When it comes to approving new drugs, the U.K. has some of the globe's toughest price negotiators. The National Institute for Health and Care Excellence, or NICE, has been anything but kind to drugmakers hoping to roll out high-priced medicine in England.

So it probably shouldn't come as much of a surprise that NICE issued a decision this week that effectively blocks the use of Celgene's (NASDAQ:CELG) Abraxane in England for patients receiving care through the country's National Health Service, or NHS. Although more than 90% of England's population gets their care from the NHS, let's take a closer look to see if a longer term view of Celgene makes more sense than abandoning its shares on the news.

Nhs

Source: National Health Service Flickr

Giving the Heisman
The report filed by NICE states that Abraxane's efficacy fails to justify its hefty price. The measure used by NICE when considering new drugs for coverage is the cost per Quality Adjusted Life Year, or QALY. To calculate QALY, NICE awards a "1" for each quality year and awards a number between "0" and "1" for each nonquality year of life expected following treatment. The cost of the treatment is then divided by the sum of the quality and nonquality years of life expected. Historically, NICE favors drugs that offer a QALY of less than $80,000, but that measure came out to more than $125,000 when NICE applied it to Abraxane.

However, before we extrapolate NICE's decision to mean that Abraxane won't ever see the light of day in England, we might want to consider how NICE has acted in the past in relation to other new drugs, including Bristol-Myers' Yervoy and Novartis and Sanofi's oral multiple sclerosis drugs Gilenya and Aubagio.

In 2011, NICE rejected Yervoy, Bristol's blockbuster therapy for skin cancer, saying that Yervoy's $128,000 four dose price tag was too high. Despite that statement, NICE reversed course and approved Yervoy the following November after Bristol offered undisclosed price cuts. In 2014, NICE similarly challenged Yervoy's use as a first-line melanoma drug. After initially balking at paying for Yervoy earlier this year, NICE agreed to approve its use just three months later.

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Source; NICE

A similar situation has played out between NICE and drugmakers of next generation oral multiple sclerosis drugs.

In 2011, NICE said that Novartis' Gilenya didn't demonstrate clear superiority over existing treatment and it wasn't until Novartis' came back with price cuts three months later that NICE changed its mind. NICE followed a similar game plan when Sanofi tried to bring Aubagio, its oral MS drug, to the U.K. in 2013. NICE issued Sanofi draft guidance that September questioning the drug's efficacy and after Sanofi delivered additional information demonstrating how Aubagio performs versus prior generation treatment, and offered price cuts, NICE changed course and approved the drug.

So, what does all this mean?
With so many new drugs coming to market with staggering price tags, it's refreshing to see payers holding the line on cost. But if patients with tough-to-treat disease like pancreatic cancer are denied therapies that may save their lives, using the QALY measure as a negotiating tactic may smack of being a bit too Machiavellian.

There's no question that Abraxane is expensive. After all, this isn't the first shot fired across the drug's bow. Earlier this year, doctors at the distinguished Memorial Sloan-Kettering Cancer Center wrote a letter that was published in the New England Journal of Medicine questioning Abraxane's price tag relative to its efficacy in pancreatic cancer.

That letter raised important questions, including how loudly doctors should advocate on patients' behalf when it comes to price and whether or not patients with few treatment options could be conceivably denied therapies based on their cost. Those questions remain divisive and unanswered, but they're important, particularly in the case of pancreatic cancer.

According to the National Cancer Institute, more than 46,000 new cases will be diagnosed and more than 39,000 people will die of pancreatic cancer in the United States this year. Sadly, just 6.7% of patients with the cancer will be living five years after diagnosis, in part due to a lack of new treatment options. That's a dismal performance and it may suggest that any potential life-saving treatment should be made available to patients, regardless of price.

Fool-worthy final thoughts
Although NICE has balked at paying for Abraxane publicly, the drug remains available to English patients via the Cancer Drugs Fund, a fund established by the government to provide access to cancer drugs that haven't been approved by NICE. Since Abraxane for pancreatic cancer use was added to the list of eligible medications covered by that fund earlier this year, it would seem that the door likely remains open for Celgene to come back to NICE with more data and a lower, more cost-friendly price.

Todd Campbell has no position in any stocks mentioned. Todd owns E.B. Capital Markets, LLC. E.B. Capital's clients may or may not have positions in the companies mentioned. Todd owns Gundalow Advisors, LLC. Gundalow's clients do not have positions in the companies mentioned. The Motley Fool recommends Celgene. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.