Saying “No” While Being NICE

By  |  December 20, 2011 |  15 

A wise man once quipped that saying that we may need to ration healthcare is like saying that we may need to respect the laws of gravity. In other words, when societies have more healthcare needs and wants than resources (and all societies do), rationing is inevitable.

The question of how to ration used to be the stuff of academic parlor discussions between health policy wonks and ethicists. But it now occupies center stage in the schoolyard brawl that passes for political discourse in today’s America. Exhibit A, of course, was Sarah Palin’s fear-mongering over “Death Panels.” Exhibit B: the Right’s christening of Don Berwick as “Rationer-in-Chief” (and a communist, for good measure) because he had once expressed his admiration for the British National Health Service.

At IHI last week, a newly unplugged Berwick — fresh from his resignation as Medicare chief — spoke passionately of solving our healthcare cost crisis by cutting waste, fraud and unnecessary care. While finding such savings is crucial, they will not be sufficient. The hard fact is that we also need to learn to set some limits. Our failure to do so has landed us in backbreaking debt, with scarcely enough to fund essential sectors such as education and the military.

In fact, during my six months on sabbatical in London (which sadly came to an end this week), when I asked British physicians or hospital administrators who have spent time in the US about their main impression of our healthcare system, I nearly always heard some version of, “You people don’t know how to say no to anything.”

They’re right.

A mature society, of course, would decide on how much money it wanted to spend on healthcare (after considering its preferred tax rate, the tradeoffs for businesses, and other social needs), and then make some difficult calls. Do we need a new chemotherapy that prolongs life by two months? If cost was no object, then sure. But what if the drug cost $200,000 and paying for it meant that we couldn’t afford to screen women for cervical cancer, treat hyperlipidemia, or ensure the safety of the food supply. Well then, maybe not.

In the UK, they have built an organization that makes these tough decisions: the National Institute for Health and Clinical Excellence (NICE). I was lucky enough to spend several hours with its leaders last week in the organization’s London headquarters. NICE is awesome, not just for what it does, but for what its existence says about the maturity of the British political system when it comes to healthcare.

Interestingly, NICE’s founding in 1999 was less about cutting costs than preventing inequity. By the late 1990s, with expensive new therapies such as beta interferon regularly entering the market, the NHS lacked a way to decide which ones to make available to British patients. So decisions were made ad hoc, on a region-by-region basis. This resulted in some patients being given treatments that were withheld from others. But this raised hackles since, in a tax-funded system, why should a patient in London have access to a new drug when one in Liverpool doesn’t? The solution was NICE, which was charged with making national coverage decisions for the NHS around expensive new treatments. (By the way, NICE does many other things, such as develop clinical guidelines and quality measures, but these aren’t terribly radical or controversial. Therefore, I’m going to focus on its “technology appraisal” work, which is radically different from anything we have in the States.)

You may have heard a bit about how NICE works, but a brief summary is in order. When a new and expensive drug or device enters the market, NICE conducts a detailed review of both its effectiveness and cost-effectiveness. Therapies that cost less than £20,000 (about $31,000) per quality-adjusted life year (QALY) saved will typically be approved for NHS coverage; those over £30,000 ($47,000) per QALY will generally be turned down. In-between is a grey zone; NICE will often take these decisions to a “Citizen’s Council,” composed of 30 public members, for input. In NICE’s 12 years of appraisals, it has approved 63% of applications, rejected 13%, recommended use only in a research setting in 5%, and “optimized” 19% (more on this group later).

I asked Sir Michael Rawlins, the avuncular 70-year old founding chairman of NICE, about the organization’s early days. How did NICE gain and keep its support when it was doing something so inherently controversial?

“Napoleon always said he’d rather have generals who are lucky than good,” he laughed. “We got lucky.”

He recounted that NICE’s first technology appraisal decision concerned zanamivir (Relenza), a Glaxo drug for influenza. The evidence showed that Relenza shortened the duration of flu symptoms by one day, at a cost per QALY of £40,000. NICE turned the drug down. Most GPs, who didn’t particularly want waiting rooms full of flu patients seeking the medicine, supported the decision. And there was no influenza advocacy group ready to pounce.

But one constituency was very unhappy. The chairman of Glaxo, Sir Richard Sykes, went “berserk,” according to Rawlins, even threatening to pull his company out of the UK market because of the NHS’s “antagonistic attitude” toward the pharmaceutical industry. Rawlins took to the media, calmly arguing that the NHS had a fixed budget and that choices had to be made. Popular opinion backed him up, as did Prime Minister Tony Blair. The stage was set: NICE could make tough calls and withstand the political heat.

I asked Sir Michael what it was about the culture of the British people and the NHS that allowed NICE to function, when America has such problems saying, and accepting, a forthright “no.”

