Greater flexibility in cost-effectiveness thresholds used by health technology assessment bodies may appear manageable in isolation. But these shifts can reshape drug pricing far beyond national boundaries.
cross the United States and Europe, health technology assessment (HTA) bodies are quietly moving the goalposts on what counts as “cost-effective.” Conventional thresholds, long anchored around $100,000 to $150,000 per quality-adjusted life year (QALY), are increasingly stretched for severe and rare diseases, in some cases approaching $500,000 per QALY. At the same time, US policy makers are pursuing most favored nation (MFN) pricing policies that tie domestic drug prices to international benchmarks, many of which rely on QALY-based cost-effectiveness thresholds. These parallel developments are rarely considered together. Yet, they are deeply interconnected. As HTA bodies expand thresholds without a clear empirical framework, they may unintentionally reshape global pricing dynamics, including the very US prices MFN policies aim to constrain.
Threshold Drift In A Globally Linked System
The evolution of cost-effectiveness thresholds is not new. What is new is the loosening of discipline around them and the fact that these changes now occur within a globally interconnected pricing system.
Across jurisdictions, HTA bodies are increasingly applying flexibility to account for severity, rarity, and unmet need. In practice, this flexibility has taken the form of higher implicit or explicit thresholds, expanded use of modifiers, and a growing divergence between formal rules and actual decisions. These adjustments are often justified as reflecting societal preferences. That may be true. But the deeper issue is that thresholds are rising without a unifying empirical framework to guide how, when, and by how much they should change.
In isolation, such flexibility may appear manageable. In a system in which pricing policies link markets together, however, these shifts have consequences that extend well beyond national boundaries.
Why More Data Changes The Decision Problem
HTA is evolving in a conflicted way. While there is growing recognition that traditional cost-effectiveness analysis fails to capture important dimensions of patient-centered value, HTA bodies have been reluctant to move beyond familiar frameworks.
Conventional cost-effectiveness analysis treats health gains as interchangeable. In practice, however, HTA bodies already behave as if this is not the case, placing greater weight on gains in severe disease, rare conditions, and populations with high unmet need.
Expanded “generalized” analytic approaches that explicitly incorporate different weights for different types of health gains do not simply generate different answers. They generate additional structured information about value.
This matters for decision making in three ways:
- When conventional and generalized cost-effectiveness frameworks agree, confidence in pricing or coverage decisions based on those frameworks increases because uncertainty is reduced.
- When they diverge, this signals heterogeneity in value, suggesting that more targeted access strategies may be appropriate rather than binary decisions (for example, cover or don’t cover).
- When both approaches indicate low value, the case for negative coverage or pricing decisions becomes clearer and more defensible.
In this sense, more data are not merely additive. They change the nature of the decision problem, shifting it from a single-threshold rule toward a more nuanced assessment of value across patient populations.
The Most Favored Nation Feedback Loop
MFN-style policies in the United States tie domestic prices to those observed in other countries. This creates a feedback loop in which HTA decisions abroad influence US pricing, which in turn shapes global revenue expectations and manufacturer behavior (exhibit 1).
Exhibit 1: Interaction of US most favored nation pricing policies with ex-US pricing and health technology assessment decisions
Source: Author’s analysis.
Within this system, threshold adjustments in major HTA markets are not purely local decisions. When thresholds expand, they can reduce downward pressure on pricing or support higher effective prices through negotiation. Those prices then enter the set of international benchmarks used to inform US pricing under MFN policies.
As a result, efforts to reduce US drug prices may be partially offset by upward pressure from ex-US HTA decisions. At the same time, manufacturers are responding to MFN by reassessing launch strategies, pricing approaches, and market prioritization. HTA bodies are therefore operating in an environment where their decisions influence not only domestic access but also global pricing dynamics.
The Limits Of Incremental Adjustment
The prevailing response to these pressures has been incremental. HTA bodies have introduced modest threshold increases, expanded modifiers, and relied on case-by-case exceptions.
This approach is unlikely to hold. A fundamental limitation underlies this problem. Even under optimistic assumptions, the maximum lifetime health benefit a therapy can deliver is bounded. For a childhood intervention that restores full health over a lifetime, quality-adjusted life expectancy is on the order of 30 QALYs. At commonly cited thresholds of $100,000 per QALY, this implies an upper bound of roughly $3 million in incremental cost for a therapy to be considered cost-effective.
