Like so much else, it began with Viagra.

When Pfizer introduced the blue pill in 1998, British health authorities worried it could wreck its budgetary process. It restricted access to the stuff, which prompted a suit claiming the government’s decision was capricious.

That inspired the government to consider a standardized, transparent approach to rationing medical interventions and a year later NICE, the National Institute for Health and Clinical Excellence was born.

Since then, NICE has received acclaim for limiting health care cost escalations and using evidence-based practices to assure that government spending buys the maximum amount of good quality life.

No one thinks this is easy. The British press is filled with heartbreaking stories of people who cannot access effective cancer drugs for example, but NICE responds that permitting these drugs means sacrificing others that are more cost-effective.

For years the British system was the only one to ration care this way, but spiraling health costs and souring economies have changed everything.

Now according to the New York Times, officials in at least 4 countries, Austria, Thailand, Colombia and Brazil say they either rely on NICE’s decisions or want to establish NICE-like institutions of their own.

Can something like NICE work in the US?

Actually, we may have no choice, according to Mike Leavitt, the secretary of health and human services. If we don’t do something to curb spending on health, it “could potentially drag our nation into a financial crisis that makes our subprime mortgage crisis look like a warm summer rain,” he said.

When Merck announced plans a few weeks back to open a BioTech production unit that would produce generic versions of protein-based drugs, some analysts worried that the new business model would be quite risky and expensive for the pharmaceutical giant.

Similar reasoning probably underlies Bristol-Meyers Squibb’s recent decision to pay Exelixis $240 million to develop 2 cancer drugs rather than acquire the troubled, mid-sized BioTech company.

In addition to the $240 million upfront, BMS forks over several hundred million dollars more if and when the compounds pass regulatory milestones and meet sales targets.

Last month Exelixis riffed 78 people—10% of its employees—and announced plans to focus exclusively on its most promising drug prospects including 2 known as  XL184 and XL281.

The arm’s length deal makes sense for BMS which was looking to make a splash in oncology ever since it lost ImClone Systems in a bidding war with Lilly (BMS co-markets ImClone’s cancer fighter Erbitux in the US, receiving 61% of US sales for the honor).

XL184 and XL281 are 2 of 16 compounds developed by Exelixis since 1994. None has received FDA approval and only XL184 has reached human testing.

XL184 is furthest down the regulatory road as a treatment for thyroid cancer, but human testing for that drug is also underway for cancers of the brain and lung.