UK pharma policy at a turning point: NICE threshold reform, VPAG, and global trade signals

December 2025 marks a pivotal moment for the UK’s healthcare and pharmaceutical landscape. NICE has announced a landmark increase in its cost-effectiveness thresholds, raising them by 25% from the longstanding £20,000–£30,000 to £25,000–£35,000 per quality-adjusted life year (QALY)[i]. This is the first major adjustment in over two decades and signals a clear intent by the UK Government to solidify the UK’s position in life sciences.

At the same time, the Voluntary Scheme for Branded Medicines Pricing, Access and Growth (VPAG) has progressed, and the UK has struck a deal with the United States to eliminate tariffs on pharmaceutical products. Together, these developments highlight both opportunities and challenges for patients, industry, and the NHS.

NICE threshold reform

The ICER threshold increase is expected to allow an additional three to five medicines or indications each year to be recommended for NHS use. The new thresholds will apply from April 2026, covering both new technology appraisals and those currently underway. Topics paused under the old thresholds will be reassessed, ensuring that patients benefit from the updated framework.

For patients, this adjustment promises greater access to innovative therapies that previously struggled to meet NICE’s cost-effectiveness criteria. For industry, it represents a more supportive operating environment, encouraging investment and innovation in the UK. NICE has emphasised that its rigorous and transparent guidance process remains unchanged, ensuring that affordability and value for money continue to underpin NHS decision-making.

Dr Samantha Roberts, NICE’s chief executive, captured the balance at the heart of this change: “In a health service funded by general taxation, it is right that government decides on the level of health spend in the UK. The newly agreed thresholds aim to support the life sciences sector and broader economy.”ⁱ

Notably, there has been no public consultation on this change. Public consultation is a routine step in how NICE usually make changes to how they operate and make decisions; the change would appear to have been driven by the UK government (and not by NICE themselves) in response to UK disinvestment decisions from major pharmaceutical companies in response to the stalling VPAG negotiations and pressures created by the Most Favoured Nation (MFN) US drug pricing initiative.

Implications for appraisals

For companies planning forthcoming appraisals, the implications are significant. Treatments that previously may have seemed challenging to gain approval may now have a more optimistic future. This creates an opportunity to revisit pipeline assets and consider whether medicines that were marginal under the old framework could now be viable candidates for NHS adoption.

For those already mid-appraisal, NICE has clarified that topics currently underway will be reassessed under the new thresholds once they come into effect. Manufacturers engaged in ongoing evaluations may benefit from a more favourable cost‑effectiveness environment, potentially altering outcomes that might otherwise have been negative.

However, for recently completed HTAs, the picture is more complex. Decisions made under the old thresholds will not automatically be reopened, meaning some medicines that narrowly missed recommendation may remain excluded despite the new framework. Conversely, medicines that were approved under the old thresholds may have offered larger Patient Access Scheme (PAS) discounts than would have been required under the new framework. This creates a potential inequity, as some products will continue to carry deeper discounts even though the higher threshold would have allowed a more favourable decision with less financial concession.

The role of Patient Access Schemes

Patient Access Schemes remain a critical lever in NICE’s appraisal process. Currently, if a medicine is close to being cost‑effective, an increase in the PAS discount can help support a positive decision. Under the new thresholds, reliance on PAS may shift. For forthcoming appraisals, smaller discounts may be sufficient to secure a recommendation, reducing the need for aggressive PAS strategies. For recently completed HTAs, however, PAS discounts may appear disproportionately large compared to what would have been required under the higher threshold, raising questions about fairness and sustainability.

Severity modifier

The threshold increase also amplifies the impact of NICE’s severity modifier. This mechanism allows higher thresholds to be applied to treatments for conditions with greater severity, reflecting the social value of addressing more serious health burdens. With the baseline threshold rising by 25%, the relative uplift provided by the severity modifier becomes even more powerful. Medicines targeting severe diseases may find themselves with a substantially improved cost-effectiveness profile, opening the door to broader access and stronger commercial incentives.

