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The National Institute for Health and Clinical Excellence or NICE is a special health authority of the National Health Service (NHS) in England and Wales.[1] It was set up as the National Institute for Clinical Excellence in 1999, and on 1 April 2005 joined with the Health Development Agency to become the new National Institute for Health and Clinical Excellence (still abbreviated as NICE).[2][3]

NICE publishes clinical appraisals of whether particular treatments should be considered worthwhile by the NHS.[4] These appraisals are based primarily on evaluations of efficacy and cost-effectiveness in various circumstances.

NICE was established in an attempt to defuse the so-called postcode lottery of healthcare in England and Wales, where treatments that were available depended upon the NHS primary care trust area in which the patient happened to live. The institute has acquired a high reputation internationally as a role model for the explicit prioritisation of health services.[5] NICE also plays an important role in pioneering technology assessment in other healthcare systems through NICE International, established in May 2008 to help cultivate links with foreign governments.[6]


Technology appraisals

Since January 2005 the NHS in England and Wales has been legally obliged to provide funding for medicines and treatments recommended by NICE's technology appraisal board.[7] This was at least in part as a result of well-publicised postcode lottery anomalies in which certain less-common treatments were funded in some parts of the UK but not in others due to local decision making in the NHS.

Before an appraisal the Advisory Committee on Topic Selection (ACTS) draws up a list of potential topics of clinical significance for appraisal. The Secretary of State for Health or the Welsh Assembly must then refer any technology so that the appraisal process can be formally initiated. Once this has been done NICE works with the Department of Health to draw up the scope of the appraisal.

NICE then invite consultee and commentator organisations to take part in the appraisal. A consultee organisation would include patient groups, organisations representing health care professionals and the manufacturers of the product undergoing appraisal. Consultees submit evidence during the appraisal and comment on the appraisal documents. Commentator organisations include the manufacturers of products to which the product undergoing appraisal is being compared. They comment on the documents that have been submitted and drawn up but do not actually submit information themselves.

An independent academic centre then draws together and analyses all of the published information on the technology under appraisal and prepares an assessment report. This can be commented on by the Consultees and Commentators. Comments are then taken into account and changes made to the assessment report to produce an evaluation report. An independent Appraisal Committee then looks at the evaluation report, hears spoken testimony from clinical experts, patient groups and carers. They take their testimony into account and draw up a document known as the 'appraisal consultation document'. This is sent to all consultees and commentators who are then able to make further comments. Once these comments have been taken into account the final document is drawn up called the 'final appraisal determination'. This is submitted to NICE for approval.

The process aims to be fully independent of government and lobbying power, basing decisions fully on clinical and cost-effectiveness. There have been concerns that lobbying by pharmaceutical companies to mobilise media attention and influence public opinion are attempts to influence the decision-making process.[8] A fast-track assessment system has been introduced to reach decisions where there is most pressure for a conclusion.

Clinical guidelines

NICE carries out assessments of the most appropriate treatment regimes for different diseases. This must take into account both desired medical outcomes (i.e. the best possible result for the patient) and also economic arguments regarding differing treatments.

NICE have set up several National Collaborating Centres who draw up the boundaries of the guideline (i.e. what it will cover). The National Collaborating Centre then appoints a Guideline Development Group whose job it is to work on the development of the clinical guideline. This group will consist of medical professionals, representatives of patient and carer groups and technical experts. They work together to assess the evidence for the guideline topic (e.g. clinical trials of competing products) before preparing a draft guideline.

There are then two consultation periods in which stakeholder organisations are able to comment on the draft guideline. After the second consultation period an independent Guideline Review Panel reviews the guideline and stakeholder comments and ensures that these comments have been taken into account.

The Guideline Development Group then finalises the recommendations and the National Collaboration Centre produces the final guideline. This is submitted to NICE who then formally approve the guideline and issues this guidance to the NHS.

Cost effectiveness

As with any system financing health care, the NHS has a limited budget and a vast number of potential spending options. Choices must be made as to how this limited budget is spent. By comparing the cost effectiveness in terms of health quality gained for the money spent.[9 ] By choosing to spend the finite NHS budget upon those treatment options that provide the most efficient results society can ensure it is does not lose out on possible health gains through spending on inefficient treatments and neglecting those that are more efficient.

NICE attempts to assess the cost-effectiveness of potential expenditures within the NHS to assess whether or not they represent 'better value' for money than treatments that would be neglected if the expenditure took place. It assesses the cost effectiveness of new treatments by analysing the cost and benefit of the proposed treatment relative to the next best treatment that is currently in use.[10].


Quality-adjusted life years

NICE utililises the quality-adjusted life year (QALY) to measure the health benefits delivered by a given treatment regime. By comparing the present value (see discounting) of expected QALY flows with and without treatment, or relative to another treatment, the net/relative health benefit derived from such a treatment can be derived. When combined with the relative cost of treatment this information can be used to form an Incremental Cost-Effectiveness Ratio (ICER) to allow comparison of suggested expenditure against current resource use at the margin (the cost effectiveness threshold).[9 ] As a guideline rule NICE accepts as cost effective those interventions with an incremental cost-effectiveness ratio of less than £20,000 per QALY and that there should be increasingly strong reasons for accepting as cost effective interventions with an incremental cost-effectiveness ratio of over £30,000 per QALY.[11]

Cost per quality-adjusted life year gained

The cost of a treatment may be relatively easy to calculate but because people may be at different ages when they receive treatment, the gain may differ according to age. A heart operation on a small child may deliver many more years of quality of life than the same operation on a 76 year old man. By taking the cost of treatment and dividing it by the years gained an overall cost benefit ratio can be determined as the 'cost per quality-adjusted life year gained' or CQG.

