We’ve seen several interesting examples of healthcare consumerism come out of the prescription drug space in recent years. The Wal-Mart $4 generic program has been well documented and is probably the most prominent example. And now the New England Journal of Medicine has floated a new idea: printing comparative effectiveness information on drug labels. Given concern in certain circles that healthcare reform will install some version of the UK’s National Institute for Health and Clinical Excellence (NICE) in the United States, the union of comparative effectiveness and consumer choice is intriguing for its simplicity.
As we mentioned on Monday, the cost-savings potential of prevention and wellness is still uncertain. Milliman Principal Kate Fitch provides some perspective on this.
We asked Kate Fitch for perspective based on lessons learned from the private sector.
Q: What wellness programs are most effective? Do some programs work better than others?
Kate Fitch: Program effectiveness goes beyond whether or not it “works.” Wellness programs should be evaluated in terms of both efficacy and value. Providing everyone with a personal trainer, personal nutritionist, and exercise equipment in the home might result in a few great outcomes. But if the cost becomes astronomical, or if the population affected by the program is insignificant, the value of the program comes into question.
The National Institute for Health and Clinical Excellence in England offers an interesting model for healthcare reform.
We asked Joanne Buckle for her perspective.
Q: What is NICE and what does it do?
Joanne Buckle: In 1999, the British National Health Service (NHS) created the National Institute for Health and Clinical Excellence, or NICE. NICE is responsible for evaluating treatments and drugs and recommending whether or not the NHS should pay for them. In the years since then, other countries have looked to NICE as an example of how they might approach cost-effectiveness questions; in fact, last year, NICE established a policy consulting wing to help these countries. In the United States, the recently enacted stimulus bill includes $1.1 billion devoted to fund studies into the comparative effectiveness of different drugs and treatments.
One measure used by NICE to approve or disapprove payment for a drug or a treatment is the cost per quality-adjusted life year (QALY). Cost per QALY is internationally recognized as a method of comparing the cost-effectiveness of alternative treatments. Treatments that increase QALYs, but at a higher price than alternatives, are likely to be approved, as long as the resulting incremental cost per additional QALY is not too high. However, new treatments that have a very high cost per QALY are not likely to be approved for payment because the health budget is limited and these treatments are poor value for money and divert resources away from treatments that produce more QALYs for the same or lower cost per QALY.