The price of life – it was £20,000. Now NHS drugs body recalculates

What price a life? The controversial National Institute for Clinical Excellence (Nice) is about to decide. Under bitter attack for denying life-extending drugs for conditions such as cancer and dementia, the body is to revolutionise how it chooses which vital life- saving drugs are funded by the NHS.

For the past nine years, Nice has come under attack repeatedly over the medications it approves or denies for NHS patients. Only yesterday, Carol Rummels won the right to a cancer drug called Tarceva denied by Nice and which she has been paying for herself. Now, South Gloucestershire Primary Care Trust has agreed to pay £1,500 a month for the drug which is available for free in Scotland, where Nice doesn't rule.

On Tuesday, the world will have its first glimpse into how the system might change: new research by leading UK health economists will raise serious questions about the way Nice makes its decisions and suggest how it might change.

Under the current system it uses something called a quality adjusted life year or QALY. In mathematical terms, this calculates the cost of a new treatment by working out how much it improves and extends a person's life compared to existing treatments.

In the real world, under Nice's current rules, this values a year of quality life at between £20,000 and £30,000.

Critics have long argued that this number was pulled out of thin air and lacks scientific credibility. The new research reveals that the public values life much more highly – between £35,000 and £70,000 a year – while Nice's critics point out that the figure it uses has remained the same for nearly a decade, ignoring inflation and rises in NHS spending.

The research from Newcastle University, commissioned by Nice and to be published in the journal Health Economics, will criticise the system for failing to take into account public opinion. The new maths calculates the figure by asking people their willingness to pay for health and what they would sacrifice to have it.

Another new study by Imperial College found that the current system fails to capture the real impact of devastating health problems on patients and their families. It says that the public wants Nice to consider age, type of illness and, most controversially, the extent to which patients themselves, or the NHS, must bear some of the blame. This array of new research means that Nice will have to abandon a "one size fits all" system of valuing patients' lives and adopt a more radical approach.

Nice has revealed that it plans to move quickly to implement some of the findings. Experts will meet in February to discuss the benchmark figure Nice currently uses to approve drugs. Meanwhile, the drug appraisal committees at Nice have been instructed to take into account the new evidence about the public's priorities. Work will begin to improve the way the QALY is calculated. The body's citizens' council will begin the process next month.

Helen Mason, lead author of the Newcastle University report, said: "For the first time we have some estimates of what the public values most. While the methods need to be refined, it is important to get the public involved because, after all, it is their money. Quite soon there will be a body of evidence which will influence the

way Nice and similar bodies across Europe make decisions."

The reports have been welcomed by patient groups which have long argued that the old system is inadequate.

Andrew Chidgey, from the Alzheimer's Society, said: "The QALY is an insufficient tool for understanding the far-reaching benefits of treatments for Alzheimer's. It is not a good way of understanding the impact of any long term condition and does not reflect the types of quality of life factors that people value most."

Professor Peter Littlejohns, Nice's clinical and public health director, said: "We are looking carefully at all the work and the next citizen's council meeting in November will look at whether we should deviate from the threshold for some groups. I don't think Nice or society is prepared to wait for another three years because patients want some of these issues addressed now. We have enough 'good enough' research to respond now and we are making the whole process about decision-making much clearer."

Despite Nice's apparent willingness to make far-reaching changes, some experts believe a more fundamental rethink is needed.

Paul Dolan, professor in health economics at Imperial College, said: "Allocating money on the basis of what conditions people fear most means resources are not going where they are most needed. We need a QALY, but it needs to change so we can measure the misery of sufferers and carers directly.

"Society wants to us to weight QALYs for people with limited lifetime health prospects. But they also want us to tweak this a bit depending on who they feel is responsible for the suffering. Culpability is tricky and controversial but these value judgements already go on implicitly, for example, when doctors decide which patient should get the liver transplant."

John Appleby, a health economist with the influential thinktank the King's Fund, said: "In the end the problem is simple. Nice and the NHS need to operate in line with what society wants them to do because it is society's money.

'It's like having a death sentence hanging over me'

Sam Khan, 42, from London, has suffered from pulmonary hypertension – high blood pressure in the lungs – since the age of 25. This potentially fatal condition causes extreme breathlessness in around 1,500 people in the UK. In March 2008, Nice ruled against a whole class of existing drugs called prostacyclins, leaving Sam with a two-month supply of hers, which cost £37,000 per year.

Ms Khan said: "My condition has reached the stage that the tablets alone are not enough. I need the inhaler six times a day, but then I can work and contribute to society. Without it, I can barely walk three or four steps. When Nice decided the drug wasn't cost effective, I was devastated. The fact it could be taken away is like having a death sentence hanging over me. I know I won't be able to work any more if Nice doesn't reverse the decision as my PCT [primary care trust] has refused to pay for it. I understand the reality behind what Nice has to do, but when you're in the middle of it, it is difficult. I don't want to live for ever, or even to 75 with this illness, but I want to be an active member of society while I reasonably can."

'It's morally wrong that when she needs help it's not there'

Beryl Beaver, 76, from Southport, was diagnosed with Alzheimer's in 2006. Nice has ruled against the drug Aricept for people in the early stages of the disease. She and her husband John, 79, spend £100 every month buying the drug privately. Nice ranks the cost to the taxpayer as much higher, because in the early stages of the disease the drug provides only a very slight improvement. Mr Beaver said: "We pay for this medication out of our savings. It is not too bad for us but we still have to go without extra help and holidays so that we can afford it. According to her most recent tests she is still not bad enough for the NHS to pay, but I have to be with her all the time as she cannot go out alone. Beryl paid all her national insurance on the basis that when she needed help she would get it without having to pay for it. But when the time came the NHS has withdrawn it, which is morally and legally wrong.