LONDON – The screw on drug pricing will take a further downward turn with the introduction on April 1 of a new "affordability" test in England.

That will see the National Health Service (NHS) in England able to delay introduction of any new drug that will cost more than £20 million (US$24.9 million) a year, even though it has been deemed cost-effective and recommended for use by the health technology assessment body, National Institute of Heath and Care Excellence (NICE).

At present, any product that passes NICE's very strict rules on cost effectiveness must be made available in the NHS within 90 days. The new budget impact test means a drug that will cost more than £20 million in any one of the first three years of use will automatically be subject to "commercial discussions" between the company and NHS England "to mitigate the impact."

Announcing the change, Andrew Dillon, NICE chief executive, said, "Companies will have the opportunity of confidential negotiations with NHS England to help avoid and minimize delays in patients having access to treatments recommended by NICE."

Where an agreement on price cannot be reached, NHS England will be able to apply to NICE for an extended period in which to introduce the drug in a phased way.

The industry and patients' groups hit out at the new measure, which ironically is being introduced following a public consultation on proposals to speed up access to cost-effective drugs.

"These new plans will prevent patients from receiving NICE-approved cost-effective medicines," said Mike Thompson, chief executive of the Association of the British Pharmaceutical Industry. "Use of new medicines in the U.K. is already poor, with patients seven times more likely to get a newly launched medicine in places like Germany or France."

Steve Bates, CEO of the Bioindustry Association (BIA), sees the budget impact test as a direct snub to life sciences companies, which have been working with the government to put in place an industrial strategy for the sector to mitigate the effects of the U.K. leaving the EU.

"The NICE/NHS England decision now leaves these companies considering whether they will continue to engage in the process, as they do not believe the government is supporting the industry to bring treatments to patients who would benefit," the BIA said.

Bates complained, too, of the short notice of the implementation of the test, saying, "[It] sends a negative signal to global life sciences investors and companies that the U.K. needs to attract in the Brexit era."

The test is "unacceptable" said the charity Cancer Research UK (CRUK). "If NICE thinks a cancer treatment is clinically effective and represents value for money, then patients should receive it without delay," said Sarah Woolnough, director of policy. She expects the new barrier to market access to affect one in five new drugs.

Because the budget impact is to be assessed by multiplying the cost per treatment by the number of patients, there will be a disproportionate effect in more prevalent conditions, such as lung and breast cancer. CRUK said that as there are thousands of patients diagnosed with those cancers in the U.K. each year, the £20 million threshold would soon be exceeded.

Another charity, the Alzheimer's Society, pointed out that the threshold would make it highly unlikely a new treatment for the neurodegenerative disease would be affordable. A drug that would help the 850,000 people with dementia in the U.K. would have to cost as little as £23.50 per patient, per year. "Companies and the NHS must work together to ensure this new test would not delay long-awaited new drugs," said Jeremy Hughes, the Society's chief executive.

The divergence between what is cost-effective and what is affordable arises because in common with health systems worldwide, the NHS is facing rising demand at a time when there is only a marginal real-terms increase in its budget.

Spending on drugs rose from £15.5 billion (US$19.3 billion) in 2014 to 2015 to £16.8 billion in 2015 to 2016, and this element of expenditure is seen as an easier target for cuts than staff or hospitals.

"No other area of the NHS has the same high level of scrutiny as medicines," said Thompson. "If the NHS became more effective in its planning, it could manage to introduction of new medicines in a more effective way."

Slightly sweetening the pill, NICE is introducing a fast track appraisal pathway for treatments that offer "exceptional value for money." These must be made available to patients within 30 days of NICE's approval, not 90, as at present.

These are products assessed as costing £10,000 or less per quality adjusted life year (QALY), NICE's main cost effectiveness metric. The usual threshold at which it judges drugs cost-effective is £20,000 to £30,000 per QALY.

In another concession, NICE said highly effective products for treating ultra-rare diseases could be approved for use at up to £300,000 per QALY. This shows the NHS is prepared to pay far more for highly specialized treatments, said John Stewart, NICE's director for specialized commissioning. That is "good for companies that are prepared to price responsibly," he said.

Last April NICE recommended PTC Therapeutics Inc.'s muscular dystrophy therapy Translarna (ataluren) after PTC agreed to provide a discount to the £220,000 (US$313,000) per patient, per year list price and for data on how each patient fares to be collected. It is expected that 50 boys will receive the drug during a five-year managed access agreement. (See BioWorld Today, April 19, 2016.)