Cost-effectiveness thresholds

Karl Claxton and colleagues at the University of York have recently published a working paper on Methods for the Estimation of the NICE Cost Effectiveness Threshold. Since a guideline was issued in 2004, NICE has used standard values of £20-30,000 as cost-effectiveness threshold. These are effectively equivalent to the cost per quality adjusted life year gained by investing in a new technology at the expenses of an already existing intervention.

This paper tries to produce an updated version of the cost-effectiveness threshold, based on empirical evidence (eg programme budgeting data for the English NHS). The methodology used is quite complex – technically, the authors used an instrumental variables approach within a structural equation setting – and aims at simultaneously estimating the impact of the level of investment (and other variables) on health outcomes and the impact the overall budget constraint (and other variables) on the level of spending for a given health programme. Their main result is to suggest a slightly lower value to be used by NICE (£18,317).

While there are some major limitation (eg the availability of data for all the different programmes, to be used to translate the impact of expenditure into changes in quality of life), the paper is extremely interesting, because it may suggest a generalised framework which would allow different settings to compute their own cost-effectiveness threshold. Again, availability of suitable data may represent a major barrier to the wider applicability of the method.

The Office for Health Economics has also produce a critique of this paper, which is available here.