Basis of recommendations

Theoretically it might be possible to draw up a table of all possible treatments sorted by increasing the cost per quality-adjusted life year gained. Those treatments with lowest cost per quality-adjusted life year gained would appear at the top of the table and deliver the most benefit per value spent and would be easiest to justify funding for. Those where the delivered benefit is low and the cost is high would appear at the bottom of the list. Decision makers would, theoretically, work down the table, adopting services that are the most cost effective. The point at which the NHS budget is exhausted would reveal the shadow price, the threshold lying between the CQG gained of the last service that is funded and that of the next most cost effective service that is not funded.

In practice this exercise is not done, but an assumed shadow price has been used by NICE for many years in its assessments to determine which treatments the NHS should and should not fund. NICE states that for drugs the cost per QALY should not normally exceed £30,000 but that there is not a hard threshold,[12 ] though research has shown that any threshold is "somewhat higher" than being in the range £35,000 - £40,000.[12 ] .[13]

The House of Commons Health Select Committee in its report on NICE stated in 2008 that "the (...) cost-per-QALY it uses to decide whether a treatment is cost-effective is of serious concern. The threshold it employs is not based on empirical research and is not directly related to the NHS budget, nor is it at the same level as that used by Primary Care Trusts (PCTs) in providing treatments not assessed by NICE, which tends to be lower. Some witnesses, including patient organisations and pharmaceutical companies, thought NICE should be more generous in the cost per QALY threshold it uses, and should approve more products. On the other hand, some PCTs struggle to implement NICE guidance at the current threshold and other witnesses argued that a lower level should be used. However, there are many uncertainties about the thresholds used by PCTs." It went on to recommend that "an independent body should determine the threshold used when making judgements of the value of drugs to the NHS."[14]


The work that NICE is involved in attracts the attention of many groups, including doctors, the pharmaceutical industry, and patients. NICE is often associated with controversy, because the need to make decisions at a national level can conflict with what is (or is believed to be) in the best interests of an individual patient. From an individual's perspective it can sometimes seem that NICE is denying access to a potentially life-saving treatment but the denial is only effective as far as the use of public resources are concerned. Treatment will then only be available if the patient can find the resources to pay for treatment in the private sector and a doctor willing to administer it.

NICE has been criticised for being too slow to reach decisions. On one occasion, the Royal National Institute of Blind People said it was outraged over its delayed decision for further guidance regarding two drugs for Wet AMD that are already approved for use in the NHS. However the Department of Health said that it has 'made it clear to PCTs that funding for treatments should not be withheld simply because guidance from NICE is unavailable'.[15]

Some of the more controversial NICE decisions have concerned donepezil, galantamine, rivastigmine (review) and memantine for the treatment of Alzheimer's disease and bevacizumab, sorafenib, sunitinib and temsirolimus for renal cell carcinoma. All these are drugs with a high cost per treatment and NICE has either rejected or restricted their use in the NHS on the grounds that they are not cost-effective.

See also


  1. ^ Office of Public Sector Information (1999-02-02). "The National Institute for Clinical Excellence (Establishment and Constitution) Order 1999". Press release. Retrieved 2009-09-18.  
  2. ^ Office of Public Sector Information (2005-03-07). "The National Institute for Clinical Excellence (Establishment and Constitution) Amendment Order 2005". Press release. Retrieved 2009-09-18.  
  3. ^ Office of Public Sector Information (2005-03-07). "The Special Health Authorities Abolition Order 2005". Press release. Retrieved 2009-09-18.  
  4. ^ About NICE
  5. ^ Schlander, Michael (2007). Health Technology Assessments by the National Institute for Health and Clinical Excellence. New York: Springer Science+Business Media. pp. 245. ISBN 978-0-387-71995-5. Retrieved 2008-11-13.  
  6. ^ Cheng, Tsung-Mei (2009-09-15). "Nice approach". Financial Times.,s01=1.html?nclick_check=1. Retrieved 2009-09-18.  
  7. ^ Sorenson, C; Drummond, M; Kanavos, P; McGuire, A. National Institute for Health and Clinical Excellence (NICE): How does it work and what are the implications for the U.S.?. National Pharmaceutical Council. Retrieved 2009-09-18.  
  8. ^ Berg, Sanchia (2006-06-09). "Herceptin: Was patient power key?". BBC News. Retrieved 2008-11-13.  
  9. ^ a b Methods for the Economic Evaluation of Health Care Programmes, Drummond et al (2005)
  10. ^ NICE guidance, 2008
  11. ^ NICE Guideline Manual: Incorporating health economics in guidelines and assessing resource impact
  12. ^ a b Measuring effectiveness and cost effectiveness: the QALY
  13. ^ Devlin, N; Parkin D (pdf). Does NICE have a cost effectiveness threshold and what other factors influence its decisions? A discrete choice analysis.. City University, London. Retrieved 2008-11-13.  
  14. ^ House of Commons Health Committee: National Institute for Health and Clinical Excellence - First Report of Session 2007-08
  15. ^ Royal National Institute of Blind People (2007-08-08). Press release. Retrieved 2008-11-13.  

Further reading


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