or more than 25 years, access to new medicines in England and Wales’* National Health Service (NHS) has required a positive recommendation from the National Institute for Health and Care Excellence (NICE). This is based on assessment of clinical and cost effectiveness. To assess cost effectiveness, NICE committees consider both costs and health outcomes, with health outcomes measured in quality-adjusted life years (QALYs).

QALY is a generic outcome that combines health-related quality of life (HRQoL), measured on a 0–1 scale, with survival (length of life), where one QALY equates to one year spent in full health. The recommended measure of HRQoL is a “utility” value calculated using a generic quality-of-life questionnaire (EQ-5D) and associated value set that assign “utility” values to the health states described by the EQ-5D descriptive system.

To reach their decisions, NICE committees compare the cost per QALY gained (the incremental cost-effectiveness ratio [ICER]) to a cost-effectiveness threshold of £20,000-£30,000 per QALY gained for over 26 years. For a medicine to be recommended for routine use in the NHS, its ICER should be less than the threshold value of £20,000 per QALY gained. If the ICER falls between £20,000 and £30,000 per QALY gained, other factors should also be considered such as uncertainty and the innovative nature of the drug. If the ICER is more than £30,000 per QALY gained, the medicine is not considered cost effective.

In a historical move, following weeks of anticipation, NICE officially announced in December 2025 that its standard cost-effectiveness threshold will increase for the first time.

What’s Changing and When?

This change, which will take effect this month (April 2026), will mean that the standard cost-effectiveness threshold that NICE committees use to judge whether a medicine is cost effective will increase by 25%, from £20,000-£30,000 per QALY gained to £25,000-£35,000 per QALY gained. It will apply to the NICE Technology Appraisals (TA) program and not to the highly specialized technologies (HST) program, which has an even higher threshold. It is anticipated that this change will allow NICE to recommend an additional 3-5 new medicines or indications per year, based on their own analysis.

In a webinar announcing the changes and discussing how they will be implemented, NICE stated that the Department of Health and Social Care (DHSC) will consult on powers to direct NICE to enact this change from April 2026, in a targeted change to regulation. This consultation has now concluded and supported this targeted change. In this same webinar, NICE stressed that this targeted change will not permit any broader intervention from government ministers in its methods or decisions

In addition to the increase in its cost-effectiveness threshold, NICE also announced it will start using a new EQ-5D-5L UK value set that was developed by asking 1200 members of the public to judge different health states. This value set has just been published in a peer-reviewed publication. This change, however, will follow the standard approach to making modular updates to its methods, including a public consultation on the proposed change before its full implementation.

NICE’s announcement came in parallel with an announcement from the UK government about the successful closure of a trade deal with the US that includes this change, alongside an agreement regarding the tariff that UK pharmaceutical manufacturers exporting medicines to the US will pay.

Why These Changes?

From a market-access perspective, these NICE methods changes are anticipated to reshape the access environment in the UK and beyond. The US-UK trade deal, of which this threshold change is part, may convince pharma companies to continue their presence in the UK and to maintain the UK’s positioning in the launch sequence after previously threatening to pull out of the UK market under pressure from the newly announced US tariffs and policies such as the MFN (Most Favored Nation) external reference pricing policy. This is according to the UK government’s press release announcing the NICE threshold changes, which stated:

“This will encourage pharmaceutical companies from around the world to prioritise the UK for early launches of their new medicines, meaning British patients could be among the first globally to access breakthrough treatments.”

Anticipated Impact

These NICE methods changes will have a far-reaching impact on the assessment of cost effectiveness of medicines in the UK, with likely spillover effects on other countries’ practices as well.

The higher Willingness-to-Pay (WTP) threshold expands headroom for treatments near previous ICER cutoffs, improving the feasibility of charging higher prices for innovative therapies. However, the unchanged discount rate, which is used to reflect the present value of costs and outcomes and adjust for time preference, limits the full advantage of this increase. This means more flexibility on price but continued pressure on future value. It remains to be seen whether this increased threshold will also apply to other NICE guidelines apart from its TA program. What NICE has confirmed is that the threshold change will not lead to any reviews of completed appraisals.

NICE’s adoption of the new EQ-5D-5L UK value set will also reshape patient-reported outcomes (PRO) strategy. Utilities derived from EQ-5D directly influence QALY calculations and ICERs. By reflecting more nuanced health states, EQ-5D-5L supports a more accurate calculation of QALYs. Trials that currently collect EQ-5D-3L data may need a new mapping function to align with the new set. Future trials should be encouraged to prioritize EQ-5D-5L and ensure high completion rates for PRO instruments, as missing data will become even more critical.

Beyond the UK

It is not clear how Europe will respond to these changes on both sides of the Atlantic, but what is clear is that action must be taken to minimize the impact of these changes on both the favorability of European markets as launch markets and the prices to be charged by pharmaceutical companies in these markets, both of which are likely to impact patient access to innovative medicines.

Further, we could speculate that this change COULD bring prices in the UK closer to those in France and Germany. The UK has been able to achieve low prices because of the powerful negotiating position of the UK’s single centralized payer for the majority of UK healthcare (the NHS), its deeply embedded health technology appraisal processes through NICE which acts as the gatekeeper for the reimbursement of drugs, and through long-standing price-control mechanisms which effectively cap the NHS’s spend on innovative medicines, the most recent iteration of which is the Voluntary Scheme for Branded Medicines Pricing, Access and Growth (VPAG), and a fallback Statutory Scheme. The current VPAG scheme requires scheme members to make payments to the Department of Health based on the application of a percentage (clawback rate) to their eligible sales of newer medicines. The effective clawback rate has reached 23.5% on “newer medicines” (22.9% clawback plus a 0.6% investment program funding, excluding new active substances)—far higher than comparator countries such as France (5.7%), Germany (7%), and Spain (7.5%).

In conclusion, pharmaceutical companies consider this threshold change as a step in the right direction towards encouraging innovation and ensuring that the UK market remains a viable one for launching innovative medicines. It is also likely to encourage companies to invest in addressing the unmet needs in therapeutic areas that are not entirely well-served but mature, such as cardiovascular and women’s health, rather than focusing and heavily investing in rare diseases and oncology. However, whether all of these benefits will be realized remains to be seen.