What NICE’s higher cost-effectiveness threshold means

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• Earlier this week, it was confirmed that the cost-effectiveness threshold used in NICE technology appraisals will increase to £25,000-£35,000 per quality-adjusted life year gained as part of a trade deal between the US and the UK. Importantly, NICE has been using a threshold of £20,000-£30,000 for over twenty years.
• NICE stands for the National Institute for Health and Care Excellence. It’s a health technology assessment body that “makes recommendations on the use of new and existing medicines and other treatments” for the National Health Service. NICE uses cost-effectiveness analysis to assess value for money.
• Quick primer on cost-effectiveness analysis and thresholds: The main output of a cost-effectiveness analysis is an incremental cost-effectiveness ratio. An incremental cost-effectiveness ratio tells you the additional resources needed to get one more unit of a health outcome. For example, a treatment with an incremental cost-effectiveness ratio of $20,000 per stroke prevented means it would cost, on average, an additional $20,000 to prevent one stroke with the treatment. An incremental cost-effectiveness ratio can be compared to a cost-effectiveness threshold to inform if spending that additional money is “cost-effective”. Going back to our hypothetical example of an incremental cost-effectiveness ratio of $20,000 per stroke prevented, if a decision maker has a cost-effectiveness threshold of $50,000 per stroke prevented, then the intervention that costs an additional $20,000 to prevent one stroke would be considered cost-effective because the incremental cost-effectiveness ratio is less than the cost-effectiveness threshold.
• NICE has historically used a range of £20,000-£30,000 per quality-adjusted life year gained as a cost-effectiveness threshold. The quality-adjusted life year is an outcome to attempts to account for length and quality of life. Starting in April 2026, the cost-effectiveness threshold range will be increased to £25,000-£35,000 per quality-adjusted life year gained. This signifies around a 17%-25% higher willingness to pay per unit of a health gain than their historical range.
• An analysis by NICE suggests that this update to the standard threshold could allow them “to recommend an additional 3-5 new medicines or indications per year”.
• In the United States, the government does not explicitly use cost-effectiveness and thus does not have a defined cost-effectiveness threshold or threshold range. The quality-adjusted life year is prohibited “as a ‘threshold’ measure to determine coverage and reimbursement” in some federal programs. 
• In US dollars, a cost-effectiveness threshold of £25,000-£35,000 per quality-adjusted life year gained would convert to around $33,000 to $47,000 per quality-adjusted life year gained.
• Although a single or explicit threshold is not used for decision making in the United States, cost-effectiveness analyses conducted for the United States setting often use a cost-effectiveness threshold range of $100,000 to $150,000, which suggests a much higher societal willingness to pay for a health gain in the United States than the willingness to pay (historical or new) used by NICE.