This blog post was published in October 2025, before the change in NICE’s cost-effectiveness threshold was announced.
Karina:
Over the past few years, there’s been growing talk about whether the National Institute for Health and Care Excellence (NICE) might revisit its long-standing cost-effectiveness threshold – the benchmark that helps determine whether new health technologies are considered “value for money” for the NHS. It’s a number that’s shaped access to medicines in the UK for over two decades, but many argue that it no longer reflects today’s realities.
To unpack this, I’ve brought together four colleagues from York Health Economics Consortium: Stuart Mealing (Director of Pharmaceutical Consulting), Robert Malcolm (Project Director), Hayden Holmes (Director of Digital Health Technologies Consulting) and Matthew Taylor (Chief Executive Officer). In this blog, you can read their discussion, where they each share their different perspectives on how NICE works and what a change could mean for patients, industry, and the health system.
What is the NICE threshold?
Karina:
Stuart, can you kick us off? There’s a lot of confusion about what the NICE threshold really represents.
Stuart:
Sure. The headline figure everyone quotes – £20,000 per quality-adjusted life year (QALY) – is often treated like a hard rule, but that’s not really how it works. In theory, it represents the opportunity cost of spending in the NHS – how much health we’d give up elsewhere for every new pound spent. But in practice, it captures much more: things like unmet need, innovation, uncertainty, and even broader social values. It’s more of a guiding principle than a strict cut-off, and the appraisal committees often adapt it case by case.
Rob:
Exactly. The threshold isn’t a precise reflection of opportunity cost – it’s a decision-making signal. When NICE was set up, the figure came from early analyses of NHS spending and some historical precedent. The £20,000 to £30,000 per QALY range that’s quoted in guidance is really just shorthand for a more complex process that also factors in affordability and political considerations. If you actually look at the data, most appraisals go above that threshold. In fact, around three-quarters of recent single technology appraisals were approved at over £20,000 per QALY, and a chunk even exceeded £30,000. So, the idea that it’s a rigid ceiling doesn’t match what happens in reality.
Mat:
And to build on that, I think it’s equally important to clarify what the threshold isn’t. It’s not a cap on drug prices, and it’s definitely not saying someone’s life is only worth £20,000. I’ve seen that misconception pop up in the media. What NICE is trying to do is get the most health from a fixed budget. The NHS can’t print more money – if it spends more in one area, it has to spend less somewhere else.
Hayden:
NICE’s own methods make this clear: for interventions with an incremental cost-effectiveness ratio (ICER) below £20,000 per QALY, the bar for rejection is high. But once you move above that, NICE starts weighing up uncertainty, innovation and other factors. By £30,000 or more, those “other considerations” must be really strong to justify a positive recommendation. The irony is that this flexibility also creates less transparency. It’s hard for companies, clinicians or even the public to know what’s truly driving decisions.
Why is there talk about changing the threshold now?
Karina:
If the cost-effectiveness threshold is already flexible, why are people calling for it to change? What’s triggered the debate?
Stuart:
One reason is simply that it’s not been formally updated since 1999. Inflation alone would suggest it’s worth revisiting. Another is that the current figure might not reflect the real-world opportunity costs in a modern NHS. Some argue it should be lower, others higher. There are valid cases for arguing both ways: lowering it could better align with societal preferences, new research on what health gains people actually value, and move closer to the true opportunity cost of producing health. Raising it could acknowledge innovation and the infrastructure benefits that new technologies bring.
Rob:
Yes, the political narrative tends to favour raising the threshold. It sounds pro-innovation, and industry obviously supports that idea, but there’s also a risk that raising it sends the wrong economic signal. If companies know the NHS is willing to pay more, they may price to the threshold, meaning we would find ourselves paying higher prices without necessarily getting more value.
Mat:
And inflation isn’t the whole story. The threshold should really track efficiency in the health system. If the NHS becomes more efficient – meaning it generates more QALYs per pound – then the threshold should actually go down, not up. Otherwise, you’re implying that the system is getting less efficient over time. If people argue for a higher threshold, I’d ask the question: are we saying the NHS is less efficient now than it was twenty years ago? Because that’s part of what that argument implies.
Hayden:
The other driver here is the changing composition of NHS spending. Pharmaceutical costs are rising faster than the overall health budget. Between 2015 and 2020, list-price spending on medicines grew by nearly 10% some years, compared to only 2% to 5% growth in the health budget overall. Hospital medicines now make up over half of total drug spend – a big shift from a decade ago. So, even without changing the threshold, more medicines are being approved and funded. It’s happening implicitly, rather than through any explicit policy decision that drugs are better value than other parts of the system.
