Caveat emptor NICE: biased use of cost-effectiveness is inefficient and inequitable

Abstract

Concern with the threshold applied in cost-effectiveness analyses by bodies such as NICE distracts attention from their biased use of the principle. The bias results from the prior requirement that an intervention be effective (usually 'clinically effective') before its cost-effectiveness is considered. The underlying justification for the use of cost-effectiveness as a criterion, whatever the threshold adopted, is that decisions in a resource-constrained system have opportunity costs. Their existence rules out any restriction to those interventions that are 'incrementally cost-effective' at a chosen threshold and requires acceptance of those that are 'decrementally cost-effective' at the same threshold. Interventions that fall under the linear ICER line in the South-West quadrant of the cost-effectiveness plane are cost-effective because they create net health benefits, as do those in the North-East quadrant. If there is objection to the fact that they are cost-effective by reducing effectiveness as well as costs, it is possible to reject them, but only on policy grounds other than their failure to be cost-effective. Having established this, the paper considers and seeks to counter the arguments based on these other grounds. Most notably these include those proposing a different threshold in the South-West quadrant from the North-East one, i.e. propose a 'kinked ICER'. Another undesirable consequence of the biased use of cost-effectiveness is the failure to stimulate innovations that would increase overall health gain by being less effective in the condition concerned, but generate more benefits elsewhere. NICE can only reward innovations that cost more.