The NICE Cost-Effectiveness Threshold

What it is and What that Means

Abstract

The National Institute for Health and Clinical Excellence (NICE) has been using a cost-effectiveness threshold range between £20 000 and £30 000 for over 7 years. What the cost-effectiveness threshold represents, what the appropriate level is for NICE to use, and what the other factors are that NICE should consider have all been the subject of much discussion. In this article, we briefly review these questions, provide a critical assessment of NICE’s utilization of the incremental cost-effectiveness ratio (ICER) threshold to inform its guidance, and suggest ways in which NICE’s utilization of the ICER threshold could be developed to promote the efficient use of health service resources.

We conclude that it is feasible and probably desirable to operate an explicit single threshold rather than the current range; the threshold should be seen as a threshold at which ‘other’ criteria beyond the ICER itself are taken into account; interventions with a large budgetary impact may need to be subject to a lower threshold as they are likely to displace more than the marginal activities; reimbursement at the threshold transfers the full value of an innovation to the manufacturer.

Positive decisions above the threshold on the grounds of innovation reduce population health; the value of the threshold should be reconsidered regularly to ensure that it captures the impact of changes in efficiency and budget over time; the use of equity weights to sustain a positive recommendation when the ICER is above the threshold requires knowledge of the equity characteristics of those patients who bear the opportunity cost. Given the barriers to obtaining this knowledge and knowledge about the characteristics of typical beneficiaries of UK NHS care, caution is warranted before accepting claims from special pleaders; uncertainty in the evidence base should not be used to justify a positive recommendation when the ICER is above the threshold. The development of a programme of disinvestment guidance would enable NICE and the NHS to be more confident that the net health benefit of the Technology Appraisal Programme is positive.

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Acknowledgements

This paper was initially prepared as a briefing paper for NICE as part of the process of updating the Institute’s 2004 Guide to the Methods of Technology Appraisal. The work was funded by NICE through its Decision Support Unit (DSU), which is based at the universities of Sheffield, Leicester, York, Leeds and at the London School of Hygiene and Tropical Medicine.

C. McCabe has worked with and for many stakeholders in the NICE appraisal process, including pharmaceutical companies, patient groups and NHS organizations.

The authors thank Louise Longworth, Carole Longson, David Barnett and members of the DSU for constructive comments on earlier versions of this paper.

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Correspondence to Professor Christopher McCabe.

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McCabe, C., Claxton, K. & Culyer, A.J. The NICE Cost-Effectiveness Threshold. Pharmacoeconomics 26, 733–744 (2008). https://doi.org/10.2165/00019053-200826090-00004

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Keywords

  • Health Gain
  • Appraisal Committee
  • Positive Recommendation
  • Public Sector Activity
  • Technology Appraisal Programme