“The man on the street gets it,” he replied. “They know that there is a finite amount of money. And politicians get it as well — they know that someone is going to have to make these tough decisions, and they’d rather it be us than them.”

Even when NICE judges that a therapy has an unfavorable cost-effectiveness ratio, the ball game isn’t necessary over. Many companies go back to the drawing board, either coming back with narrower indications (i.e., defining a more limited patient population in whom the drug is cost-effective) or, more interestingly, a price reduction. The latter, called a “patient access scheme,” is more convoluted than a simple price cut. Because dozens of countries use the UK price as their reference point, companies are reluctant to simply drop the sticker price. Rather, the schemes are a bit like late-night TV ads for carrot peelers or ab rollers, offering to give patients the first two months free, or to refund the NHS the money if the drug doesn’t work. If the givebacks cause the treatment to dip below NICE’s QALY threshold, it gets approved (and NICE’s decision is called “approval after optimization”).

I wondered how NICE set its £20,000/£30,000 per QALY thresholds. Sir Michael told me that the thresholds emerged in the early days of the organization by consensus, without a formal process. Interestingly, the UK thresholds aren’t very different from the typical American threshold of $50,000 per QALY (which, of course, is often cited but rarely applied), despite the fact that the US spends twice what the UK spends on healthcare. While the concept of using money per QALY is highly controversial in healthcare, it is an accepted method for making cost/safety tradeoffs in other industries, such as in highway construction.

Periodically, NICE considers adjusting its thresholds for certain patient populations, such as patients with rare diseases, or patients of a particular age group. The organization typically asks the Citizen’s Council to consider these vexing questions because, as Sir Michael told me, they really are questions of “social values.” The reports of the Council are thoughtful and remarkably mature. For example, here is an excerpt of the Council’s report on “Age,” which illustrates the dialogue’s seriousness of purpose. One Council member said:

It is very sad when a child is seriously or critically ill but it is also sad when an adult is suffering too. I appreciate the loss to society if a person is cut off at a tender age – and to the family involved this is a terrible grief, but I am very reluctant to put a higher value on one age group as it immediately implies and creates a lesser value to another. All age groups are important as each person is a unique individual who cannot be replaced.

In the end, the Council recommended against adjusting the thresholds around age, which means that NICE considers a year of life for a 70-year old to be as valuable as one in a 7-year old. While one can argue with the decision, the fact that it was made by a group of ordinary citizens gives it tremendous legitimacy. Ditto NICE’s approach to innovation, the “rule of rescue,” and a variety of other fraught but essential topics.

As you might expect, NICE is threatened periodically by those with a variety of agendas, particularly advocacy groups that want access to a new treatment for their illness and manufacturers with an interest in getting their wares approved. While the organization has regularly overcome these ever-present challenges, there are some new threats on the horizon. The Cameron government is planning to change the relationship between NICE and the NHS, with NICE no longer offering an up or down judgment but rather giving government negotiators the data and allowing them to work out the contract with drug and device companies (“value-based pricing“). This would likely inject more politics into these decisions, as well as compromise NICE’s arms-length relationship with the government and, ultimately, its independence. In the slippery slope category, in 2010 the government allocated £200 million for a “cancer drugs fund,” which covers some chemotherapies that don’t meet NICE’s QALY threshold. This might seem humane, but once other disease advocates begin pushing their cases, the whole consensus — based so much on equity — could come crashing down.

Despite these challenges, the organization seems extremely solid and has received many votes of confidence. In fact, NICE’s biggest threat may well be mission creep, as it has been given more and more tasks to work on (now including guidelines on public health topics) by a Conservative government eager to consolidate the number of boxes on its org charts.

The US has seen a few trickle-down effects from NICE, in some very ironic ways. When pharmaceutical companies offer the NHS price reductions to meet NICE’s QALY thresholds, whose prices do you think the companies raise to maintain their profits? Ours, of course, since lobbyists have succeeded in convincing our politicians to prevent Medicare from negotiating prices with drug companies. And when US taxpayers put one billion dollars into cost-effectiveness research studies and then, in the next breath, prohibit Medicare from using these results in coverage decisions, who gets to use the findings in their deliberations? NICE, of course.

You’ll be pleased to know that the Brits are grateful.

Decisions over setting limits are invariably wrenching, but our failure to create a transparent way to make these decisions just means that rationing occurs implicitly  and haphazardly. As Berwick eloquently noted last week, the US already rations care when we limit access to primary care for Medicaid patients, or impose backbreaking co-pays for Medicare patients, or allow people to lose their healthcare insurance when they become sick. An explicit process for making choices is absolutely essential if we are going to get a handle on healthcare costs in a way that is equitable and just.

But a country whose political dialogue is characterized by “death panels” and “Rationer-in-Chief” is one that is not mature enough to engage in frank and explicit public conversations about defining limits. Ultimately, silly season will end, our society will come to grips with the need to choose, and we will begin looking for a method of making these thorny decisions. When that day comes, it’s nice to know that we have a model to learn from.


