NICE Citizens Council report on assessing future costs and health benefits open for comment

The Citizens Council of the National Institute for Health and Care Excellence (NICE), which provides public input into the Institute's work, has published a report on its meeting at which it discussed how NICE should assess future costs and health benefits. The public is now invited to comment on 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. The Citizens Council's views on which issues they feel should be taken into account in relation to discounting will be used to inform NICE's independent advisory committees.

Discounting is important to NICE, because one of the Institute's central functions is to assess whether the NHS should provide new treatments based on the value for money which that particular treatment provides for the NHS, given its benefits for patients and cost. On occasions, NICE assesses drugs that provide a life-long health benefit to patients after only a short course of medication. This scenario can present particular issues for NICE's advisorycommittees because of the way that discounting is usually applied to treatments which have a high cost in the short term, but which provide benefits over a very long timescale, such as 30 years or more.

The Citizens Council concluded that discounting is a valid aspect of the calculation of future costs and health benefits. 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 they occur 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. 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.

In relation to healthcare, the Citizens Council felt that there is a case for treating costs and benefits of health differently to the way discounting is applied to costs and benefits for non-health commodities or services. With respect to benefits, most of the Council agreed that there are occasions when NICE should depart from its current discounting policy - which is to apply a 3.5 percent discount rate for costs and benefits in line with all public bodies. Examples of such occasions included interventions where costs were mostly up front but where benefits would be accrued over a long time in the future and those that yielded a total cure.

Sir Michael Rawlins, Chair of NICE, said: “I warmly welcome the Citizens Council's consideration of 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. Discounting is a difficult issue, and one which generates a range of viewpoints amongst experts, so the Citizens Council's thoughts on this topic are very useful.

“It is clearly the Citizens Council's view 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 Citizens Council also highlighted the importance of protecting public health interventions from any adverse impacts of discounting. 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 Citizens Council's thoughts on discounting are an important contribution to NICE's work, and will help guide our independent advisory committees. But before the Council's conclusions are presented to the Board, we are very keen to hear what the general public thinks about their views.”

The report on the Council's views is available on the NICE website for public comment, at Comments must be sent in by 5pm on 8 June 2012.


Notes to Editors

1. Read the Citizens Council report.

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.

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.

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

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

This page was last updated: 10 May 2012

Accessibility | Cymraeg | Freedom of information | Vision Impaired | Contact Us | Glossary | Data protection | Copyright | Disclaimer | Terms and conditions

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

Selected, reliable information for health and social care in one place

Accessibility | Cymraeg | Freedom of information | Vision Impaired | Contact Us | Glossary | Data protection | Copyright | Disclaimer | Terms and conditions

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