What could happen if the threshold changes?
Karina:
Let’s talk about the consequences. What happens if NICE officially raises or lowers the threshold?
Stuart:
If it’s too low, you could end up rejecting more products that could benefit patients. That makes the UK a less attractive market for companies, especially smaller biotechs, because it looks too risky. That could delay or even prevent access to innovative treatments. But if it’s too high, companies are more likely to increase prices to match it, because they’re pricing to what the NHS is willing to pay. The NHS then spends more, even when there’s no improvement in overall value for money. Either way, you affect population health, either through reduced access or higher costs that squeeze other services.
Rob:
It’s a really good point Stuart. The threshold isn’t just a technical detail, it’s a signal to the life sciences sector. It shapes investment, pricing, and even which clinical trials come to the UK. But it also affects the sustainability of NHS finances. So, any change has ripple effects beyond NICE’s walls.
Mat:
That’s why I think we need to stop pretending it’s purely a scientific number. It’s also a political and ethical one. If we raise it, we’re making a statement about how much society is willing to spend on certain types of health gains above others. If we lower it, we’re saying the NHS should focus on efficiency and opportunity cost. Either way, we should be explicit about that choice.
Hayden:
I agree that transparency is key. Right now, there are layers of opacity, such as confidential discounts, managed access agreements and rebates. In some cases, it’s even confidential that a confidential discount exists! That makes it impossible to know the real price the NHS pays or to judge how close decisions are to the nominal threshold. If the threshold changes, it has to come with a clearer conversation about what it means, and about who gains or loses as a result.
What about industry pressure and political context?
Karina:
Hayden, you’ve mentioned the political side. Do you think industry lobbying plays a role here?
Hayden:
I think it’s fair to say there’s strong pressure from pharmaceutical groups, often under the banner of supporting innovation or ‘resilience.’ But resilience has become quite a nationalistic term, and I think we need to remember that health is global. In my opinion, the idea that companies would abandon the UK entirely is overstated. The marginal cost of bringing an approved drug to a relatively large national market is relatively low. It might just mean the UK gets drugs later, which has pros and cons. On the plus side, we’d have more real-world evidence to inform decisions.
Stuart:
That’s true. I think sometimes the threat of withdrawal is used to influence policy, but in practice, the UK remains an important market. What we don’t want is a system that either discourages innovation or rewards inefficiency.
Rob:
Also, related to transparency, I believe that industry needs predictability. Companies can plan around a clear framework, even if it’s strict. The problem is uncertainty – when thresholds are applied inconsistently, or when modifiers and managed access schemes blur the boundaries. That unpredictability is what probably frustrates both manufacturers and clinicians.
Mat:
And ultimately, patients lose out from that inconsistency too. Transparency and fairness matter as much as the actual number on the page.
So, what should happen next?
Karina:
If you were advising NICE or the Department of Health, what would you recommend they do?
Mat:
I’d start by being honest about what the threshold represents. Let’s stop pretending it’s a purely empirical measure and acknowledge that it’s a policy choice balancing health, fairness and innovation. From there, we can debate whether the current figure reflects those priorities.
Rob:
Yes, I would agree with Mat. I’d like to see better communication about how decisions are made above or below the stated range. The data show that we already approve many interventions above £30,000 per QALY, so why not say so transparently and explain why?
Stuart:
I think NICE should also review how thresholds work across different appraisal routes: standard, highly specialised, managed access, etc. They all use different implicit values, which muddies the picture. A coherent system-wide approach would help.
Hayden:
For me, it’s about explicit decision-making. If we’re implicitly raising the threshold by approving more expensive medicines, let’s have the political debate out in the open. Are we comfortable spending more on drugs and less on other parts of the NHS? If so, fine – but let’s say it, rather than letting it happen quietly.
Final reflections
Karina:
It sounds like you all agree on one thing – that the threshold isn’t just a number, but a reflection of what the NHS and society value. Any final thoughts?
Stuart:
The key is balance. Too low or too high both have consequences. The right threshold isn’t about picking a perfect number, but about having the right principles and transparency behind it.
Rob:
We also need to remember that it’s a living tool, not a fixed rule. It should evolve with evidence, efficiency and policy priorities.
Mat:
And with clarity about what we’re trying to maximise: health, fairness or innovation. You can’t have all three perfectly aligned.
Hayden:
Whatever happens next, I hope the debate leads to greater transparency – in pricing, in decisions, and in how we define value for money in healthcare.
Karina:
Thank you all for such a thoughtful discussion. The NICE threshold might look like a simple number on paper, but it captures some of the most important questions in health economics – about how we value health, innovation and fairness.
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