The National Institute for Health and Care Excellence (NICE) has confirmed that the standard cost-effectiveness threshold used to evaluate new medicines will rise from the long-standing £20,000–£30,000 range to a new band of £25,000–£35,000 per quality-adjusted life year (QALY). This update, titled Changes to NICE's cost-effectiveness thresholds confirmed (1 December 2025), marks the first structural change to these figures since the institute was founded in 1999. The announcement was spearheaded by Dr Samantha Roberts, Chief Executive of NICE, and aligns with a broader ‘UK–US Economic Prosperity Deal’ aimed at securing pharmaceutical supply chains and encouraging domestic investment.
The substance of this change originates from a new ministerial power of direction. Previously, NICE held sole authority over its appraisal methods. However, following a Department of Health and Social Care (DHSC) consultation launched in late 2025, ministers will now be empowered to set the standard threshold via secondary legislation. This shift recognises that the threshold is a matter of public policy and national investment strategy rather than a purely technical health-economic calculation. The government plans to invest approximately 25% more in innovative treatments to support this change, which NICE estimates will lead to an additional three to five medicines or indications being approved for NHS use each year.
Industry groups have reacted with a mixture of relief and caution. Richard Torbett, Chief Executive of the Association of the British Pharmaceutical Industry (ABPI), described the move as an ‘important step’ toward ensuring patients can access cutting-edge therapies. However, the ABPI noted that had the threshold kept pace with inflation since 1999, the upper limit would now exceed £56,000. Similarly, the BioIndustry Association (BIA) welcomed the clarity but expressed concern that the thresholds for ‘Highly Specialised Technologies’ (HST), which apply to ultra-rare diseases, have not seen a proportional increase, potentially leaving the most vulnerable patient groups behind.
Conversely, health economists from the University of York have warned of the ‘opportunity cost’ inherent in this decision. They argue that diverting billions of pounds toward higher-priced innovative drugs may lead to the withdrawal of funding for other essential NHS services, such as primary care or mental health, where the cost per QALY is often significantly lower. Critics suggest that while the new thresholds may benefit those with rare conditions or specific cancers, the broader population health may suffer if the overall NHS budget does not expand to cover the additional £5 billion in long-term annual costs.
Implementation is set to start in April 2026. NICE has indicated that evaluations currently underway may be paused if the new thresholds could tip a ‘not recommended’ decision toward a positive outcome. Beyond the headline figures, NICE will also adopt a new ‘value set’ for health-related quality of life, using updated public preference data to better reflect modern views on the impact of chronic illness.
The higher value ceiling will likely reduce the number of terminated appraisals and facilitate more successful price negotiations. By narrowing the gap between international pricing expectations and UK willingness-to-pay, the reform creates a more predictable pathway for product launches. This shift toward a more flexible value framework may also allow for a smoother transition into the next generation of cell and gene therapies, which often struggle to meet current cost-utility benchmarks.
Source: National Institute for Health and Care Excellence (NICE)
Link: Changes to NICE’s cost-effectiveness thresholds confirmed
Date: 1 December 2025
