A NICE New Business: Fee-for-Advice

The UK’s National Institute of Clinical Excellence (NICE) is piloting a fee-for-service business that would see companies paying to receive early advice on what kind of cost-effectiveness and pharmaco-economic data they might require to secure drug reimbursement.

Speaking at the Financial Times’ Global Pharmaceutical and Biotechnology Conference in London on Monday, NICE CEO Andrew Dillon talked about the need for earlier engagement with industry, and mentioned a test-run it was carrying out with Novartis. “We’ve just completed the formal part of the process, in an attempt to provide some sort of proof-of-concept for the idea,” he told the audience. He declined to specify which Novartis drug candidate is the guinea pig.

NICE will present an evaluation report to its Board at the end of the first quarter of next year, according to Dillon, outlining how valuable the process has been, and what resources are required. It will presumably also outline in more detail how many meetings take place and at what stage in the drug candidate’s development. "I would envisage companies seeking advice as they prepare their phase 3 studies, although in principle they might approach us at any stage in the development of a product," noted Dillon in an email after the meeting.

As pressure mounts on drug companies to prove not just that a product works and is safe, but that it's also cost-effective, many firms want and need to engage with bodies like NICE well before approval stage. Sure, some are now being more creative in circumventing negative reimbursement recommendations--as we saw in the case of Johnson & Johnson and the risk-sharing rebate scheme it suggested for blood-cancer drug Velcade. But better still to have the appropriate data in the first place, ideally at minimum extra cost.

If the early-advice scheme is adopted, drug firms will have to pay for the privilege, though. “This will be a fee-for-service business,” Dillon told IN VIVO Blog. NICE will have to charge companies given the additional resources required, he explained.

But isn’t there a conflict here—companies paying NICE for advice on whether their drug might be labelled cost-effective? Not really, according to Dillon. “Regulators charge extra for early consultations with companies,” he says, “so why not us? It’s what everyone wants.”

That’s for sure. And given NICE’s influence beyond the UK, the agency may find clients seeking advice on how to best design their trials and provide optimal pharmaco-economic data even if the UK isn’t their target market.

Potentially a nice bit of business on the side for NICE, then.

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No Cure, No Pay

For most other consumer goods, you’d expect to get your money back if the product didn’t work. Not so for drugs, where many treatments don’t work in at least a significant minority of patients—but payors and governments can’t claim a refund.

That may be about to change. Today Johnson & Johnson’s Janssen-Cilag subsidiary offered to pay back the UK’s National Health Service if their blood cancer drug Velcade fails to help improve patients’ condition.

It’s not a done deal—the Department of Health will now consider the proposal. And there are still plenty of creases to iron out, such as what levels of improvement the drug would need to show in order to trigger payment. But the proposal has the backing of the UK’s cost-effectiveness body, the National Institute of Clinical Excellence, which means it’s likely to be accepted in some form or another.

Janssen isn’t doing this just to look good: for them, this scheme is the only way it will see any reimbursement for the £25,000-per-cycle drug, which NICE initially deemed too expensive to be cost-effective. This risk-sharing agreement is part of Janssen’s appeal against that decision, and the trend will probably catch on as other firms seek to overturn negative reimbursement outcomes. Some are already talking to NICE about similar schemes.

And small wonder: no cure, no pay makes absolute sense. It renders the cost of treatment economically feasible for payors, and it may help manufacturers, too, by forcing them to identify patients that will respond best to their treatment, and to find ways to improve compliance if a drug does not appear to have the same effect in daily use as it does in controlled trials. That will facilitate more widespread reimbursement and sales.

So why hasn’t 'no cure, no pay' caught on? It’s not as if Janssen is the first mover here. Novartis in 2004 tried it with hypertension treatment Diovan, to try to boost flagging sales in the US; the company claims it worked. In 2005, Bayer did the same with erectile dysfunction drug Levitra in Denmark, offering patients a refund if they were not satisfied. There are plenty of other even earlier examples, according to a paper in the British Medical Journal by Claus Møldrup, Associate Professor in the Department of Social Pharmacy at the Danish University of Pharmaceutical Science in Copenhagen. (See Box.) No cure, no pay hasn't caught on because it hasn't had to: traditional marketing techniques have worked fine.

Until now, that is. From here on, we'll see more money-back guarantees, and we’ll also see other schemes linking price to performance. GSK in September 2006 announced that it had persuaded two European governments to allow the price of pharmaceuticals to vary, in either direction, according to real-life data that emerge on the drug's effectiveness. (See February's IN VIVO article for a discussion of this and other price-discounting schemes underway in the UK.)


So governments and payors had better get cracking and set up their systems to receive funds, rather than simply pay them out—this was just one of the challenges that helped snuff out the Danish no-cure, no pay arrangements.

In the latest Velcade proposal, the NHS will be refunded in the form of a credit note from Janssen, according to the BBC. It’s not quite your money back, then—but at least you can try a new product for free.


SOURCE: BMJ 2005;330:1262-1264 (28 May)

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While You Were in the Cheap Seats

Go Phils!

IN VIVO Blog took in the Phillies-Giants game at Citizens Bank Park in Philly on Sunday. Hopefully our readers had better weather (though the game was excellent!). A few tidbits from the weekend ...

• It seems like Dr. John Buse's Congressional testimony on Wednesday will sure be interesting. The American Diabetes Association president-elect issued a statement on Friday (perhaps in an attempt to avoid mis-quotes), intended to be his only public communication until the testimony, that addresses the notion that GSK tried to silence his criticism of Avandia's risks in the past. NYT has the story, and Buse's statement.


• ASCO ... ASCO, ASCO. Have you heard, there's an oncology conference in Chicago? Lots of news from Pfizer, GSK, BMS and the rest. Covered well over at the WSJ's Health Blog.


• Wouldn't it be NICE? J&J has made the UK's National Institue for Clinical Excellence an offer it would be tough to refuse: the drugmaker will cover the cost of Velcade for patients who don't respond. The NIH would only pay when patients did well on the drug. Of course the details need to be ironed out. Full story at the FT. Hat tip Pharmalot.


• Insider at Pharmagossip highlights Big Pharma's latest new media problem: Youtube. He also directs us to this recent Simpsons excerpt: "Nappien activates your brain's napping centers, and attacks your body's awakegens."

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