Do Fixed Cost-Effectiveness Thresholds or CE Threshold Magnitudes Matter?

By Matthew Sussman, MA

In my last post, I highlighted three subtle differences between ICER’s and NICE’s methodologies when conducting cost-effectiveness (CE) analyses. These differences, if overlooked, could actually lead to very different recommendations for coverage, reimbursement, and pricing. Two of these important differences revolve around CE thresholds, specifically the use of a predefined, fixed cost-effectiveness threshold and also the CE threshold magnitude. In this post, we’ll explore how fixed CE thresholds and CE threshold ranges can impact major findings and recommendations.

How Committed are ICER and NICE to Basing Decisions on a CE Threshold?


ICER has a high commitment to a CE threshold and bases their evaluation of an intervention’s long-term value for money exclusively on a fixed cost-effectiveness threshold between $50,000 and $175,000 per QALY gained. Key components of ICER’s CE threshold include:

  • Interventions with incremental CE ratios below $50K represent “high” long-term value for money.
  • Interventions with incremental CE ratio above $175K represent “low” long-term value.
  • Incremental CE ratios between $50K and $175K are considered to have an “intermediate” long-term value for money.


Through 2019, ICER will pilot a way of quantifying broader measures of value (termed “other benefits or disadvantages” and “contextual considerations”) into their evaluation. For now, these broader measures of value will not impact the CE thresholds, determination of value, or value-based pricing assessments.


NICE is less committed to a fixed CE threshold than ICER. In “Developing NICE Guidelines: Process and Methods,” NICE does reference an incremental CE ratio of £20,000 per QALY gained (see Section 7.7) and in general, considers interventions with a CE ratio <£20,000 per QALY gained to be cost-effective. However, interventions resulting in an incremental CE ratio of ≥£20,000 per QALY gained may still be recommended by NICE, but need to present a compelling case, especially if the intervention results in an incremental CE ratio of >£30,000 per QALY gained. The following factors may lead NICE to recommend such an intervention:

  • A high degree of certainty around the incremental CE ratio
  • Indication that the health gain (i.e., differential treatment effect on quality of life) has been adequately captured
  • Indication that the intervention adds distinct differential benefits that may not have been captured in the health gain


nice-ce-thresholdDoes ICER or NICE Use a Narrow CE Threshold?


ICER justifies the lower and upper bounds of their CE threshold based on guidance from the World Health Organization (WHO), which suggests a threshold range of 1-3 times the per capita GDP of the country per additional QALY. For the US, this translates to $57,000 to $171,000 per QALY gained, which is in close proximity to ICER’s threshold of $50,000 to $175,000 per QALY gained.



Despite the lack of an official CE threshold, NICE’s range of plausible incremental CE ratios for which an intervention may be cost-effective is actually narrower than ICER’s, even when adjusting for per capita GDP. NICE also does not follow the same CE threshold guidance from the WHO that ICER does. If NICE applied the WHO’s methods, the resulting CE threshold would be approximately £30,000 to £90,000 per QALY gained, which is a stark difference from NICE’s current CE threshold of £20,000 to £30,000 per QALY gained.

Why does a Predefined, Fixed Cost-Effectiveness Threshold and/or a Narrow CE Threshold Matter?

A predefined, fixed cost-effectiveness threshold impacts the recommendations for or against an intervention. ICER, which is highly committed to the use of a CE threshold, does not recommend interventions whose incremental CE ratios fall above the higher bound of their CE threshold. However, it is important to note that ICER’s recommendations for coverage and reimbursement are not legally binding with public or private payers.

NICE, on the other hand, is less committed to the use of a fixed threshold and may still recommend an intervention with an elevated incremental CE ratio, pending the strength of evidence of additional factors for consideration. Although NICE is less committed to a fixed CE threshold, their range of plausible incremental CE ratios for which an intervention may be cost-effective is narrower than ICER’s, potentially making it harder to prove an intervention’s case for coverage and reimbursement when considering NICE’s guidelines.

ICER Versus NICE: Who Cares About A Value-Based Price Evaluation?

To sum up this post, the level of commitment to predefined, fixed cost-effectiveness thresholds, as well as the range of CE thresholds can lead to differences in recommendations between ICER and NICE organizations. Besides the CE threshold, one more critical way that ICER and NICE approaches differ includes evaluations of value-based prices. Stay tuned for my next and final post on ICER’s and NICE’s value-based price evaluations.