UK raises NICE QALY thresholds amid new UK–US drug pricing deal

The UK Government has set out the first increase to NICE’s cost-effectiveness thresholds in over two decades as part of a wider policy package, accompanied by a new UK–US pharmaceuticals agreement that provides zero-tariff access to the US market and clarifies the UK’s position under the US Most-Favored Nation pricing initiative.

The UK Government has announced two major policy developments affecting the pharmaceutical sector: confirmed changes to the National Institute for Health and Care Excellence’s (NICE’s) cost-effectiveness thresholds and a landmark UK–US trade agreement designed to safeguard medicines access and strengthen investment.

Under the agreement, the UK has secured a preferential 0% tariff for all pharmaceutical exports to the US for at least 3 years. According to the government, the UK is the only country to have secured such terms, an outcome intended to protect UK-based manufacturing and aimed at “cementing our place as a world leader for life sciences investment.” The deal also confirms agreed terms for how the UK will be treated under the US Most-Favored Nation (MFN) drug-pricing initiative. According to the government, the agreement signals to the pharmaceutical sector “that the UK is a top destination for investment and growth” and is designed to safeguard access to the latest treatments while strengthening the UK’s position as a global life sciences hub.

In the trade agreement, the UK has also committed to supporting changes to the Voluntary Scheme for Branded Medicines Pricing, Access and Growth (VPAG). To ensure that higher launch prices are not offset through broad portfolio rebates, the VPAG repayment rate is expected to fall to 15% in 2026 and remain at or below that level for the duration of the scheme. These adjustments are intended to provide a more stable and predictable commercial environment for companies bringing new therapies to the UK market. The government also signaled a long-term increase in medicines investment, stating that spending on new treatments will rise from around 0.3% of GDP to 0.6% of GDP over the next decade, aided by the updated VPAG scheme.

In parallel, the government confirmed the first increase to NICE’s cost-effectiveness thresholds since 1999. Speculation had intensified in recent months that the UK would take this step as part of wider efforts to bolster its competitiveness in life sciences and navigate evolving US trade dynamics. The updated range, rising from £20,000–£30,000 to £25,000–£35,000 per quality-adjusted life year (QALY), marks a significant shift within the UK’s long-established evaluative framework. QALYs are widely used by health technology assessment bodies (HTA) internationally, although they are not formally applied by some, including the US Centers for Medicare & Medicaid Services (CMS) in coverage decisions. The UK’s continued reliance on QALY-based assessment therefore positions the new threshold as a significant shift within an established evaluative framework rather than a departure from existing practice.

NICE said the revised thresholds will allow its committees to reflect contemporary commercial and economic conditions and support recommendations for treatments that deliver substantial health gains but may previously have fallen outside the cost-effectiveness range. The institute currently recommends around 91% of the medicines it evaluates and estimates that the new threshold could enable an additional three to five approvals each year.

The measures are accompanied by plans for NICE to adopt a new value set alongside EQ-5D-5L to generate the health utility values that inform QALY calculations. The new set, to be introduced following peer review and consultation, is expected to influence cost-effectiveness estimates and may improve the cost-effectiveness of medicines on average. Dr Samantha Roberts, NICE Chief Executive, said the institute’s “global reputation for robust, rigorous, transparent guidance will not change” as the updated tools are incorporated into committee deliberations from April 2026.

Further details on implementation will be outlined during a dedicated NICE webinar on December 3, 2025.