VPAG progress and US tariffs

While NICE’s threshold reform sends a strong signal of support for innovation, optimism is now reinforced by the resolution of VPAG negotiations. The government and industry have agreed a rebate rate of 15% on branded medicine revenues, replacing the previously criticised 23.5%–35.6% range described by the Association of the British Pharmaceutical Industry (ABPI) as “high and unpredictable.” This lower, more predictable rate has been welcomed by major companies as a step toward restoring confidence in the UK market and encouraging investment.[ii]

The timing of the VPAG agreement is significant. It aligns directly with the UK’s recent deal with the United States to eliminate tariffs on pharmaceutical products, creating a coherent package of measures designed to boost trade, attract R&D investment, and strengthen the UK’s competitiveness in life sciences. Raising NICE’s thresholds is one part of this response, but the clarity on VPAG rebates ensures that the benefits of tariff‑free trade can now be fully realised.

Taken together, these developments present real progress in UK health policy. NICE’s threshold increase, the US tariff deal, and the resolved VPAG negotiations sends positive signals to industry. For patients, the changes promise expanded access to therapies. For companies, they create opportunities, but also uncertainty. For the NHS, they raise questions about how to balance affordability with the ambition to remain globally competitive in life sciences.

The December 2025 announcement is more than a technical adjustment. It is a turning point. By raising cost-effectiveness thresholds, the UK is sending a clear message: it wants to remain competitive in life sciences while expanding access to innovation. The challenge now is to ensure that higher thresholds, evolving PAS strategies, and the severity modifier translate into better outcomes for patients, sustainable NHS spending, and a coherent industrial policy.

The broader impact of NICE’s threshold reform extends well beyond appraisal mechanics. For patients, the change promises earlier and wider access to innovative medicines, particularly in areas such as oncology, specialty care. and rare diseases, where treatments often struggled to meet cost‑effectiveness criteria. For the NHS, the adjustment will inevitably increase expenditure on branded medicines, requiring careful prioritisation and budget management, but it also offers the potential for improved outcomes and, if resource saving interventions are prioritised, this could impact upon efficiencies and reduction in waiting lists.

For the UK life sciences sector, the higher threshold sends a signal that the country is making efforts to foster innovation and competitiveness. By creating a more generous threshold, the reform may help arrest the slide in R&D investment, support the UK’s reputation as a launch market, and ensure that the benefits of cutting‑edge science are realised domestically, rather than abroad.

The challenge for 2026 and beyond will be to align these elements into a coherent framework that sustains patient benefit, attracts R&D investment, and ensures the NHS remains financially resilient. Whilst increasing the cost‑effectiveness threshold is an important step to promote the introduction of new medicines in the UK, all these new medicines will need to be funded by the NHS, and in a system that is already under significant financial pressure. Balancing affordability with access will remain a central challenge and medicines that can support the reduction of other healthcare resources will likely be welcomed.

References

[i] Changes to NICE’s cost-effectiveness thresholds confirmed | NICE

[ii] UK-US deal is good news for NHS patients and will help to support UK life sciences competitiveness, says ABPI

About the author

Stephen Ralston is EVP of Market Access and HEOR at Coronado Research. Ralston brings over 25 years of experience in delivering high-quality strategic Market Access solutions and HEOR evidence to the pharmaceutical industry. Having held leadership roles within pharmaceutical companies and successfully founded his own Market Access and HEOR consultancy, he possesses a unique understanding of the challenges clients face in developing strategies and evidence for new assets. His extensive expertise enables him to navigate the complexities of the industry while ensuring the delivery of high-quality, impactful solutions. Ralston has played a pivotal role in the introduction of new medicines across rare diseases, oncology (both rare and broader indications), and immunology, among other therapeutic areas. His work includes securing landmark HTA approvals for rare oncology treatments and successfully negotiating with payers to refine decision-making criteria, ultimately improving patient access to innovative therapies.