Value of health economists questioned

The need for careful consideration of the costs and benefits of new drugs – and the consequences of those decisions – is now widely accepted. Health economists are central to how these decisions are made, but they are facing a backlash from various quarters. Leela Barham, a health economist by training – but maybe not seeing herself as a ‘true’ economist – highlights the debate.

A young but influential branch of economics

Health economics has been described as ‘mostly applied microeconomics, borrowing and adapting tools used elsewhere by economists’. So, when viewed in this context, it is still a relatively young branch of economics.

The UK seems to have developed many of the tools that are now so often used in the wider pricing and reimbursement of drugs. For example, the Quality Adjusted Life Year (QALY) came from the Centre for Health Economics at York University. The centre was set up by Prof Alan Maynard and celebrated its 50th anniversary in 2013. Also the world-renowned National Institute for Health and Care Excellence (NICE), with the cost per QALY at its heart, is another reason that health economics is so influential in the context of pricing and reimbursement of new drugs.


Health economists have made a substantial and positive contribution to what are likely to remain difficult, highly political, decisions about access to new drugs. That they can provide a way to help all parties to understand the consequences of decisions made is, in my view, an unambiguous ‘good’ thing.

However there have been comments made about health economists that suggest a degree of backlash. For example, Cancer52 said, during the tortuous debate about Value Based Pricing (VBP) in the UK, that NICE needed to “ensure that the wider value assessment is not just an opportunity for health economists to use ever more complex analysis.”

In response to the NICE consultation on the renamed version of VBP, Value Based Assessment (VBA), the Rarer Cancers Foundation said “it is notable that the perspective of health economists has dominated the debate on the development of the VBA proposals. Now is the time to redress that balance.” Likewise, the Cancer Campaigning Group stated that it wanted less reliance on the interpretations of health economists.

Others seemed to want to be able to better understand the health economic principles and methods being debated in VBA, asking for NICE to help make independent health economist expertise available to patient organisations. They said that patients’ groups didn’t have access to this expertise in-house and may not be able afford to hire it in. Without access to health economic expertise they felt disadvantaged compared to others.

Commissioners’ views

In addition, commissioners have queried just how far health economists can go to help with some decisions. For example, 12 commissioners said, “it is even harder to set a QALY for the value of innovation and we would challenge that even an expert health economist could do this with certainty.”

Looking internationally, there is a rich and entertaining debate online if you simply search under the term ‘arrogant economists’, particularly in light of comments made by Jonathan Gruber, a health economist, that the Affordable Health Care Act in the US came about because of the stupidity of voters.

Pushback isn’t universal though; the Royal College of Physicians raised its concerns about the potential loss of health economists in Guideline Development Groups that inform NICE clinical guidelines. It saw a danger that this could lead to unchecked vested interests.

Setting the threshold – not just for health economists

Perhaps nowhere is the importance of health economists in today’s pricing and reimbursement world clearer than in the debate about the cost effectiveness threshold. A leading health economist, Prof Karl Claxton from the University of York, along with researchers from the Office of Health Economics (OHE) and Imperial College, has led research to explore an empirically-based estimate of what the threshold to underpin NICE decision-making should be. This analysis suggests that a central estimate of around £13,000 reflects opportunity costs in England’s NHS.

That is, as you would expect, not free from controversy. The OHE critiqued the work, pointing out that there are some real limitations in the data available and some big assumptions made. Sir Andrew Dillon, as chief executive of NICE, has highlighted the implications of lowering the threshold in terms of closing the door on most new treatments. But, in relation to the profession, he says, “whether we’ve got the balance right is a question for everyone to reflect on; it’s certainly not a decision just to be left to health economists.” He sets out what he thinks we need from economists: “to develop new tools that combine all [things that people, health systems and the government value very highly]”, instead of just focusing on the QALY.

Just as the NHS faces interesting times, these are also interesting times for health economists and how others see them. Let’s hope that health economists can take up the challenge set by Sir Andrew.

About the author:

Leela Barham is an independent health economist and policy expert who has worked with all stakeholders across the health care system, both in the UK and internationally. Leela works on a variety of issues: from the health and wellbeing of NHS staff to pricing and reimbursement of medicines and policies such as the Cancer Drugs Fund and Patient Access Schemes. Find out more here and you can contact Leela on

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