As a result, therapies priced above this level cannot be deemed cost-effective under conventional frameworks, regardless of their clinical impact. This is not simply a pricing issue but a structural constraint of the model itself. As more transformative therapies emerge, particularly in rare and severe diseases, this ceiling becomes increasingly binding.
Fixed thresholds, even when periodically adjusted, cannot keep pace with rapid innovation in high-cost therapies, evolving societal preferences, and global pricing interdependence. Over time, formal thresholds begin to understate actual willingness to pay. Decision making becomes increasingly reliant on discretionary adjustments, and consistency becomes more difficult to maintain.
The result is a system in which the stated rules and the actual decisions begin to diverge. As this gap widens, uncertainty increases for manufacturers, providers, and patients, and the credibility of HTA institutions is placed under strain.
A Missed Opportunity For Formalization
Recent efforts to modernize HTA methods reflect an awareness of these challenges, but they have not fully resolved them. The inaugural Health Economics Methods Advisory report, for example, set out to explore how broader benefits might be incorporated into economic evaluation. Yet, it ultimately reinforces existing frameworks and places constraints on the inclusion of new value elements, limiting the extent to which patient-centered value can be operationalized.
By maintaining reliance on fixed or only loosely adjusted thresholds, and by imposing restrictive conditions on incorporating additional benefits, the report risks slowing progress at a time when greater flexibility and clarity are needed. The central question remains unanswered: How should HTA systems adapt when both value and pricing are dynamic and globally interconnected?
From Constraint To Coordination
This question points toward a less intuitive but more coherent path forward. Rather than continuing to defend static thresholds or rely on incremental adjustments, HTA bodies could move toward explicitly higher and more flexible willingness-to-pay benchmarks, grounded in formal methods that account for severity, rarity, and societal preferences. Frameworks such as the Generalized Risk-Adjusted Cost-Effectiveness analysis illustrate how this could be implemented systematically, replacing ad hoc exceptions with structured variation.
At first glance, raising thresholds in this way may appear to increase short-term spending. In a globally linked pricing system, however, the effects are more complex. Higher thresholds in major HTA markets would feed into international reference pricing and MFN benchmarks, helping to stabilize global pricing expectations. This could reduce the need for repeated renegotiation across jurisdictions and ease the tensions currently emerging between US pricing policy and ex-US HTA decisions.
In this sense, threshold expansion, when grounded in transparent and consistent methods, could function as a form of policy coordination. It would better align incentives across manufacturers, HTA bodies, and payers while improving predictability and preserving access.
Winners, Losers, And The Path Forward
Such a shift would have uneven effects across stakeholders. Patients would likely benefit from expanded access and a broader set of treatment options. Providers could face fewer barriers in navigating coverage decisions. Manufacturers, particularly those focused on severe and rare diseases, would operate within a more predictable value framework.
For taxpayers and health systems, the trade-offs would be more complex, reflecting higher short-term spending alongside continued support for innovation. These trade-offs already exist. The difference is whether they are managed explicitly through coherent policy or emerge through inconsistency.
For HTA institutions themselves, the stakes are highest. Continuing along the current path risks further divergence between formal thresholds and real-world decisions. Moving toward a structured, adaptive approach offers a way to restore both credibility and consistency.
Conclusion
Cost-effectiveness thresholds are already rising. The question is whether this evolution will remain informal and reactive or be grounded in a coherent framework that reflects both societal values and global market dynamics. In a world of interconnected pricing, HTA decisions are no longer local. They shape, and are shaped by, policies beyond their borders. Absent a shift from drift to design, HTA systems will continue to operate in tension with the markets they seek to govern. A more coordinated approach, grounded in transparent methods and adaptive thresholds, offers a path toward greater alignment, stability, and better decision making.
Author’s Note
William Padula declares grants in the past three years from PhRMA Foundation, the National Institutes of Health, AbbVie, and Bristol Myers Squibb. He declares personal fees and equity holdings from Stage Analytics.
Padula, W. (2026, May 28). When cost-effectiveness thresholds drift: Global HTA, MFN pricing, and the need for A coherent framework. Health Affairs Forefront. https://www.healthaffairs.org/content/forefront/cost-effectiveness-thresholds-drift-global-hta-mfn-pricing-and-need-coherent-framework
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