Some advocacy organizations have directly or indirectly called for use of threshold-based cost-effectiveness analysis (CEA) in the United States. However, calls for the adoption of models using CEA thresholds risk concealing ongoing disagreements among economists about whether and how to establish these thresholds. Health decision-makers outside the U.S. also face practical challenges.
Fundamentally, cost-utility analysis estimates the incremental cost per additional unit of health improvement for a given treatment. It compares this value to a predetermined monetary threshold, which theoretically represents the maximum cost society is willing or able to pay for one unit of health. In some models, that benchmark, the CEA threshold, serves as the primary decision criterion for determining whether medicines should be funded or covered.
U.S. policy discourse has mainly focused on criticisms of quality-adjusted life years (QALYs), a composite summary metric of health. The National Council on Disability, which makes recommendations to the President and Congress on policies affecting Americans with disabilities has emphasized the inherent discriminatory nature of this metric. The U.S. Congress has banned its use in Medicare, and the U.S. Centers for Medicare and Medicaid Services disallowed its consideration in the drug price regulations as part of the 2022 Inflation Reduction Act. There has been comparatively less attention on the implications of fixed CEA thresholds as a determinant of reimbursement.
Johnson & Johnson and Avalere Health researchers conducted a targeted literature review, as well as ten semi-structured, double-blinded in-depth interviews with international CEA experts and experienced U.S. stakeholders to identify issues that would arise if such fixed thresholds of the value of a life year were to be used in the U.S. market setting.
The research revealed:
- The academic debate about thresholds is diverse, but the consensus is that they differ widely and are arbitrary.
- Where CEA thresholds are used, stakeholders found that the unresolved tensions lead to practical challenges in decision-making. Real-world experiences with thresholds show considerable variability, from rejection in some countries to adoption of several arbitrarily set threshold values in others.
- U.S. stakeholders highlighted the dissonance between CEA thresholds and the realities of the decentralized U.S. healthcare system.
- Payers unanimously expressed that everyone should have equal access to necessary care and rejected prioritizing reimbursement based on metrics like QALYs, a metric which was found to be discriminatory by the U.S. National Council on Disability.
The research suggests that framing healthcare decisions through the lens of societal resource scarcity, assigning a monetary value to human life and using that dollar value to centrally ration care based on standardized formulas, all conflict with prevailing values in the U.S. and societal preferences for individual choice, autonomy and personal freedom.
U.S. policymakers should keep in mind the arbitrary nature of thresholds used in cost-effectiveness analysis when considering recommendations to import mechanistic, rigid models. They and the prices that are suggested by them rely on thresholds that are ill-suited for population health decision-makers and patients in the U.S.
This research was funded by Johnson & Johnson. For full details on the study design, methods and limitations, see: Neumann U, Ciarametaro M and Banks J. “ICER thresholds in cost-utility analysis: Assessing conceptual relevance and practical adequacy for drug reimbursement decision-making in the US.” Johnson & Johnson Innovative Medicine. Poster presented at: Academy of Managed Care Pharmacy (AMCP) Nexus 2025; October 27-30, 2025; National Harbor, MD.