AMPLIFIED GLOBAL WELFARE EFFECTS OF NICE'S PROPOSED 25% COST-EFFECTIVENESS THRESHOLD UPLIFT THROUGH INTERNATIONAL REFERENCE PRICING
Author(s)
Mireia Jofre-Bonet, PhD1, alistair J. mcguire, BA, MPhil, PhD2.
1Office of Health Economics, London, United Kingdom, 2LSE Health, London School of Economics and Political Science, London, United Kingdom.
1Office of Health Economics, London, United Kingdom, 2LSE Health, London School of Economics and Political Science, London, United Kingdom.
OBJECTIVES: To evaluate the welfare implications of NICE's proposed 25% increase in the cost-effectiveness threshold (£20,000 to £25,000 per QALY), with focus on how UK pricing decisions shape global pharmaceutical R&D through international reference pricing (IRP) networks and HTA methodology spillovers.
METHODS: We extend a dynamic welfare model to compare three views of how UK threshold changes translate into global R&D incentives. Under the first, the UK is a pure price-taker, with effects scaled to its 3% global revenue share. Under the second, multilateral HTA coordination propagates the UK signal fully. Under the third (network-amplified), UK influence operates through IRP networks and methodology spillovers, captured by an effective market influence parameter that can substantially exceed the 3% nominal share. R&D intensity responds endogenously, and firms factor in policy credibility over R&D horizons.
RESULTS: The uplift is welfare-improving across all three views of global R&D transmission. Under the network-amplified view, the effective influence of UK pricing on global R&D exceeds the country's nominal market share, generating welfare gains. The uplift also partly reverses around 40% real erosion in NICE's threshold since the mid-2000s. Firms factor the durability of UK policy commitments into R&D decisions, and the framework quantifies the credibility threshold needed for the uplift to deliver full welfare benefits.
CONCLUSIONS: The framework shows that the global R&D effect of any UK threshold change is amplified well beyond the UK's 3% market share through international reference pricing and HTA methodology channels. Applied to the proposed 25% uplift, the welfare effect is positive, but the magnitude depends on two factors typically missing from threshold debates: the real-terms erosion of the threshold since the 2000s, and the credibility firms attach to the new level. The framework offers HTA bodies and decision-makers a way to evaluate threshold proposals against these factors rather than against the headline figure alone.
METHODS: We extend a dynamic welfare model to compare three views of how UK threshold changes translate into global R&D incentives. Under the first, the UK is a pure price-taker, with effects scaled to its 3% global revenue share. Under the second, multilateral HTA coordination propagates the UK signal fully. Under the third (network-amplified), UK influence operates through IRP networks and methodology spillovers, captured by an effective market influence parameter that can substantially exceed the 3% nominal share. R&D intensity responds endogenously, and firms factor in policy credibility over R&D horizons.
RESULTS: The uplift is welfare-improving across all three views of global R&D transmission. Under the network-amplified view, the effective influence of UK pricing on global R&D exceeds the country's nominal market share, generating welfare gains. The uplift also partly reverses around 40% real erosion in NICE's threshold since the mid-2000s. Firms factor the durability of UK policy commitments into R&D decisions, and the framework quantifies the credibility threshold needed for the uplift to deliver full welfare benefits.
CONCLUSIONS: The framework shows that the global R&D effect of any UK threshold change is amplified well beyond the UK's 3% market share through international reference pricing and HTA methodology channels. Applied to the proposed 25% uplift, the welfare effect is positive, but the magnitude depends on two factors typically missing from threshold debates: the real-terms erosion of the threshold since the 2000s, and the credibility firms attach to the new level. The framework offers HTA bodies and decision-makers a way to evaluate threshold proposals against these factors rather than against the headline figure alone.
Conference/Value in Health Info
2026-11, ISPOR Europe 2026, Vienna, Austria
Value in Health, Volume 29, Issue 12S
Code
HPR123
Topic
Economic Evaluation, Health Policy & Regulatory, Health Technology Assessment
Topic Subcategory
Pricing Policy & Schemes
Disease
No Additional Disease & Conditions/Specialized Treatment Areas