Why the government must urgently raise the NICE cost-effectiveness threshold

The National Institute for Health and Care Excellence (NICE) plays an important role in determining whether new medicines will be funded for NHS patients . It does this by assessing whether a new medicine, or a new use of an existing medicine, is considered a good use of NHS money.

At the heart of the process is NICE’s baseline cost-effectiveness threshold. This is the cost the NHS will pay to achieve one year of good health, currently £20,000 – £30,000 per Quality-Adjusted Life Year (QALY). It is therefore one of the most influential numbers impacting treatment options and outcomes for NHS patients.

Twenty years of stagnation
NICE’s baseline threshold has remained unchanged for over twenty years. This matters because, as a result, the real value of what the UK [1] is willing to pay for new medicines has declined by 47 per cent between 1999 and 2025 [2]. Put another way, the amount the UK will pay for a medicine which provably improves a human life has almost halved over the past two decades.

If the upper end of NICE’s threshold had risen with inflation since 1999, it would now be around £56,794 [3]. If it had increased in proportion with the growth of the NHS budget since 2014, it would stand at £59,150 [4].

Most countries do not specify a threshold for making decisions about funding new medicines. Of those that do, the NICE threshold is among the lowest [5].

It is becoming increasingly difficult to defend a forever frozen threshold. Rising inflation, increasing NHS costs associated with prescribing medicines included in NICE evaluations, and successive reforms to health budgets continue to alter the economic landscape, making it harder to bring medicines to UK patients.

Without action, the benefits that medicines offer to patients will continue to be undervalued, and the UK will increasingly set the bar too high for NHS patients to benefit from new medical innovations. Raising the threshold is not about lowering standards; it is about ensuring standards reflect today’s realities.

The unique scrutiny placed on medicine spending
The threshold used by NICE is an outlier, even within the UK, for the low value it places on human life.

When considering other areas of government spending, such as transport or education, both HM Treasury and the Department of Health and Social Care (DHSC) have previously adjusted their interpretations of the value of a QALY to account for inflation [6,7]. The Treasury now recommends that the government use a value of £70,000 per QALY gained. This variation creates systemic inequalities in the allocation of public funds.

The NHS needs to ensure it gets good value for money. However, it is also important to recognise that medicines are already the most robustly scrutinised area of NHS spending. Every new medicine, and every major licence extension of an existing one, undergoes a comprehensive evaluation of its costs and benefits before the NHS agrees to fund it.

Additionally, companies may face further pricing pressures through commercial access arrangements, individual budget impact assessments, and industry-wide rebates under successive Voluntary and Statutory Schemes. No other part of NHS spending is subjected to this level of cost containment.

There is little doubt that many standard NHS interventions would not pass the same stringent tests that medicines face.

The wider impacts of frozen thresholds
The stagnation in NICE’s threshold is now a pressing problem, not only for patients, but also for the UK’s global competitiveness in the life sciences. It is limiting the country's ability to attract investment and the UK’s standing as a launch market for innovative treatments.

A recent ABPI report, ‘Creating the conditions for investment and growth’, identified the low value threshold used to assess medicines in the UK as a key drag factor impacting inward life sciences investment in R&D and manufacturing [8].

A question of fairness and global responsibility
The UK government is operating in an increasingly complex geopolitical environment. Developed countries are under pressure to contribute their fair share to the development of new medical innovations. NICE does an excellent job of assessing clinical and cost-effectiveness, but the parameters it works within are outdated.
The UK prides itself on having a health system that is both rigorous and fair. However, twenty years of stagnation in the NICE baseline threshold have left us with a system that undervalues medicines, deters investment, and denies some patients access to innovations that are already benefiting patients in other countries.

If the UK is to remain a priority market for pharmaceutical innovation and if NHS patients are to benefit from timely access to the latest treatments, then NICE’s baseline threshold must be raised.

This is why the ABPI is calling for urgent action. The NICE baseline threshold should be increased as soon as possible, in line with inflation, to £40,000–£50,000 and then index-linked thereafter. Making this change would, over time, lead to a greater share of the NHS budget being allocated to medicines, and additional funding will be needed to support this.

Decisive action now will ensure the UK can continue to be a leader in life sciences, and, most importantly, that patients here can access the medicines they need when they need them.

Endnotes
[1] NICE decisions apply in England, Wales and Northern Ireland. The Scottish Medicines Consortium makes decisions in Scotland and has a different decision-making framework. It also uses a £20,000-30,000 threshold as a guide, but less explicitly than NICE.
[2] Using GDP deflator to 2024 and OBR estimates for 2025, the depreciating value of a QALY from £30,000 in 1999 is to £15,847 in 2025. Calculated from when NICE was established.
[3] £30,000 in 2024 prices, base = 1999 adjusted for inflation (GDP inflator, June 2025). Calculated from when NICE was established.
[4] £30,000 increased in line with nominal NHSE to 2025, base = 2014 (ABPI analysis of calendar-year adjusted NHS budget) 
[5] OHE, International Cost-Effectiveness Thresholds and Modifiers for HTA Decision Making 
[6] The value of a QALY in the Treasury Green Book was increased to £70,000 to reflect 2020/21 prices.
[7] DHSC uplifted the Claxton et al. estimate of the opportunity cost in the NHS (£12,936) to £15,000 to account for uncertainty in the estimate and to reflect 2016 prices. DHSC. Annex C Statutory Scheme – Branded Medicines and Pricing Impact Assessment. 21 February 2024.
[8] ABPI, Creating the conditions for investment and growth, 10 September 2025