lifetime could be as high as $4m. (US drugs are notoriously expensive) . For most patients the cost of the drugs represents 80% of all treatment costs. The investment is still worthwhile. Not just on humanitarian grounds but on economic grounds. MS is a disease of young people. The most likely age at which it appears is between 20 and 50. It is a debilitating, affecting an individual’s life. Their ability to work and their productivity. Any mitigation of symptoms will improve quality of life over a long period of time. It will also benefit the economy.

New Drugs for an Ageing Population

Infectious diseases are no longer the threats that they once were. In their place, the chronic diseases of later life are driving medical costs and innovation. These are diseases for which there is no cure. The symptoms of arthritis can be relieved but not cured. Hips and knees can now be replaced in the worst cases. For many chronic disease drugs and procedures already exist. Hip and knee replacements were approved by NICE.

Treatment improvements in the UK, and elsewhere, will have to face the economic tests. Does the new treatment deliver incremental quality of life adjusted years? People are living longer so the benefits will last longer. Is the elderly healthy ageing incremental benefit worth the cost of the new drug or procedure?

Improvements in healthy ageing and life expectancy will increasingly depend on Societies’ tolerance for increasing healthcare budgets.