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NICE Citizens Council publishes final report on assessing future costs and health benefits

The Citizens Council of the National Institute for Health and Care Excellence (NICE), which provides public input into the Institute's work, has published the final report on its meeting at which it discussed how NICE should assess future costs and health benefits. The Council members' views on the issue of discounting - the way in which health benefits are valued and calculated over a very long period of time - will be used to guide the methods used by NICE's independent advisory committees. The final report takes into consideration comments received from the public, and has been formally accepted by the NICE Board.

As a standard, health economists base discount rates on factors including economic growth and also time preference - where people tend to prefer to have a benefit now, but pay later. This is a familiar concept in the retail sector, for example purchasing furniture or household goods. However in healthcare, sometimes the opposite is the case: pay now, benefit later. As people tend to prefer benefits ‘now', discounting usually values benefits which occur a long way in the future less highly than if the benefit occurred today. To assess the value of the benefit in the future compared to now, the value is adjusted by a certain amount which is called the discount rate.

Discounting is important to NICE, because one of the Institute's central functions is to assess whether clinical and public health interventions are value for money, given their benefits and cost. On occasions, NICE assesses things that are costly in the short-term but provide a much longer-term benefit. This scenario can present particular issues for NICE's advisorycommittees because discounting has the result of reducing the impact of the longer-term benefits.

The Citizens Council considered how different views on valuing future health benefits and costs translate into different discount rates, and how this affects conclusions on whether a new treatment could be considered cost effective or not. Overall, the Citizens Council concluded that discounting is a valid aspect of the calculation of future costs and health benefits.

Sir Michael Rawlins, Chair of NICE, said: “The NICE Board has received the Citizens Council's report on how discounting influences the way that future health is valued over a long period of time, as well as its effects on the assessment of costs associated with treatments providing long-term health benefits.

“The Citizens Council's view is that discounting is a valid aspect of the calculation of future costs and benefits. The Council also considered instances where the costs are upfront and the benefits accrue over a long period of time. In such cases the Council advised the Institute that it should depart from its current discounting policy - which is in line with all public bodies - of applying a 3.5 percent discount rate for costs and benefits.

“The importance of protecting public health interventions from any adverse impacts of discounting was also highlighted by the Citizens Council. They hope that NICE would take appropriate action should any occasions of public health being disadvantaged arise. This was a particular concern to the Council as the methodology behind discounting appeared to favour treatment more highly than cost-effective preventative public health activities where benefits tend to occur in the future.

“The NICE Board is grateful for The Citizens Council's consideration of discounting; the resulting report is an important contribution to NICE's work, and will help guide our independent advisory committees.”

The report on the Council's views is available on the NICE website.

Ends

Notes to Editors

1. The direct link to the Citizens Council report is http://www.nice.org.uk/aboutnice/howwework/citizenscouncil/reports.jsp .

2. The Citizens Council consists of a diverse group of 30 individuals, reflecting the age, gender, socioeconomic status and ethnicity of the people of England and Wales. The council meets yearly to hear expert information on challenging topics and thoroughly discuss the issues raised. It is a formal committee of the Institute, helping identify broad social values and how NICE might apply them in preparing its guidance. The Council's view on each topic discussed is captured in reports which provide advice to NICE and its independent committees; the Citizens Council does not produce any of NICE's guidance for the NHS.

3. The meeting on discounting took place in November 2011, and following a period of public comment, the report was presented to the NICE Board at its public meeting in July 2012.

4. Discounting is a methodology used by economists to calculate how much something will be worth in the future. It is not to be confused with Patient Access Schemes (PAS) in relation to technology appraisals, where manufacturers might agree a PAS with the Department of Health to make their drug available to the NHS at a discounted price.

5. At the meetings the Citizens Council hear evidence from speakers covering all aspects of this topic, before taking part in thorough discussions to examine the issues in detail. The meetings are held in public.

6. Since it was set up, the Citizens Council has provided valuable input on a range of issues including: incentives to promote individual behaviour change, patient safety, harm reduction in smoking, and ‘only in research' recommendations. Previous reports are available at http://www.nice.org.uk/aboutnice/howwework/citizenscouncil/reports.jsp .

About NICE

7. The National Institute for Health and Care Excellence (NICE) is the independent organisation responsible for providing national guidance and standards on the promotion of good health and the prevention and treatment of ill health

8. NICE produces guidance in three areas of health:

  • public health - guidance on the promotion of good health and the prevention of ill health for those working in the NHS, local authorities and the wider public and voluntary sector
  • health technologies - guidance on the use of new and existing medicines, treatments, medical technologies (including devices and diagnostics) and procedures within the NHS
  • clinical practice - guidance on the appropriate treatment and care of people with specific diseases and conditions within the NHS.

9. NICE produces standards for patient care:

  • quality standards - these reflect the very best in high quality patient care, to help healthcare practitioners and commissioners of care deliver excellent services
  • Quality and Outcomes Framework - NICE develops the clinical and health improvement indicators in the QOF, the Department of Health scheme which rewards GPs for how well they care for patients
  • Commissioning Outcomes Framework - NICE develops the potential indicators for the COF, the scheme starting in 2013, which will help measure the health outcomes and quality of care commissioned by Clinical Commissioning Groups.

10. NICE provides advice and support on putting NICE guidance and standards into practice through its implementation programme, and it collates high quality guidance and evidence-based information to help professionals deliver the best patient care through NHS Evidence.

This page was last updated: 08 August 2012

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Copyright 2014 National Institute for Health and Care Excellence. All rights reserved.