  1. Chris Johnson December 20, 2011 at 3:40 pm - Reply

    I agree the silly season will end, but I fear it will not be because everybody suddenly becomes sensible. I think it’s more likely that we will finally just run out of money — the freight train will hit the wall at 80 mph. All the various players will only get reasonable when that’s their only choice.

    As you’ve pointed out so nicely, one person’s dubious treatment is somebody else’s revenue stream. As just one example, actually implementing the American Academy of Pediatrics’ new guidelines for tonsillectomy would bring howls of rage (and lobbying) from the ENT community.

  2. Vicki Searcy December 20, 2011 at 3:42 pm - Reply

    Very informative article. Sadly, I’m afraid that we in the USA will never come to grips with the fact that we have to make decisions about how to “ration” our healthcare dollars. As the article pointed out, we do ration, whether we choose to acknowledge it or not. On CNN this morning, there was a story about a sick baby who was sent from Indiana to Boston for care, despite the fact that the baby could have been taken care of in Indiana. The media makes those who need to make difficult medical decisions – which ultimately will impact all of us – appear to be unfeeling and caring only about the expense.

  3. Menoalittle December 21, 2011 at 5:18 am - Reply


    Eloquently stated but, where was NICE when the UK purchased HIT devices that were utter failures financially, doomed enumerable patients to delays, injuries and deaths, and nearly bankrupted the NHS?

    It is of more than passing interest that according to the NY Times, US senior federal health officials and congressional leaders met with HIT vendors with the help of Newt GinGrinch’s Center for Health Transformation “to review the UK approach (to HIT) and how it might be applied in the US”.

    $ billions are being spent, and Berwick favored this, on HIT in the US without any evidence that it improves outcomes or reduces costs. The wiring of US healthcare will result in more expenses on an already financially over burdened health care system. This is a fraud on the taxpayers and patients.

    What does Berwick have to say on this fraud, that medical devices are being deployed without approval by the FDA?

    Patients will suffer while the vendors, their shareholders and CEOs, and folks like Newt are enriched. Sad

  4. Pharmerbill December 21, 2011 at 7:26 pm - Reply

    Great article as usual. What do you make of the inconsistencies in the valuation of a QALY within the NHS. As I understand, a primary care trust puts a QALY at 12,000 for circulartory disease, but 19000 for cancer. (Based on some 2007 data, so excuse me if this is outdated).

    Is anyone addressing the variations in values used?
    Shouldn’t there be a consistent value?

  5. Francine T, MD December 22, 2011 at 12:03 pm - Reply

    The QALY valuation of electronic care records and electronic ordering ought to result in abject denial for purchase, yet no one has looked at the inefficiencies, delays, errors, injuries, deaths and other disruptions in care and the provision of said care.

    Indeed, a horlicks in the trusts as previously reported at several and as described by Dick Granger.

  6. Paul Levy December 22, 2011 at 2:51 pm - Reply

    Beautifully written, Bob, and a terrific summary.

  7. Mary Thomas, CMIO December 23, 2011 at 1:58 am - Reply

    Thank you for reminding of the QALY.

    Welcome back to San Fran, Dr. W. Since UCSF has had such a wonderul experience going paperless and digital, and the process is ongoing, would you help us all by setting up the framework and calculations and spreadsheets to determine QALY in this endeavor?

    You are the man with reputation, academic standing, and equanimity to pull it off. When you perform the calcs, you may forgo the GE Centricity costs; but, it would be interesting to see the numbers with and without.

    I hope it is less than: $999999999999999999999999999999999999999999999999999999999999999999999.34= estimated QALY for EHR with CPOE and CDS, cause when I look at the overall costs, increased length of stay, adverse outcomes, never events, and toll on human resources, it ain’t cheap.

  8. John Biebelhausen, MD, MBA December 24, 2011 at 10:08 pm - Reply

    I’m curious what role physicians might best adopt in order to help shift American psyche in this regard.

    As a medical resident some six months into my training, I’ve had the unique opportunity to have the bedside conversation with patients concerning their care decisions—life, and death. Consistently, I’ve witnessed the pattern of relief in the suffering individual when their caretaker offers solace in the option of acceptance. Acceptance by the widowed World War II Veteran filled with life but shrouded in skin and bones. Acceptance by the ailing cirrhotic burdened by the lottery proposition of a transplant liver. It’s unfortunate that such life-and-death decisions made in the context of the doctor-patient relationship on a daily basis are transformed into ‘death panels’ on the national stage.

    It’s little more than the human condition to want all that is possible, and that which is seemingly not, even if the reward might be perceived as small (quantify that in moments, QALYs or however you may). However, the US healthcare system, tortuous as it may be, does embrace the individuality of the doctor-patient relationship. It is here—in the office, at the bedside, occasionally even in the home—where we can continue to have our greatest effect. While systems change will undoubtedly yield the greatest advances, physicians should not underestimate the totality of their efforts in parallel.

