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The NHS in England could spend 25% more on new medicines under increased cost-effectiveness thresholds that will be used by the National Institute for Health and Care Excellence (NICE).
In a statement published on 1 December 2025, NICE said the new thresholds will allow the NHS to spend £25,000 to £35,000 per quality adjusted life year (QALY) gained by the use of a new drug, compared with the previous thresholds of between £20,000 and £30,000.
NICE has not formally increased its thresholds since its establishment in 1999.
Its statement said the threshold increase, which will apply to medicines being considered from April 2026, will allow an additional three to five medicines to be approved for use on the NHS each year.
The statement also revealed changes to how QALYs used by the regulator are calculated.
“The value set comes from asking thousands of people from the public to judge how good or bad different health states would be,” it said.
NICE added that the new value set will then be used to calculate numerical values used in decision-making.
The agreement to spend more on medicines used by the the NHS in England medicines budget is part of what is known as the ‘UK–US Economic Prosperity Deal‘, which sets a 0% tariff on UK pharmaceuticals imported to the United States.
In a statement published on Monday 1 December 2025, the Department of Health and Social Care said: “The government will also invest around 25% more in innovative, safe and effective treatments — the first major increase in over two decades.
“It means NICE will be able to approve medicines that deliver significant health improvements but might have previously been declined purely on cost-effectiveness grounds — this could include breakthrough cancer treatments, therapies for rare diseases and innovative approaches to conditions that have long been difficult to treat.”
Commenting on the announcements, Sally Gainsbury, senior policy analyst at health think tank The Nuffield Trust said: “A big increase in the price the NHS pays by raising the NICE threshold will not bring additional benefits for the population as a whole, it will just make healthcare more expensive.
“The NHS budget is already under intense pressure and so the reported £3bn extra cost will need to be fully funded by the Treasury.
“However, even if it is not to come from day-to-day NHS budgets, that will not stop this being a deal that undermines the NHS’s ability to get the most health benefits for patients out of its resources,” she added.
Karl Claxton, professor of health economics at the centre for health economics at the University of York, said: “We urgently need to see an impact assessment, which takes account of the full weight of robust research evidence with a comprehensive valuation of all the impacts.
“Only then can NHS patients and the general public understand the consequences of this decision made on their behalf and appropriate parliamentary scrutiny can then be applied to this deal to examine whether it constitutes a good use of scarce public funds.”
The findings of The Pharmaceutical Journal’s analysis of NICE’s own technology appraisal data, published in October 2025, revealed that the proportion of technology appraisals — NICE’s assessment of whether drugs should be recommended for NHS use — terminated by manufacturing companies had increased in recent years, with cost-effectiveness likely a contributing factor.
Richard Torbett, chief executive of the Association of British Pharmaceutical Industry (ABPI), commented: “These commitments begin to address industry concerns on NHS access to medicines and the UK’s record-high and unpredictable payment rate.
“There remain a great many details to work out and further technical improvements to make, but with this strong and positive progress, I look forward to working with the government to ensure this plan delivers for the NHS and UK industry.”
The agreement follows an ongoing dispute between the government and the pharmaceutical industry, which in August 2025 failed to agree on the next Voluntary Scheme for Branded Medicines Pricing, Access and Growth (VPAG) — the levy paid by industry to the government on the sales of branded medicines.
The government uses VPAG to cap the profits that pharmaceutical companies can make from NHS medicines by recouping a percentage of their on sales, with the levy doubling in the past year.
Mark Samuels, chief executive of Medicines UK, said: “The US tariff deal brings much‑needed clarity after months of stalled negotiations, which has been a drag on progress elsewhere. We welcome the 0% tariffs on exports to the United States and the certainty that brings for the next three years.”
The ABPI previously called for the NICE threshold to double, saying that some pharmaceutical companies could not offer their products at the low prices paid by the NHS.
A report published by the ABPI in September 2025 found that some pharmaceutical companies threatened to withdraw investment in the UK unless issues around payment were addressed.
Commenting on the NICE threshold review, Claire Anderson, president of the Royal Pharmaceutical Society, said: “Raising NICE’s cost-effectiveness thresholds could help patients access treatments that were previously out of reach, where the evidence shows they offer real improvements in health and quality of life.
“This change underlines the vital importance of pharmacy leadership in the NHS — from commissioning through to delivery — to support patient care, ensure best use of the NHS medicines budget and deliver on key national priorities.”
