The U.K.’s National Institute for Health and Care Excellence (NICE) is considering raising the cost-effectiveness threshold for the first time in 26 years. This threshold determines the maximum amount that the healthcare system is willing to pay for an additional unit of health benefit, typically measured in quality-adjusted life years (QALYs). It serves as a signal for what the government is willing to pay for healthcare interventions.
Foreign direct investment in the British life sciences sector has seen a significant decline in recent years, falling by 58% from £1.9 billion in 2021 to £795 million in 2023. To address this decline and to appease external pressures, the British government is contemplating raising the cost-effectiveness threshold as a benchmark for assessing the value of healthcare interventions for the National Health Service (NHS).
NICE evaluates medicines and medical technologies based on their clinical- and cost-effectiveness, as well as their overall cost to the NHS. The agency uses QALYs to measure clinical benefit, combining the length of life gained from a treatment with its impact on patients’ quality of life. Currently, NICE considers medicines costing between £20,000 and £30,000 per additional QALY gained to represent good value for money for the NHS.
The current cost-effectiveness threshold range has been in place since 1999, but there are discussions about potentially increasing it to £25,000 to £37,500 per QALY. This proposed change is part of a larger plan to adjust drug prices and spending in response to potential United States tariffs on imported pharmaceuticals.
The Association of the British Pharmaceutical Industry (ABPI) has advocated for a more significant increase in the threshold, suggesting a range of £40,000 to £50,000 per QALY. However, concerns have been raised about the potential impact of raising the threshold without a corresponding increase in pharmaceutical budgets, which could lead to longer wait times for patients and cuts elsewhere in the NHS.
Health Secretary Wes Streeting has proposed a “top-up” fund for increased pharmaceutical spending to address this issue. The decision to revise the cost-effectiveness threshold will require a careful balance of societal health, fairness, and innovation, taking into account evolving evidence and policy priorities.
Ultimately, the outcome of these policy deliberations will not only impact the U.K. healthcare system but also be influenced by external factors, such as pressures from the global pharmaceutical industry and the Trump administration. It is crucial to strike the right balance in setting the cost-effectiveness threshold to ensure the best outcomes for patients and the healthcare system as a whole.
