NICE’s New £35k/QALY Era: Ripple Effects for Australia’s PBS and Other HTA Markets | NICE Cost Effectiveness Threshold | iPharmaCenter

NICE’s decision to accept higher cost‑per‑QALY ratios is more than a technical parameter change; it reflects a domestic adjustment to a broader bargain the UK has struck with the United States to pay more for branded medicines in return for zero tariffs on British pharmaceutical exports. That combination of trade and health‑policy concessions is likely to shape how other tax‑funded health systems define value, manage finite drug budgets and approach negotiations with global manufacturers.​

What has changed inside NICE - NICE Cost Effectiveness Threshold

Ministers have asked NICE to move its standard incremental cost‑effectiveness range from £20,000-£30,000 per QALY up to £25,000-£35,000, lifting the upper end of the band by about a quarter after years of effective stability. NICE analysis indicates that, once applied, this wider range will enable a handful of additional products or indications each year to pass the “value for money” test.​

This shift lands at a time when most single‑payer and HTA agencies are trying to rein in high‑cost medicines, not loosen constraints. A higher threshold effectively broadens the gateway for expensive oncology, rare disease and advanced therapies that previously sat just beyond the accepted cost‑per‑QALY limit.​

How the UK–US deal fits in

The policy move sits alongside a new UK–US arrangement under which the UK will increase the net prices it pays for new medicines by around 25% while the US suspends existing and prospective tariffs on UK pharmaceuticals, components and related medical products. Trade and policy statements describe a package in which the NHS medicines budget is allowed to grow faster, and NICE’s valuation rules are relaxed, in exchange for three years of tariff‑free access to the US market.​

President Trump has repeatedly argued that other rich countries underpay for medicines, forcing US patients to subsidize global R&D, and has used tariff threats and “most‑favored‑nation” rhetoric to push for higher prices abroad. With this deal, the UK becomes the first major system to explicitly accept higher domestic drug prices and a higher HTA threshold as part of an international trade compromise.​

NHS access gains versus budget risk

For patients and clinicians, a more generous threshold should mean that some cancer drugs, biologics and other high‑cost therapies that previously failed on cost‑effectiveness grounds will now be judged acceptable and funded. For NHS planners, however, every additional pound spent on premium‑priced medicines has to come from either extra Treasury funding or trade‑offs elsewhere in the system, even with existing rebate and clawback schemes.​

Health economists warn that even small shifts in the threshold can produce large cumulative budget impacts when applied across a pipeline of expensive products. The government’s argument is that a more attractive pricing climate will draw life‑sciences investment and jobs to the UK, with future tax receipts offsetting some of the near‑term spending pressure, but that macro upside will materialise-if at all-on a much longer time horizon than HTA and commissioning decisions.​

Why Australia’s PBS is uneasy? Impact of MFN on Australia

Australia is not part of the UK-US deal, but the agreement has already prompted concern that the US will look to replicate similar arrangements with other major trading partners and publicly funded drug schemes. The PBS has been targeted in past and current trade discussions, with US officials and industry arguing that reference pricing and strict cost‑effectiveness criteria undervalue innovative medicines.​

If companies can point to a higher UK willingness‑to‑pay benchmark in talks with Australia’s PBAC and PBS, Canberra may face heightened pressure to accept higher prices, narrow reimbursement criteria or longer delays to listings, rather than simply holding the line on its current implicit thresholds.

Senior Australian ministers have stated publicly that the PBS “is not up for negotiation,” setting up a potential clash between domestic affordability commitments and external expectations that Australia should shoulder a larger share of global drug revenues.​

Broader signal for HTA worldwide

NICE has long been treated as a touchstone for cost‑effectiveness policy, so a formal increase in its threshold is likely to inform debates in other HTA bodies, even if they do not copy the exact numbers. US trade officials have suggested that pharmaceutical pricing strategies in multiple allied countries are being scrutinised in light of the UK deal, which could extend similar pressure to Canada, parts of Europe and other Asia‑Pacific markets.​

If that dynamic plays out, the UK’s move may come to be seen as the opening step in a gradual upward drift in what higher‑income health systems are expected to pay per QALY for cutting‑edge therapies. HTA agencies will then have to decide whether to relax their own thresholds, redesign access and risk‑sharing schemes to contain costs, or accept that some products will launch later-or not at all-compared with markets that have chosen to pay more.