Changes to NICE drug appraisals: what you need to know

The NHS is under unprecedented financial pressure, so it’s more important than ever for it to use the money it has effectively and fairly.

Background to the proposals

The drugs and other treatments recommended by NICE in its technology appraisal programmes must be funded by the NHS, by law, through what's called the ‘funding directive’. Normally, when the funding directive is applied, the NHS has 90 days to make the treatment available.

Budget impact test

Some of NICE’s recommendations can cost the NHS tens of millions pounds a year.  This money has to be found regardless of other pressures and priorities. Every pound spent on a new drug is potentially a pound not spent elsewhere in the NHS, such as in general practice or in mental health services.   Mostly, the NHS can manage these additional financial pressures and gets new drugs to patients as quickly as possible.  But when the impact on budgets is very high, it makes sense for special arrangements to be put in place so that the NHS can manage the introduction of new drugs in a way that doesn't impact unfairly on other services.

NICE and NHS England are introducing two ways to do this. First, through negotiations with the company to help reduce the budget impact of a new treatment. And second, if these negotiations can't resolve enough of the budget impact challenge, by phasing the cost of introducing the new treatment over a longer period.

How the proposals will work

  • Every drug which NICE assess as being clinically and cost-effective is on a path to full routine commissioning which is in line with the NHS Constitution’s ‘right’ for patients to drugs and treatments that have been recommended by NICE for use in the NHS. The introduction of the budget impact test does not change this.
  • However, the NHS is also committed in the Constitution to provide the most effective, fair and sustainable use of finite resources.
  • For those drugs that have a particularly significant impact on the NHS’s budget, our focus needs to be about how quickly the NHS can reasonably introduce them but in a way that does not take money away from other priorities and areas of clinical need.
  • NICE and NHS England are therefore introducing a ‘budget impact test’, to assess the level of the affordability challenge that new drugs pose.
  • The test will look at the net budget impact of new products, i.e. how much extra the NHS would need to pay for the new products on top of what it pays already for any comparable treatments and related services, which will be replaced by the new treatment.
  • For those products that have a net budget impact of £20m or more per year, in any of the first 3 years of its use in the NHS, a commercial discussion will be triggered between NHS England and the company. These products represent such a significant pressure on the NHS’ budget that we think it is appropriate to ensure that there is an opportunity to work with the company to find an approach that will not distort the NHS’s ability to pay for the other important things that it has already committed to fund.
  • The purpose of this commercial discussion will be to consider ways to introduce the product in a way that is mutually agreeable to the company and NHS England. This may involve a discussion about price or different models for how the NHS might pay for the product.
  • £20m is therefore not the maximum amount that the NHS will ever pay for a new drug. There can and will be circumstances where it is appropriate for the NHS to pay more in order to make new treatments available for patients.
  • In circumstances where a commercial agreement cannot be reached, NHS England can apply to NICE to allow the phased introduction of the product to help manage the financial impact over a longer period than the standard 90 days.
  • NHS England will need to set how the phasing would work, informed by clinical advice, and the plans for reaching full implementation (usually within three years). This will need to be carefully considered for each case and NICE will consult with patient and professional groups and the company on the proposals.
  • The longer implementation period isn't so that NHS England and the companies can carry on negotiating. Commercial negotiations have to be completed by the time NICE issues its guidance.

Special arrangements for treatments for very rare conditions

  • Drugs for very rare diseases will be evaluated against a sliding scale, so that the more additional QALYs (a way of measuring benefits to patients) a medicine offers, the more generous the cost per QALY level it will need to meet, starting at £100,000 per QALY, rising to a maximum of £300,000 per QALY. This is ten times higher than the normal limit applied by NICE.

Fast track appraisal

  • Drugs that offer exceptional value for money will go through a fast track NICE appraisal process with the aim of becoming available to patients 30 days after the drug has been approved by NICE. Initially this will apply to drugs costing up to £10,000 per QALY. NICE will review this with the intention of using a ‘lighter touch’ appraisal process in the future for other medicines.


Q: Is the £20m budget impact test a cap, and the maximum that will be paid for a new medicine in one year?

A: It’s not a cap. When the net cost of a new medicine is predicted to cost more than £20m in any of its first three years of use, this will trigger discussions between NHSE and the company to mitigate the impact it will have on the rest of the NHS. It does not mean that any drug over £20m will not be funded.

Q: Who decides whether to delay the introduction of a new drug costing more than £20m?

A: If discussions between the company and NHS England cannot manage the budget impact of the drug sufficiently, NHSE can apply to NICE to extend the period over which it is introduced. Normally all medicines recommended by NICE have to be funded within 90 days of final guidance. In these cases, NHS England will have to set out how long they’d like it extended by and how they will gradually scale up use of the drug during that period in order for NICE to agree.

Q: Will the use of an expensive new medicine be banned for up to three years?

A: No.  If NICE gives a positive appraisal to a product, it will be routinely commissioned, but if there is a significant budget impact, the introduction may need to be phased over a longer period than the standard 90 days.  This would be done through a variation to NICE’s funding requirement, following a request from NHS England.  If this is agreed, then NHS England will have a plan in place to introduce the product in a phased way, based on clinical advice, up to full implementation by the end of the phasing period.  

Q: Do the plans breach the NHS Constitution on patient rights to access drugs approved by NICE as cost effective?

A: No. Patients will still gain access to NICE approved drugs. In some cases, where the net budget impact is high, access may need to be phased in over a longer period. NICE has always been able to consider requests from the NHS to extend the funding requirement; for example, where the necessary facilities or staff are not immediately available.  NICE has agreed to such requests on a number of occasions, where it was felt arrangements needed to be made to enable the guidance to be implemented.