HEDS is part of the School of Health and Related Research (ScHARR) at the University of Sheffield. We undertake research, teaching, training and consultancy on all aspects of health related decision science, with a particular emphasis on health economics, HTA and evidence synthesis.

Friday, 5 August 2011

NICE changes discount rate methods

“The NICE Board, having given consideration to the circumstances where it expects advisory bodies to use sensitivity analysis on the impact of discounting, has issued a clarification to section 5.6 of the current Guide to the Methods of Technology Appraisals (2008).”

The changes to 5.6.2 of the Guide are as follows (in bold):

“The need to discount to a present value is widely accepted in economic evaluation, although the specific rate is variable across jurisdictions and over time. The Institute considers it appropriate to normally discount costs and health effects at the same rate. The annual rate of 3.5%, based on recommendations of the UK Treasury for the discounting of costs, should be applied to both costs and health effects. Where the Appraisal Committee has considered it appropriate to undertake sensitivity analysis on the effects of discounting because treatment effects are both substantial in restoring health and sustained over a very long period (normally at least 30 years), the Committee should apply a rate of 1.5% for health effects and 3.5% for costs.

This raises a lot of questions, but one point is worth noting from a methodological perspective.  The UK Treasury’s recommendation of 3.5% is only the ‘headline’ figure.  Within Annex 6 of the Green Book, declining long term discount rates are presented for situations where costs and benefits extend beyond 30 years; precisely the situation identified by NICE in its revised guidance.  For 31-75 years, the discount rate falls to 3.0%, not 1.5%.