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NICE’s Discounting Review: Clear Thinking on Rational Revision Meets Obstacle of Industrial Interests


  • James F. O’Mahony

    (Trinity College Dublin)

  • Mike Paulden

    (University of Alberta)

  • Chris McCabe

    (Institute of Health Economics
    University of Alberta)


The National Institute of Health and Care Excellence (NICE) recently published a review of discounting practice and theory as part of a consultation on its current methods guidelines. The review examines the case for revision or retention of current methods. The changes considered include eliminating favourable rates in certain special cases and the reduction of the base-case rate for costs and health effects from 3.5 to 1.5%. The review also notes the potential need to reduce the cost-effectiveness threshold to accommodate a discount rate reduction, explaining that an agreement between the UK government and the pharmaceutical industry proscribes changing NICE’s threshold range until the end of 2023. We believe NICE should be commended for a useful overview of the existing literature and relevant issues. We firmly endorse NICE’s view that favourable discount rates are not a good way to apply a preference for certain interventions. Similarly, we support the option of reducing the discount rate to 1.5%, which better accords with real government borrowing costs. We suggest further work to clarify the appropriate theoretical basis for the NICE’s social discount rate and the sensitivity of the threshold to changes in discounting. The prospects of a necessary discount rate reduction appear to depend on whether a threshold reduction can be achieved within NICE’s current range or if the range itself must be revised downwards. NICE has usefully informed the debate around discount rates. Ultimately, the path to a methodologically consistent and evidence-based revision of discounting depends on whether NICE needs to adjust the threshold too and if it is free to do so.

Suggested Citation

  • James F. O’Mahony & Mike Paulden & Chris McCabe, 2021. "NICE’s Discounting Review: Clear Thinking on Rational Revision Meets Obstacle of Industrial Interests," PharmacoEconomics, Springer, vol. 39(2), pages 139-146, February.
  • Handle: RePEc:spr:pharme:v:39:y:2021:i:2:d:10.1007_s40273-020-00990-8
    DOI: 10.1007/s40273-020-00990-8

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    References listed on IDEAS

    1. 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.
    2. Mike Paulden & Karl Claxton, 2012. "Budget allocation and the revealed social rate of time preference for health," Health Economics, John Wiley & Sons, Ltd., vol. 21(5), pages 612-618, May.
    3. Karl Claxton & Steve Martin & Marta Soares & Nigel Rice & Eldon Spackman & Sebastian Hinde & Nancy Devlin & Peter C Smith & Mark Sculpher, 2013. "Methods for the estimation of the NICE cost effectiveness threshold," Working Papers 081cherp, Centre for Health Economics, University of York.
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    Blog mentions

    As found by, the blog aggregator for Economics research:
    1. Chris Sampson’s journal round-up for 15th March 2021
      by Chris Sampson in The Academic Health Economists' Blog on 2021-03-15 12:00:14

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