NICE to consult on inflation-busting fee increases

NICE ran a webinar on 2nd November, setting out – ahead of a formal consultation due to open on 21st November – its plans to increase fees for technology appraisals to help the organisation manage cost pressures and move to cost recovery, as required by legislation.

The new fee for the most common type of appraisal, the Single Technology Appraisal (STA), could increase by 23% to £186,100 from April 2024. Leela Barham summarises the proposals.

Over 20% increase in fees

Based on an internal review of costs – NICE has number crunched to identify and apportion internal costs to the technology appraisal programme and predicted demand - the institute is proposing to increase the fees for appraisals by 23% from its current rates for the new financial year, starting in April 2024 (Table 1).

Table 1: Proposed fee changes

NICE is also looking at charging for technical engagement, when it happens. Technical engagement is an earlier discussion between companies and NICE and others to discuss issues, in the hope that it would reduce the number of committee meetings to reach NICE recommendations.

NICE is also hoping to introduce a change fee (£18,610), in order to help NICE mitigate from the opportunity costs of work not done when an appraisal is cancelled or the work changes to activity charged at a lower fee.

Process changes will be coming too, with expedition of a commitment from companies to pay. Refunds could also be given more often. Companies could get a refund, for example, when a topic goes into the streamlined approach to management access.

There may yet be a proposal to change the fee for small companies, too, but NICE wasn’t able to say what those changes could be, as final discussions are ongoing with the Department of Health and Social Care.

Webinar to inform company budgeting

Lori Farrar, associate director at NICE, told webinar participants that NICE held the webinar to help companies plan for their budgets for next year, rather than waiting for the formal consultation to open.

That’s a change, as Farrar explained: “This is quite different. Life sciences companies are approaching their budget setting for the next financial year; we’ve heard from previous feedback that having sight of changes to the fees is helpful to receive ahead of time.”

Paul Catchpole, value and access policy director from industry group, ABPI, said that the industry did “really appreciate the early engagement.”

Cost recovery not yet met

NICE hasn’t so far been able to recoup the costs it incurs in delivering appraisals, according to Farrar. Not only that, but the institute also needs to “reduce the risk of a potential future deficit because of ineffective and unsustainable charging model.” The underpinning legislation for charging at NICE requires cost-recovery: that contrasts to other countries who charge for their HTAs.

For 2022/23, NICE had a fee deficit of £2.4million. The current financial year deficit is forecasted to be order of £1.5million to £1.9million, according to Martin Davison, interim associate director for finance at NICE.

Deficits have been driven by lags in fee changes with higher fees not being in place soon enough to cover deficits - inflation that has affected NICE’s cost base and the timing of charges. Fees are charged at the beginning in the appraisal process, but the actual cost of an appraisal will vary according to the time taken, or if a shift to a different type of appraisal happens over the course of work.

Costs for some work that contributes to appraisals, but which haven’t been included before, have added to the proposed fees for 2024/25, too, including the work of the medicines optimisation team and that of the science policy and research team.

NICE also has the problem of running the appraisal programme based on expected volumes of work, which doesn’t always materialise as companies can choose not to submit altogether, avoiding the fee. Davison also noted that NICE doesn’t always know which companies can qualify for small company discounts.

Charges could limit patient access

Catchpole explained to NICE colleagues on the webinar why the consultation is important to industry. “Charges are material,” he said. He also noted that “if you add up all the different types of costs to companies, across the whole ecosystem, going from regulation to early scientific advice, to HTA, it’s not an insignificant amount.”

Catchpole also linked charges – across the whole ecosystem – to launching of new treatments. “Charges can, indirectly, influence patient access,” he said. “If we get the calibration of charges wrong, it may not be possible for some companies to make submissions for some kinds of medicines, smaller indications, or rarer diseases because the business case isn’t there. If you add up all the costs, and the commercial return, it doesn’t fit.”

The call is for “calibration of charges”, across the whole system, from Catchpole.

Formal consultation opens 21st November

The formal consultation will start on the 21st November and is due to close the week of 18th December.

Catchpole said that the ABPI would be putting in a response. It’s likely companies will, too. However, given the economics and that hanging from cost recovery would require changes to legislation, it feels unlikely that NICE will be able to significantly change the proposals.

About the author

Leela Barham is a researcher and writer who has worked with all stakeholders across the healthcare system, both in the UK and internationally, on the economics of the pharmaceutical industry.