This approach may help to reduce clinical error and, at best, may help to reduce variations in practice for recommendations that are easily affordable by local NHS bodies. It does little to reduce variations for more costly recommendations or to aid transparency in allocation of resources. If SIGN does not take careful account of cost, then local cash constrained NHS bodies certainly will. Any costly recommendations issued by SIGN will therefore be followed or ignored at a local level largely on the basis of behind the scenes power politics, free from public scrutiny and debate about what alternative services could have been purchased.

The approach taken by SIGN does nothing at all to increase efficiency in the allocation of resources. Being efficient is not the same thing as being cheap. An intervention may be relatively costly yet relatively efficient—that is, it may do more good per pound spent than other, relatively cheaper, interventions—and vice versa. To improve efficiency decision makers need information on what economists call opportunity costs—the benefits foregone when scarce resources are used one way rather than another. With this information, efficiency can be improved by reallocating resources towards relatively cost effective interventions and away from less cost effective ones, thus delivering greater health gains for the same level of spending. Of course decision makers may be interested in the efficient delivery of benefits other than health gains, taking account of local circumstances such as budgetary impact and wider political and ethical considerations. In the absence of any information about opportunity cost, however, they cannot attempt to achieve the efficient use of resources.

These elementary economic principles have been carefully and clearly set out in many introductory texts on economic evaluation in health care.⁴ So either SIGN's protagonists believe that efficiency is an irrelevant objective or they have failed to understand the logic of resource allocation. Either way, SIGN is inadequate because seemingly robust professional advice is distributed to clinicians, which, if adopted, will distort resource allocation and waste scarce resources.

SIGN's rival or complementary organisation (why is there such an overlap in such a small country?) is the Health Technology Board for Scotland. This is charged with “providing a single Scottish source of advice on the clinical and cost-effectiveness of new and existing health technologies.”⁵ The board is now over a year old, but it has faced difficulties recruiting staff and seems fated to contract out its work. Whether it does its work “in house” or outside in academia or in commercial agencies, the board is confronted by gross deficiencies in the supply of well trained health service researchers and health economists. Unfortunately, the board seems stymied at birth, while local politicians and policymakers are increasingly impatient about the production of “results.”

In pursuing this ambitious agenda, NICE has an inadequate budget and, until recently, a less than transparent evaluation process. Thus the eventual decision of NICE to support the use of zanamivir in the NHS was based on evidence that was not available to outsiders until three weeks after the decision was announced. Consequently, many people were dubious about the scientific basis of this decision and some have subsequently over-ridden it.⁸ Similar concerns have been expressed about some other decisions (for example, on taxanes) and delayed decision making (for example, about interferon beta for multiple sclerosis) by NICE.^9,10 Since April 2001 all evidence has had to be open, and this welcome change will aid transparency. However, the continued and protracted lobbying of NICE by patients' organisations and industry bodies generates fears that decisions can and will continue to be delayed by mechanisms other than the evidence base.

These are not the only problems with NICE. The decisions of NICE are not mandatory but advisory: the chairman of NICE, Sir Michael Rawlins, has declared their purpose to be to give “guidance” to professionals.¹¹ Legally, guidance cannot be mandatory: the 1948 and subsequent NHS acts stipulate that the NHS cannot require individual clinicians to practise medicine in any particular way. However, the NHS tends to react as if advice from NICE were mandatory, as do the media. One exception to this has been a group of general practitioners in north Devon who robustly rejected NICE's advice on zanamivir.¹²

NICE has concluded that all of the new pharmaceuticals it has appraised are cost effective and has refused to rank them in any form of hierarchy—not even a grading of “high,” “medium,” or “low” cost effectiveness, let alone a full scale league table. As a consequence, health authorities are slavishly funding marginally cost effective drugs approved by NICE and diverting funding away from more cost effective existing services that lack politically powerful advocates (for example, hip replacements and cataract surgery). NICE has effectively become an advocacy mechanism by which lobbies of specialists and their supporters in the pharmaceutical industry extract more public money from the NHS. Instead of challenging the pharmaceutical industry to show value for money, NICE has become their “golden goose.”

To ensure consistency in decisions on rationing made by NICE, a fixed growth budget for new technologies might be implemented (over, say, a three year cycle), within which NICE must prioritise its guidance. This could be distributed to health authorities and primary care trusts in proportion to the estimated net costs of the new technologies, and could cover all NHS and associated social care costs for each technology over a particular time period. It could also account for savings resulting from guidance on stopping the use of established technologies, giving NICE an incentive to identify disinvestment opportunities (for example, induction of labour using vaginal gel rather than cheaper but equally effective vaginal tablets¹⁴). To preserve incentives for realistic estimation of net costs, local bodies could be allowed to demand further cash from NICE if they can show after the event that the original estimates by NICE were too low.

A second change would be for NICE to be given the option of concluding that definite national guidance is inappropriate for some technologies, if reducing postcode prescribing would compromise other goals relating to equity or efficiency. A case in point might be interferon beta for multiple sclerosis—positive guidance might not be cost effective (yielding modest benefits to a relatively small number of patients at a high total cost), but negative guidance might compromise the NHS principle of seeking to do as much as possible for seriously ill patients. Leaving funding decisions to local discretion might be the best option.

As an aid to decision making, NICE should publish information on cost effectiveness in a format that makes it readily comparable across appraised technologies, including league tables of incremental cost effectiveness whenever possible. Such tables might provide information on cost effectiveness for different subgroups of the population, differentiate between local and overseas data, and grade the quality of these data on the basis of compliance with guidance on methods published by NICE.¹⁵