The U.K.’s National Health Service (NHS) may face higher drug spending as a result of ongoing negotiations with the United States, potentially signaling a shift in how the country evaluates the value of new medicines. A sharp decline in foreign direct investment in the British life sciences sector, falling 58% from £1.9 billion ($2.5 billion) in 2021 to £795 million ($1.04 billion) in 2023, has prompted the British government to consider changes to its cost-effectiveness threshold – a benchmark used to determine if healthcare interventions offer value for money.
Understanding NICE and the Cost-Effectiveness Threshold
The National Institute for Health and Care Excellence (NICE) assesses medicines and medical technologies, considering clinical effectiveness, cost-effectiveness, and overall cost to the NHS. A key measurement used in this assessment is the quality-adjusted life year (QALY), which combines the length of life gained from a treatment with the impact on a patient’s quality of life.
Currently, NICE considers medicines costing between £20,000 ($26,032) and £30,000 ($39,048) per additional QALY gained to represent good value. While this range isn’t a strict cutoff, it serves as a crucial signal to the life sciences sector, influencing investment, pharmaceutical pricing, and even the location of clinical trials within the United Kingdom.
U.S. Negotiations and Potential Threshold Increase
To stem the outflow of investment and appease the Trump administration, senior British officials are reportedly proposing a 25% increase in the cost-effectiveness threshold to £25-£37.5k/QALY. This change is a key component of plans presented to the U.S. to adjust drug prices and avoid potential U.S. tariffs on imported pharmaceuticals, with Britain now in “advanced talks” with U.S. officials to avert such duties.
Industry Perspectives and Budgetary Concerns
The Association of the British Pharmaceutical Industry (ABPI) has long advocated for a change in the threshold, seeking a considerably larger increase—between £40,000 and £50,000—with subsequent index-linking to inflation. However, this would require additional funding to support the increased spending.
Raising the threshold without a corresponding increase in pharmaceutical budgets could create a “black hole” in the NHS budget. While an increased threshold might allow access for expensive new drugs, it would likely necessitate cuts elsewhere in the system, potentially leading to longer wait times for patients.
Proposed Solutions and Ongoing Debate
Health Secretary Wes Streeting is pushing for a “top-up” fund specifically for increased pharmaceutical spending, rather than expecting the money to come from existing NHS budgets. The York Health Economics Consortium recently posed the question, “should NICE revisit its cost-effectiveness threshold? Or is the current £20k-£30k per QALY still fit for purpose?”
Experts agree that whatever number NICE adopts will reflect a policy choice balancing societal health, fairness, and innovation. This should be considered a “living tool, not a fixed rule,” evolving with evidence and changing policy priorities. Given the global nature of the pharmaceutical industry, outside influences, particularly those from the Trump administration, will likely impact the final decision.
The ongoing debate underscores the complex challenge of balancing access to innovative medicines with the long-term financial sustainability of the NHS, highlighting the need for careful consideration of the wider impact of any changes to the cost-effectiveness threshold. Ultimately, the decisions made will shape the future of drug pricing and access to care within the United Kingdom.