    Indeed, the experience need not be unique:

  9. g January 9, 2012 at 7:38 am - Reply

    awesome piece

    this needs to be front page, morning news, breaking news, prime time discussion.

    medical community needs to take the lead position in reeducating the public about cost of care as it relates to quality of life at ‘near end of life.’
    we (society) developed bad habit of doing everything as a direct consequence of physician behaviour. i suspect most physicians have routinely preferred to take the seemingly easier route of ordering more studies, consultants and tests, rather than having that seemingly more difficult conversation about futile care with patient and their supporters.

    besides we tolerate smokers with repeated admissions for tobacco-related illnesses, drug-abusers with repeated drug-abuse-related illnesses, alcoholics with repeated alcohol-induced problems, decompensated diseases due to noncompliace with recommendations.

    indeed we are very silly and immature.

  10. […] not to cover, like medications or devices with low cost-effectiveness ratios (as I described in my previous blog on NICE). But that’s unusual. Far more commonly, the insurance is used to purchase services that are […]

  11. Management Pawn January 17, 2012 at 1:59 pm - Reply

    First, an aside to John Biebelhausen:
    John – I saw that article you linked to in your comment on how doctors die via It should be required reading for all young doctors as they move from education into practice.

    On topic:
    There is a separate but similar body in Scotland called the Scottish Medicines Consortium [SMC]. NICE guidance only officially covers England, Wales and Northern Ireland; SMC guidance applies in Scotland. And, to confuse matters further, the Cancer Drugs Fund applies to England only – not Wales, Northern Ireland or Scotland.

    Every UK NHS organisation will, however, have in place some form of IPTR (individual patient treatment request) process to allow individual specialists to make a case to their clinical management team for patient access to a drug or therapy which has not been recommended for use by NICE and/or SMC.

    While I don’t wish to speak for elsewhere in the UK, the situation In Scotland is that the specialist has to demonstrate an exceptional clinical reason for their patient qualifying and each case is considered by a team of the organisation’s most senior clinicians.

    It may be that there is a fairer way of deciding such matters, but this seems to me to be the best trade-off between generic advice and individualised treatment.

  12. The Awkward World of Private Insurance in the UK | Health Care Jobs in Illinois January 18, 2012 at 8:31 am - Reply

    […] not to cover,like medications or devices with low cost-effectiveness ratios (as I describedin my previousblog on NICE). But that’s unusual. Far more commonly, the insurance is usedto purchase services that are […]

  13. […] not to cover, like medications or devices with low cost-effectiveness ratios (as I described in my previous blog on NICE). But that’s unusual. Far more commonly, the insurance is used to purchase services […]

  14. VS March 9, 2012 at 4:06 am - Reply

    Great commentary,

    Our society will not cover the cost of a patient who is suffering from DM and HTN. SO he/she forgoes treatment for few years, until they develop ESRD and need HD. Now they automatically get coverage on tax payers expense. How much money we could have saved if we were able to pay for his ” preventive care”.

  15. Hemicraniectomy | November 1, 2012 at 4:48 am - Reply

    […] for elderly patients? We touched on the fact that in the U.K., there is a governmental entity, the National Institute for Health and Clinical Excellence, that examines medical technologies and makes coverage decisions. If the death panels Medicare and […]

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About the Author:

Robert M. Wachter, MD is Professor and Interim Chairman of the Department of Medicine at the University of California, San Francisco, where he holds the Lynne and Marc Benioff Endowed Chair in Hospital Medicine. He is also Chief of the Division of Hospital Medicine. He has published 250 articles and 6 books in the fields of quality, safety, and health policy. He coined the term hospitalist” in a 1996 New England Journal of Medicine article and is past-president of the Society of Hospital Medicine. He is generally considered the academic leader of the hospitalist movement, the fastest growing specialty in the history of modern medicine. He is also a national leader in the fields of patient safety and healthcare quality. He is editor of AHRQ WebM&M, a case-based patient safety journal on the Web, and AHRQ Patient Safety Network, the leading federal patient safety portal. Together, the sites receive nearly one million unique visits each year. He received one of the 2004 John M. Eisenberg Awards, the nation’s top honor in patient safety and quality. He has been selected as one of the 50 most influential physician-executives in the U.S. by Modern Healthcare magazine for the past eight years, the only academic physician to achieve this distinction; in 2015 he was #1 on the list. He is a former chair of the American Board of Internal Medicine, and has served on the healthcare advisory boards of several companies, including Google. His 2015 book, The Digital Doctor: Hope, Hype, and Harm at the Dawn of Medicine’s Computer Age, was a New York Times science bestseller.


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