The NYT has an article which, for some reason, is entitled "The Evidence Gap." 

The British National Institute for Health and Clinical Excellence (NICE) uses evidence based methods to determine whether a drug is worth the cost.  Th example they site in the article is a new kidney cancer drug that costs 3 to 4 times more than NICE has budgeted for that disease state.  NICE uses quality adjusted life year to determine a treatment's merit, and then weighs it against the cost.  According to the article, it's about $20k per six months of life.

Ia.  What Price Life?

Certainly people are outraged; life is worth any price.  Unfortunately, no one seems to have the courage to say this, use it as a first principle.  Instead, NICE says this: 

Equity lies at the heart of the NHS. Lack of equity...  was one of the reasons why NICE was established. Much of the philosophical literature on equity is far from being applicable to the real world.^18,19 NICE has therefore had to make its own judgments.

Yet another group of doctors who believe they are living at The End Of History. Whenever I hear, "this time it's different" or "the old way of thinking doesn't apply" I know to expect the opposite to occur.

Ib. What Price Life?

But the argument over "what price life" is a red herring, the real question is "who best to decide how to allocate resources? and the answer (IMHO) is not government, but doctors.

The main support for the government plan is that it lowers drug costs.  First, by restricting the use of certain meds, and second (from the NYT:)

Drug and device makers, which once routinely denounced the British for questioning product prices, have begun quietly slashing prices in Britain to gain NICE's coveted approval, especially because other nations are following the institute's lead.

Aha.  Pharma voluntarily lowers prices to be able to fit within the government's budget.  How much more effective would this be if they had to cut it to fit within the doctor's "patient budget" by which doctors are told there's a certain amount they can spend

Additionally, creating a budget for doctors will force Pharma to start creating drugs that fit into the budget.  So either the cost will come down, or they'll create something that's worth the cost.

But what about those patients who need more than their budget?  Simply allow a "prior authorization" system by which a doctor can call the insurer/Medicair to expand the budget, and he can cite his reasons.  Oh, it's a pain?  That's the point.  If it is really worth it, it will be worth it.  And make it so the doctor can even bill for the time.  The obstacle alone will greatly reduce "impulse buying" of meds ("I wanna try Pristiq!") Consider that simply having a discussion with a reviewer-doctor alone is worth the government's effort, because there are docs who never get a chance to talk to anyone except a rep about what's going on in medicine.  Hell, offer CME credit for the discussion.

II.  What Price Autonomy?

But why not let the government control the budget?  What advantage is there in giving it to the doctors?

1. Autonomy.  Doctors don't want to be dictated to by government.  Since we must unfortunately have some sort of control plan, give as much control to the doctors as possible.  Consider that if medicine becomes so flow-charted, so controlled from the outside, then smart people will not be interested in becoming doctors.
2. Education.  If they have to decide what's worth it, they'll have to stay current.  Even if the flow-chart tells you exactly what to do next, do you really want a doctor who doesn't have a full understanding of the issues?
3. Alternatives.  Doctors may actually try to use non-pharmacologic treatments.  The horror!  I have a question: if diet can lead to bad health, why can't a good diet lead to not just neutral, but better health?  Why can't a food be as good for you as some are bad for you?  e.g. if Big Macs are bad for your cholesterol, what foods would lower cholesterol?  Doctors are not trained to think that way anymore.
   
4. The government is not a doctor.  Neither are the people in NICE or any other body that determines cost-effectiveness.  Oh, I know they're MDs, but they're not "on the ground" doctors.  Their focus is not reality based.
5. Corruption.  If a doctor is "corrupted" by Pharma (or his own academic interests, or political bias, etc) then that's one.  If NICE/FDA gets corrupted by Pharma (or their own academic interests, or political bias) then that's the game.  If you want to see what top down bias looks like, it looks like Depakote.
   

III.  What Price Dignity?

British authorities, after a storm of protest, are reconsidering their decision on the cancer drug and others.

So we see that when the drug deals with acute survival, there is controversy.  Ok, Perhaps the model shouldn't be applied to those drugs, at least not at first.  But it most certainly can be applied to psychiatry, for which there is no evidentiary, logical, or even anecdotal reason to think that any one medicine is necessary at any cost-- hell, at even double the cost.  (I'd grant you lithium and clozapine, but they're already generic.)

I know, I know, "doctors already have too much to worry about, they can't be busy with drug costs."  Too bad.  Seriously: too the hell bad.  The current system is untenable, something must change.  If you don't like this plan, then you will have a government plan.  See II, above.

The budget needs to go to the doctors; and then doctors need to get together and start learning again.  Set up advisory panels, put the academics to work on something real, instead of silly clinical trials which are biased-- not just by Pharma, but by their own desire for advancement.  "I believe in antiepileptics."  Awesome.