The National Institute for Health and Clinical Excellence (NICE) is to take over the work of an advisory body which assesses very high-cost drugs used in the treatment of people with rare and very rare conditions.

From next April, NICE will take over this work, which is currently done by the Advisory Group for National Specialised Services (AGNSS), as part of the reforms being put in place through the Health and Social Care Act 2012, which also establishes the NHS Commissioning Board. The reforms mean that Ministers will no longer require formal advice on how highly-specialised services should be commissioned - this will be within the remit of the Board.

"Giving this role to NICE, from April, will create an impartial and robust mechanism for providing independent recommendations on which drugs the NHS Commissioning Board should commission as part of its new role of national commissioner for specialised services," says the government.

However, a recent debate in the House of Lords heard strong concerns from peers about the loss of AGNSS, which was established in 2010 and is "widely regarded as doing a marvellous job," said Labour peer Lord Turnberg.

The Group is "recognised, not only by the NHS and by patients but also by other countries, as a model for the way services for patients with rare diseases should be provided. It does this by having developed a rational framework that takes account of best practice and societal and health gains. It has done so in a way that is efficient and at a reasonable cost," he said.

Liberal Democrat Baroness Jolly, who chairs the Specialised Healthcare Alliance, also urged Ministers to reconsider disbanding AGNSS "when the need for it remains unchanged."

"Historically, the view has been taken that NICE would struggle to combine under one roof the evaluation of products with a cost per quality-adjusted life year [QALY] often very substantially higher than the threshold which usually applies. Furthermore, in this highly specialised field, where a service develops around novel treatment, the distinction between services, products and technology is sometimes difficult to make in areas of previously unmet need," she said.

"The AGNSS decision-making framework therefore represents a major step forward," said Baroness Jolly. "It recognises that the evidence base for small patient populations may be less-developed. At the same time, it imposes demanding standards in terms of the number of patients whose condition improves as a result of treatment, compared to the total number of patients treated. This approaches 100% for more expensive services, products and technologies."

Responding, Health Minister Lord Howe, told the debate that he recognised the concerns of some peers about NICE taking over this aspect of AGNSS' work, as the current QALY that NICE operates for its appraisals would rule out highly-expensive drugs for small numbers of people with rare conditions.

Therefore, he said, NICE has developed a process for assessing such drugs based on the decision-making framework currently used by AGNSS, which balances health gain, best clinical practice, societal value and reasonable cost. 

Nor will NICE's recommendations for such treatments be based solely on a cost-per-QALY figure, he added. 

"NICE proposes setting up a dedicated expert panel to produce an assessment of a new drug, usually within six months.  Given that we wish the new process to commence in April 2013, NICE will develop interim methods for the first few assessments. The Institute plans to subject these processes and methods to a consultation in 2013-14 alongside the assessments it will carry out,” he went on, and added: "NICE's work will make sure that we have a robust, transparent and consistent process in place for assessing very high-cost, low-volume drugs." 

Lord Howe also told the Lords that officials at the Department of Health are still exploring "a number of points of detail" with NICE, and that he would be saying more about the detail of this proposal "in the coming weeks."

Commenting on the plan, NICE chairman Professor Sir Michael Rawlins said the Institute is looking forward to taking on this new role. 

"As with all our work, we will be consulting widely with patients, carers, clinicians, commissioners and industry to ensure that we develop a robust and transparent process for making decisions about these highly-specialised drugs," said Sir Michael.

Following the transfer of responsibilities next April, AGNSS will formally cease to be a group offering advice to Ministers.