NICE Citizens Council publishes final report
The Citizens Council of the National Institute for Health and Clinical 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.