New medicines are often seen as the pinnacle of healthcare advancement, promising longer, healthier lives for patients. However, healthcare systems may face difficult trade-offs when deciding whether to pay for these innovations, which typically come with a higher price tag compared to existing treatments.¹  

Understanding the value of new medicines: quality-adjusted life-years (QALYs) and opportunity cost 

To assess the value for money of a new treatment, the National Institute for Health and Care Excellence (NICE) uses a measure called the Incremental Cost-Effectiveness Ratio (ICER). This ratio calculates the additional cost required to gain one extra QALY, where one QALY represents a year of life in perfect health. A lower ICER indicates better value for money.¹ 

Historically, NICE has deemed new medicines as providing value if they cost less than £20,000–£30,000 per QALY gained.¹ Within the NHS, analyses suggest that approximately £15,000 is spent to generate one QALY with existing services.¹ This value has been estimated as the ‘health-opportunity cost’–the health benefits forgone when resources are used for one treatment instead of another.¹ 

While new treatments recommended by NICE often provide health benefits to the patients who received them, their high cost can lead to net losses at a population health level.¹ One study found that new medications resulted in a net loss of approximately 1.25 million QALYs between 2000 and 2020.¹ This highlights a crucial balance between the price of new medications and access to existing treatments and services due to the reallocation of limited resources and funding. 

A net-health deficit 

One analysis of 183 new medicines recommended by NICE between 2000 and 2020 highlights key elements of this trade-off.¹ 

• Health gains for individuals: New medicines provided significant benefits to the 19.82 million patients who received them, generating an estimated 3.75 million additional QALYs.¹ Across all appraisals, the median gain was equivalent to an extra half-year in full health. 

• High costs for the system: These gains came at an estimated additional cost to the NHS of £75.1 billion.¹ The largest costs were driven by medicines in immunology (£25.7 billion) and oncology (£22.7 billion).¹ 

• Forgone health for the population: The study calculated that if this £75.1 billion had been spent on existing NHS treatments and services (at the £15,000 per QALY rate), it could have generated an estimated 5.00 million QALYs. ¹ 

• The net result: Comparing the health gained (3.75 million QALYs) with the health forgone (5.00 million QALYs) suggests that the funding of new medicines over existing treatments and services resulted in a net loss of 1.25 million QALYs for the overall UK population.¹ This is in contrast to earlier studies reporting that new medicines are linked to substantial health gains for the worldwide population, contributing to major life-expectancy gains over the past four decades.¹ 

Not all medicines are equal 

The impact of new medicines on population health varies significantly across different types of treatment and therapy area. 

For example, anti-infective medicines were highly cost-effective, with a median ICER of just £6,478, and contributed positively to population health. ¹ 

In contrast, oncology medicines had the highest median ICER at £30,000 and were the largest driver of the overall population health loss, accounting for a deficit of 0.87 million QALYs.¹ This was followed by medicines for immunology and the vascular system, which also had a negative net health effect. 

Colonis repurpose medicines to bring health benefits of existing treatments to patients 

While new medicines offer clear benefits to the patients who receive them, their high and rising prices create a significant health burden on the population when funded within a fixed-budget system.  

Repurposing existing medicines often doesn’t carry the same cost as developing a new medication and may also be a faster process. As a result, it may allow for improved usability of a medicine while keeping costs down.  

At Colonis Pharma Ltd, we’re dedicated to prioritising the development of value-added medicines through repurposing and reformulating existing treatments to deliver options that empower patients’ lives.  

References 

1. Naci H et al. Lancet. 2025;405:50–60. 

Colonis Pharma Ltd is an independent entity under the Clinigen Group.  

November 2025 | GB-CPL-0-319 

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