Method: Earlier econometric analysis estimated the relationship between differences in spending by local health care purchasers primary care trust (PCT) spending, across programme budgeting categories (PBCs), and associated disease-specific mortality. This research has been extended in several ways including estimating the impact of marginal increases or decreases in overall NHS expenditure on spending in each of the 23 PBCs. Further stages of work, using data sources including MEPS, link the econometrics to broader health effects in terms of QALYs.
Result: The most relevant 'central' threshold was estimated at £18,317 per QALY (2008 expenditure, 2008-10 mortality). Uncertainty analysis indicates that the probabilities that the threshold is less than £20,000 and £30,000 per QALY, respectively, are 0.64 and 0.92. Additional 'structural' uncertainty suggests, on balance, that the central or best estimate is, if anything, likely to be an overestimate. The health effects of changes in expenditure are greater when local purchasers are under more financial pressure and are more likely to be disinvesting than investing. This indicates that the central estimate of the threshold is likely to be an overestimate for all technologies which impose net costs on the NHS and the appropriate threshold to apply should be lower for technologies which have a greater impact on NHS costs.
Conclusion: The methods go some way to providing an empirical estimate of the scale of opportunity costs the NHS faces when considering whether the health benefits associated with new technologies are expected to offset the health that is likely to be lost elsewhere in the NHS. The study also starts to make the other NHS patients, who ultimately bear the opportunity costs of such decisions, less abstract and more ‘known’ in social decisions. This work has implications for the Government's proposals to move to a system of value-based pricing for new prescription pharmaceuticals.