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Searching for cost effectiveness thresholds in the NHS


  • Appleby, John
  • Devlin, Nancy
  • Parkin, David
  • Buxton, Martin
  • Chalkidou, Kalipso


Objectives The UK's National Institute of Health and Clinical Excellence (NICE) has an explicit cost-effectiveness threshold for deciding whether or not services are to be provided in the National Health Service (NHS), but there is currently little evidence to support the level at which it is set. This study examines whether it is possible to obtain such evidence by examining decision making elsewhere in the NHS. Its objectives are to set out a conceptual model linking NICE decision making based on explicit thresholds with the thresholds implicit in local decision making and to gauge the feasibility of (a) identifying those implicit local cost effectiveness thresholds and (b) using these to gauge the appropriateness of NICE's explicit threshold.Methods Structured interviews with senior staff, together with financial and public health information, from six NHS purchasers and 18 providers. A list of health care services introduced or discontinued in 2006/7 was constructed. Those that were in principle amenable to estimation of a cost-effectiveness ratio were examined.Results It was feasible to identify decisions and to estimate the cost-effectiveness of some. These were not necessarily 'marginal' services. Issues include: services that are dominated (or dominate); decisions about how, rather than what, services should be delivered; the lack of local cost effectiveness evidence; and considerations other than cost-effectiveness.Conclusions A definitive finding about the consistency or otherwise of NICE and NHS cost effectiveness thresholds would require very many decisions to be observed, combined with a detailed understanding of the local decision making processes.

Suggested Citation

  • Appleby, John & Devlin, Nancy & Parkin, David & Buxton, Martin & Chalkidou, Kalipso, 2009. "Searching for cost effectiveness thresholds in the NHS," Health Policy, Elsevier, vol. 91(3), pages 239-245, August.
  • Handle: RePEc:eee:hepoli:v:91:y:2009:i:3:p:239-245

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    References listed on IDEAS

    1. Nancy Devlin & David Parkin, 2004. "Does NICE have a cost-effectiveness threshold and what other factors influence its decisions? A binary choice analysis," Health Economics, John Wiley & Sons, Ltd., vol. 13(5), pages 437-452.
    2. Stephen Martin & Nigel Rice & Peter C Smith, 2008. "The link between health care spending and health outcomes for the new English Primary Care Trusts," Working Papers 042cherp, Centre for Health Economics, University of York.
    3. Williams, A., 2004. "What Could be Nicer than NICE?," Monographs, Office of Health Economics, number 000489, November.
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    Blog mentions

    As found by, the blog aggregator for Economics research:
    1. Sofosbuvir: a fork in the road for NICE?
      by Chris Sampson in The Academic Health Economists' Blog on 2015-01-20 17:21:00


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    Cited by:

    1. E. Wetering & E. Stolk & N. Exel & W. Brouwer, 2013. "Balancing equity and efficiency in the Dutch basic benefits package using the principle of proportional shortfall," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 14(1), pages 107-115, February.
    2. Barnsley, P. & Towse, A. & Karlsberg Schaffer, S. & Sussex, J., 2013. "Critique of CHE Research Paper 81: Methods for the Estimation of the NICE Cost Effectiveness Threshold," Occasional Papers 000106, Office of Health Economics.
    3. 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.
    4. Karlsberg Schaffer, S. & Sussex, J. & Hughes, D. & Devlin, N., 2014. "Opportunity Costs of Implementing NICE Decisions in NHS Wales," Research Papers 000517, Office of Health Economics.
    5. 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.
    6. Aidan Hollis, 2016. "Sustainable Financing of Innovative Therapies: A Review of Approaches," PharmacoEconomics, Springer, vol. 34(10), pages 971-980, October.
    7. Levaggi, Rosella, 2014. "Pricing schemes for new drugs: A welfare analysis," Social Science & Medicine, Elsevier, vol. 102(C), pages 69-73.
    8. Johannesson, M. & Jonsson, B. & Jonsson, L. & Kobelt, G. & Zethraeus, N., 2009. "Why Should Economic Evaluations of Medical Innovations Have a Societal Perspective?," Briefings 000228, Office of Health Economics.
    9. Karlsberg Schaffer, S. & Sussex, J. & Devlin, N. & Walker, A., 2013. "Searching for Cost-effectiveness Thresholds in NHS Scotland," Research Papers 000078, Office of Health Economics.
    10. Helen Dakin & Nancy Devlin & Yan Feng & Nigel Rice & Phill O'Neill & David Parkin, 2015. "The Influence of Cost‐Effectiveness and Other Factors on Nice Decisions," Health Economics, John Wiley & Sons, Ltd., vol. 24(10), pages 1256-1271, October.
    11. Laura Levaggi & Rosella Levaggi, 2017. "Rationing in health care provision: a welfare approach," International Journal of Health Economics and Management, Springer, vol. 17(2), pages 235-249, June.
    12. Hernandez-Villafuerte, K. & Zamora, B. & Feng, Y. & Parkin, D. & Devlin, N. & Towse, A., 2019. "Exploring Variations in the Opportunity Cost Cost-effectiveness Threshold by Clinical Area: Results from a Feasibility Study in England," Research Papers 002142, Office of Health Economics.
    13. Martina Garau & Grace Hampson & Nancy Devlin & Nicola Amedeo Mazzanti & Antonio Profico, 2018. "Applying a Multicriteria Decision Analysis (MCDA) Approach to Elicit Stakeholders’ Preferences in Italy: The Case of Obinutuzumab for Rituximab-Refractory Indolent Non-Hodgkin Lymphoma (iNHL)," PharmacoEconomics - Open, Springer, vol. 2(2), pages 153-163, June.
    14. Laura Catherine Edney & Hossein Haji Ali Afzali & Terence Chai Cheng & Jonathan Karnon, 2018. "Estimating the Reference Incremental Cost-Effectiveness Ratio for the Australian Health System," PharmacoEconomics, Springer, vol. 36(2), pages 239-252, February.
    15. Jessica Ochalek & Karl Claxton & Paul Revill & Mark Sculpher & Alexandra Rollinger, 2016. "Supporting the development of an essential health package: principles and initial assessment for Malawi," Working Papers 136cherp, Centre for Health Economics, University of York.
    16. Laura Levaggi & Rosella Levaggi, 2016. "Welfare analysis of rationing in health care provision," Working papers 39, Società Italiana di Economia Pubblica.
    17. Shah, K. & Praet, C. & Devlin, N. & Sussex, J. & Appleby, J. & Parkin, D., 2011. "Is the Aim of the Health Care System to Maximise QALYs? An Investigation of," Research Papers 000180, Office of Health Economics.
    18. Laura Levaggi & Rosella Levaggi, 2011. "Welfare properties of restrictions to health care based on cost effectiveness," Health Economics, John Wiley & Sons, Ltd., vol. 20(1), pages 101-110, January.
    19. Kristian Bolin & Lars Forsgren, 2012. "The Cost Effectiveness of Newer Epilepsy Treatments," PharmacoEconomics, Springer, vol. 30(10), pages 903-923, October.
    20. Karlsberg Schaffer, Sarah & Sussex, Jon & Devlin, Nancy & Walker, Andrew, 2015. "Local health care expenditure plans and their opportunity costs," Health Policy, Elsevier, vol. 119(9), pages 1237-1244.


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