London School of Hygiene & Tropical Medicine

UPDATED 02/12/2025

In a press release on 1 December 2025 the UK Government announced a US-UK trade deal covering pharmaceutical prices that will see NICE increase the reimbursement threshold it uses to make decisions about the relative value for money of new treatments.

While full details of the deal have yet to be released, Francis Ruiz, Senior Policy Advisor at the London School of Hygiene & Tropical Medicine (LSHTM), who has been following this story, said:

“The big question is where will the extra money come from? If the Government is committing extra funding to increase the pharmaceutical spend from 0.3 to 0.6% GDP this could be a good deal for the UK. But if this is coming out of existing NHS budgets it could lead to lives lost as more cost-effective treatments are crowded out to make way for expensive new drugs.

“Importantly, the rebate % firms will have to pay if sales are higher than agreed has now been capped at 15%. Under the 2024 Voluntary Scheme for Branded Medicines Pricing and Access (VPAG), participating companies pay blended ‘rates’ which depend on the characteristics of their individual portfolios. New active substances, for example, are subject to 0% rebates while other drugs will be subject to rates varying between 10-35% according to the Association of the British Pharmaceutical Industry (ABPI). So while at present we can’t be precise about the full impact of this change, the drugs bill will inevitably go up as intended.  

“The uplift to the NICE threshold does not appear to be based on any considered technical analysis, and precedent has now been set making it an overtly political negotiation. Using the threshold to support wider economic policy muddies NICE’s role as the arbiter of value for individual health technologies.”

Original story: published 12/11/2025

Last month NICE (the National Institute for Health and Care Excellence), the UK’s Health Technology Assessment body, faced calls to increase the reimbursement threshold it uses to make decisions about the relative value for money of new treatments.

This call follows various pharmaceutical firms announcing pauses or scrapping their investments in the UK. But changing the threshold has raised questions about the impact on prices for new treatments, and on patients looking to access these in the NHS, as well as the long-term health of  the UK pharmaceutical industry.

NICE determines the cost-effectiveness of new treatments by using the quality-adjusted life year (QALY) metric. Currently, NICE considers a treatment falling between £20,000-£30,000 per QALY to be cost-effective, and would usually recommend its use within the NHS. Over the last 20 years, the threshold has remained static, leading to calls for its increase.

Francis Ruiz, Senior Policy Advisor, is a health economist with over 20 years of experience in evidence-informed priority setting in health, including over 10 years of experience working with NICE. In a recent blog, co-written with Professor Andrew Briggs of the Global Health Economics Centre at LSHTM, he explored the important questions raised by possible threshold changes.

He said: “The impact on patients and the NHS of an increase in the threshold will depend on changes elsewhere, such as the role of ’special accommodations’ that NICE already applies to certain diseases, or changes to the voluntary agreement between industry and government.

“As Professor Briggs and I note in our blog, the reality is that the NICE threshold has drifted upwards over the years via approvals through these ‘special accommodations’. Given this trend, a more explicit raising of the threshold may not make a noticeable difference in treatments offered, at least with respect to some areas such as new cancer drugs.”

Discussing the potential impact of any decision to increase the threshold on the NHS, he said: “The NHS is legally obliged to fund treatments recommended by NICE and, generally speaking, make them available within three months of guidance publication. The NHS may choose to respond by pushing for more aggressive confidential price discounts, where they can negotiate public reimbursement at less than the listed market price for treatments to support patient access. However, this would seem at odds with government statements which suggest that the NHS would need to start paying more for pharmaceuticals going forward as a proportion of overall health spend.

“The NHS could delay implementation of treatments (or employ both strategies). Delays are certainly a risk for both the NHS, as there is evidence that they are currently struggling to roll-out NICE recommended treatments to patients, and for manufacturers who could lose out on sales and revenue.”

On the idea that it could boost innovation, he said: “Raising drug prices may be perceived as a critical element in the UK government’s pursuit of growth and a necessary concession of trade negotiations with the US, given the backdrop of a lacklustre national economic performance.

“However, the link between national prices and research and development (R&D) investment is relatively weak in comparison to other factors. The UK already promotes R&D through incentives like research funding and tax credits, and further policy to support R&D would be better focused on industrial strategy and policy around government spending.

“Using the threshold to support wider economic policy muddies NICE’s role as the arbiter of value for individual health technologies.

“This could potentially over-reward less valuable treatments, which would not provide the best treatments for patients, or represent best value for money to the taxpayer. As well as undermining transparency, some disease areas may be more favoured compared to others with consequences that lower profile but cost-effective treatments may have to be denied.”

NOTE: On 02/12/2025 an updated version of this story was republished to reflect a new comment.