The NICE Approach to Rationing ART in PEPFAR Countries (Part I)

Suppose it is necessary to ration US support for AIDS drugs in poor countries. How should it be done?Many readers may not be willing to get past my first sentence, arguing that health care is a right and should never be rationed. But in these days of financial crisis, the observation that resources are scarce cannot be so easily dismissed. In my work on the PEPFAR program, I have shown that failure to ration AIDS treatment in the 15 PEPFAR countries is likely to increase US spending on AIDS treatment in those countries until it reaches $12 billion in the year 2012. That would be four-fifths of all US foreign assistance spent outside Iraq and Afghanistan. Since those already on treatment have an entitlement to continued support, the most obvious way to reduce future treatment expenditures is to slow the expansion of the program. But unless other donors or the recipient country pick up the slack, this will mean implicit or explicit rationing of AIDS treatment to only a portion of those who need it.Gardiner Harrisâ's article in the December 3 edition of the NYT provides an excellent overview of the way government support for health care is currently rationed in the United Kingdom. The National Institute for Health and Clinical Excellence (or NICE) establishes a threshold of dollars per life-year and approves expenditures below that threshold while rejecting those above it. They argue that (1) expenditures higher than their threshold would not be efficient or fair because that British money could be used to save many more British life-years with other interventions and (2) some seemingly high cost interventions banned by NICE can - and have - become acceptable low cost interventions when the owners of the relevant patents simply lowered their prices.Applying these ideas to AIDS treatment in developing countries is complicated by the fact that AIDS treatment expenditures are funded externally while other more cost-effective health care interventions are funded locally. A Ugandan version of the NICE commission given authority to reallocate AIDS treatment expenditures to more cost-effective interventions could find many alternative ways to spend the money. But fortunately for AIDS patients and for the people who work on AIDS programs, donor money for AIDS treatment is not available for other diseases.Even within the rather rigid strictures imposed by congress, the U.S.'s PEPFAR money could be reallocated to some degree across the rubrics of treatment, care and prevention. A NICE approach would compute the cost of saving a life-year by expenditures in each of the three areas. It would then allocate AIDS expenditures so as to equalize the number of life-years saved per dollar by the three expenditures categories. In the absence of positive or negative spillovers between these categories, few doubt that such an approach would lead to more spent on prevention and less on treatment. A further benefit of such calculations might be that pharmaceutical firms would lower their prices in order to win more of the AIDS dollar just as the NYT article describes such firms doing in the UK in response to some of NICE's decisions.An important feature of the NICE approach as described in the article is that it guides choices among interventions, not among recipients of those interventions. Thus once NICE has decided to ban an intervention, that intervention is banned for everyone with the same medical condition. This approach is quite different than simply turning the dial on the speed of scale-up of a mix of all AIDS treatment regimens as seems to be the current approach towards the US PEPFAR program.For example, when resources are scarce, a NICE approach would refrain from funding much more expensive second-line therapy for anyone until all of those needing first-line therapy have been accommodated. Individuals who can afford to pay for second-line therapy out of their own pockets could of course do so. And the decision to ban second-line therapy could be reversed when the prices of the second-line drugs are reduced to levels commensurate with those of first-line drugs. Thus, application of the NICE approach would go a long ways towards extricating donors from the position of rationing ART by choosing among recipients, as they currently do.However, application of a NICE approach to ART in poor countries is vulnerable to two serious criticisms, which I will address in my next blog.