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The Value of Thinly Spread QALYs

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Abstract

A number of recent findings from the literature imply that the value of a QALY varies depending on the concentration or dispersion of that QALY over treated individuals. Given that funding decisions are currently made under either the assumption of distributive-neutrality or some combination of explicit decision criteria and implicit adjustment for distributional concerns, it is likely that substantial social welfare gains are available if distributional objectives could be more accurately reflected in funding decisions. This paper considers three alternative approaches to explicitly adjust for distributional concerns with regard to the concentration or dispersion of individual health gains.

Including non-health arguments in the objective function by #x2018;weighting’ QALYs for distributional effects or imposing differential funding thresholds for interventions with different distributional effects might be considered first- and second-best solutions, and would likely deliver the greatest social welfare gains. However, there is some doubt that first- or second-best solutions would be: (i) feasible given current data gaps; and (ii) politically acceptable. Rather, a simple and transparent approach is suggested wherein the sponsors of interventions that deliver health gains that are of questionable ‘welfare-significance’ for the treated individual would be required to provide decision-makers with an estimate of willingness to pay for the QALYs in question and would only be eligible for funding in the event that the positive net present value criterion is met.

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Notes

  1. 1 21% of respondents assigned equivalent social value to 1 year of benefit for 100 persons and to 20 years of benefit for fewer than 5 persons. In comparison, 14% of respondents assigned equivalent social value to 2 years of benefit for 100 persons and to 20 years of benefit for fewer than 10 persons. 18% of respondents assigned equivalent social value to 5 years of benefit for 100 persons and to 20 years of benefit for fewer than 25 persons.

  2. 2 The rationale for specific egalitarianism with respect to healthcare stems from the characteristics it has in consumption. In particular, healthcare confers — to a greater or lesser extent — ‘good health’ and, hence, the distribution of healthcare has implications for the distribution of health. As Culyer and Wagstaff[10] put it, “the demand for equality in healthcare is a derived demand from the equality of health” (p. 432).

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Acknowledgements

The Centre for Health Economics at Monash University provided the necessary financial support to allow completion of this paper but the views expressed herein are the sole responsibility of the author. The author would like to thank two anonymous referees for useful comments on an earlier draft. The author has no competing interests to declare.

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  1. Centre for Health Economics, Faculty of Business & Economics, Monash University, Building 75, Clayton, 3800, Victoria, Australia

    Duncan Mortimer

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Mortimer, D. The Value of Thinly Spread QALYs. Pharmacoeconomics 24, 845–853 (2006). https://doi.org/10.2165/00019053-200624090-00003

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