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The NICE Cost-Effectiveness Threshold: What it is and What that Means


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  • McCabe, C
  • Claxton, K
  • Culyer, AJ


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 hese 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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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 26466.

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Date of creation: 2008
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Handle: RePEc:pra:mprapa:26466

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Keywords: health economics; cost-effectiveness; ICER threshold;

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  1. Birch, Stephen & Gafni, Amiram, 1992. "Cost effectiveness/utility analyses : Do current decision rules lead us to where we want to be?," Journal of Health Economics, Elsevier, vol. 11(3), pages 279-296, October.
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Cited by:
  1. Andrew Willan & Simon Eckermann, 2012. "Value of Information and Pricing New Healthcare Interventions," PharmacoEconomics, Springer, vol. 30(6), pages 447-459, June.
  2. Karl Claxton & Stephen Palmer & Louise Longworth & Laura Bojke & Susan Griffin & Claire McKenna & Marta Soares & Eldon Spackman & Jihee Youn, 2011. "Uncertainty, evidence and irrecoverable costs: Informing approval, pricing and research decisions for health technologies," Working Papers 069cherp, Centre for Health Economics, University of York.
  3. Mike Paulden & Karl Claxton, 2009. "Budget allocation and the revealed social rate of time preference for health," Working Papers 053cherp, Centre for Health Economics, University of York.
  4. Mark Sculpher & Karl Claxton, 2012. "Real Economics Needs to Reflect Real Decisions," PharmacoEconomics, Springer, vol. 30(2), pages 133-136, February.
  5. Liran Einav & Amy Finkelstein & Heidi Williams, 2014. "Paying on the Margin for Medical Care: Evidence from Breast Cancer Treatments," NBER Working Papers 20226, National Bureau of Economic Research, Inc.
  6. Refoios Camejo, Rodrigo & McGrath, Clare & Herings, Ron, 2011. "A dynamic perspective on pharmaceutical competition, drug development and cost effectiveness," Health Policy, Elsevier, vol. 100(1), pages 18-24, April.
  7. Christopher McCabe & Paul Baxter & Roberta Longo & Peter Hall & Jenny Hewison & Mehran Afshar & Geoff Hall, 2013. "Methods for Identifying the Cost-effective Case Definition Cut-off for Sequential Monitoring Tests: an Extension of Phelps and Mushlin," Working Papers 1303, Academic Unit of Health Economics, Leeds Institute of Health Sciences, University of Leeds.
  8. Christopher McCabe & Richard Edlin & Peter Hall & Klemens Wallner, 2013. "Leasing health technologies- an affordable and effective reimbursement strategy for innovative technologies?," Working Papers 1302, Academic Unit of Health Economics, Leeds Institute of Health Sciences, University of Leeds.
  9. Martin Hoyle, 2011. "Accounting for the Drug Life Cycle and Future Drug Prices in Cost-Effectiveness Analysis," PharmacoEconomics, Springer, vol. 29(1), pages 1-15, January.
  10. J. Jaime Caro & Erik Nord & Uwe Siebert & Alistair McGuire & Maurice McGregor & David Henry & Gérard de Pouvourville & Vincenzo Atella & Peter Kolominsky-Rabas, 2010. "The efficiency frontier approach to economic evaluation of health-care interventions," Health Economics, John Wiley & Sons, Ltd., vol. 19(10), pages 1117-1127.
  11. Stefano Capri & Rosella Levaggi, 2011. "Shifting the risk in pricing and reimbursement schemes? A model of risk-sharing agreements for innovative drugs," DEP - series of economic working papers 2/2011, University of Genoa, Research Doctorate in Public Economics.
  12. Fischer, Katharina Elisabeth, 2012. "A systematic review of coverage decision-making on health technologies—Evidence from the real world," Health Policy, Elsevier, vol. 107(2), pages 218-230.
  13. Mark Sculpher & Karl Claxton, 2010. "Sins of omission and obfuscation: IQWIG's guidelines on economic evaluation methods," Health Economics, John Wiley & Sons, Ltd., vol. 19(10), pages 1132-1136.
  14. Thomas Delea & Paul Tappenden & Oleg Sofrygin & Dominy Browning & Mayur Amonkar & Jon Karnon & Mel Walker & David Cameron, 2012. "Cost-effectiveness of lapatinib plus capecitabine in women with HER2+ metastatic breast cancer who have received prior therapy with trastuzumab," The European Journal of Health Economics, Springer, vol. 13(5), pages 589-603, October.
  15. John Vernon & Robert Goldberg & Joseph Golec, 2009. "Economic Evaluation and Cost-Effectiveness Thresholds," PharmacoEconomics, Springer, vol. 27(10), pages 797-806, October.
  16. László Gulácsi & Alexandru Rotar & Maciej Niewada & Olga Löblová & Fanni Rencz & Guenka Petrova & Imre Boncz & Niek Klazinga, 2014. "Health technology assessment in Poland, the Czech Republic, Hungary, Romania and Bulgaria," The European Journal of Health Economics, Springer, vol. 15(1), pages 13-25, May.
  17. Lionel Perrier & Anne Lefranc & David Pérol & Philippe Quittet & Aline Schmidt-Tanguy & Carole Siani & Christian Peretti & Bertrand Favier & Pierre Biron & Philippe Moreau & Jacques Bay & Séverine L, 2013. "Cost Effectiveness of Pegfilgrastim Versus Filgrastim After High-Dose Chemotherapy and Autologous Stem Cell Transplantation in Patients with Lymphoma and Myeloma," Applied Health Economics and Health Policy, Springer, vol. 11(2), pages 129-138, April.
  18. Karl Claxton & Simon Walker & Steven Palmer & Mark Sculpher, 2010. "Appropriate Perspectives for Health Care Decisions," Working Papers 054cherp, Centre for Health Economics, University of York.


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