1. In December 1999, the Rt Hon Alan Milburn MP, Secretary of State for Health, stated:

The NHS, just like every other healthcare system in the world—public or private—has to set priorities and make choices. The issue is not whether there are choices to be made, but how those choices are made. There is not a service in the world, defence, education or health, where this is not the case.[1]

These comments were made to the first conference of the National Institute for Clinical Excellence[2] which had been established that year as an independent organisation to help the NHS set priorities and make choices. The organisation was expected to contribute to a more effective system of allocating resources by analysis of the clinical and cost-effectiveness of treatments.[3] It was to examine the treatments and other technologies and approaches that patients receive from the NHS. In particular, NICE was to address a number of problems, including the presence of multiple, often conflicting, guidelines on the use of medical technologies and variations in local commissioning which meant that patients' access to certain types of care depended on where they lived. It was envisaged that NICE would provide a "single source of advice" to the health service, making clinicians' jobs easier and clarifying what patients could and could not expect from the NHS.

2. The Health Committee has taken a close interest in NICE's work over the last eight years. In 2001/02 the Committee undertook its first inquiry into the organisation.[4] It found an institution which was carrying out its vital task competently but the Committee also saw a number of ways the organisation could be improved. Many of the Committee's recommendations were accepted and implemented and NICE's remit has changed.[5] The Institute now takes much more seriously the need to ensure its guidance is implemented. Disappointingly, a number of the Health Committee's recommendations, for example that NICE should conduct technology appraisals at the time of launch, were not implemented.

3. Since 2002, the environment in which NICE operates has continued to change. Its work seems to have become ever more contentious. It has been increasingly subject to criticism. Those patient organisations, drug companies and clinicians which believe that NICE has come to the wrong decision have been vociferous in their protests. Recently Eisai, supported by the Alzheimer's Society, was given the right to a judicial review of a NICE decision. Ministers too have intervened following public outcries. For instance, in November 2005 the Rt Hon Patricia Hewitt MP publicly announced her concern about the refusal of a PCT to prescribe trastuzumab (Herceptin) to a patient with breast cancer for a then unlicensed indication before it had been assessed by NICE.[6] This made it almost impossible for NICE not to approve the drug, once licensed, regardless of cost.

4. We were surprised by the vehemence of the criticisms and keen to find out how valid they were or, alternatively, whether NICE was subject to unfair and unjustified pressure. Accordingly, five years after our first inquiry we decided to hold another inquiry into NICE. Our terms of reference were as follows:

• Why NICE's decisions are increasingly being challenged;
• Whether public confidence in the Institute is waning, and if so why;
• NICE's evaluation process, and whether any particular groups are disadvantaged by the process;
• The speed of publishing guidance;
• The appeal system;
• Comparison with the work of the Scottish Intercollegiate Guidelines Network (SIGN); and
• The implementation of NICE guidance, both technology appraisals and clinical guidelines (which guidance is acted on, which is not and the reasons for this).

5. We received 124 memoranda and took oral evidence from 31 witnesses, including pharmaceutical companies, patient and professional organisations, PCTs, clinicians and health economists as well the Chairman and Chief executive of NICE and the responsible Minister. We visited similar organisations to NICE in Scotland, France and Canada. We were very fortunate to have the assistance of our Specialist Advisers Professor Joe Collier, Professor Alan Maynard and Dr Hilary Pickles.

6. The evidence we received contained praise for NICE's work but also, as might be expected, criticisms. Some criticisms had already been widely reported in the press: there were concerns about the time taken to produce guidance, topic selection and the lack of emphasis on disinvestment. In contrast, other criticisms had had less publicity, in particular the fear that PCTs were unable to afford NICE guidance, notably its technology appraisals of new drugs. As a consequence, PCTs were unable to provide other possibly more cost- and clinically-effective treatments, which had not been assessed by NICE. Thus, while some witnesses thought NICE was rejecting too many treatments, especially new drugs, others thought it was probably not rejecting enough.

7. During the inquiry the OFT published its report on value-based medicines pricing, in which it recommended that medicines should be priced according to their clinical value to the NHS. Such a move would mean a major new role for NICE in helping to set the price of drugs. The pharmaceutical companies opposed the OFT report and in December the Government had still not made a definitive response. Given the role envisaged for NICE in the OFT report we decided to expand the scope of our inquiry to examine this issue.

8. In this report we look first at what NICE does and how it works, changes made since its establishment and the new challenges it faces. In the following three chapters we cover the criticisms made of NICE: first of the evaluation process, then of concerns about affordability and in Chapter 5 we look at implementation. In Chapter 6, we consider drug pricing in the light of the OFT report. Finally, we summarise our main conclusions and recommendations.

2   Since 2005 the National Institute for Health and Clinical Excellence Back

3   The proposals for NICE were set out in the Consultation Paper: A first class service: quality in the new NHS Back

4   Health Committee, Second Report of Session 2001-02, National Institute for Clinical Excellence, HC 515-1 Back

5   The functions of the Institute, as described in its terms of reference, are listed in the Annex. Back

6   Times, 8 November 2005, http://www.timesonline.co.uk/tol/news/uk/article588013.ece, BMJ, 2005;331:1162 Back