Modelling the monetary value of a QALY: a new approach based on UK data

QALY-type preference and willingness-to-pay among end-of-life patients with cancer treatments: a pilot study using discrete choice experiment

PURPOSE

Quality-adjusted life-year (QALY) is a dominant measurement of health gain in economic evaluations for pricing drugs. However, end-of-life (EoL) patients' preference for QALY gains in life expectancy (LE) and quality of life (QoL) during different disease stages remains unknown and is seldom involved in decision-making. This study aims to measure preferences and willingness-to-pay (WTP) towards different types of QALY gain among EoL cancer patients.

METHODS

We attributed QALY gain to four types, gain in LE and QoL, respectively, and during both progression-free survival (PFS) and post-progression survival (PPS). A discrete choice experiment including five attributes (the four QALY attributes and one cost attribute) with three levels each was developed and conducted with 85 Chinese advanced non-small cell lung cancer patients in 2022. All levels were set with QALY gain/cost synthesised from research on anti-lung cancer drugs recently listed by Chinese National Healthcare Security Administration. Each respondent answered six choice tasks in a face-to-face interview. The data were analysed using mixed logit models.

RESULTS

Patients valued LE-related QALY gain in PFS most, with a relative importance of 81.8% and a WTP of $43,160 [95% CI 26,751 ~ 59,569] per QALY gain. Respondents consistently preferred LE-related to QoL-related QALY gain regardless of disease stage. Patients with higher income or lower education levels tended to pay more for QoL-related QALY gain.

CONCLUSION

Our findings suggest a prioritised resource allocation to EoL-prolonging health technologies. Given the small sample size and large individual heterogeneity, a full-scale study is needed to provide more robust results.

Resource allocation in public sector programmes: does the value of a life differ between governmental departments?

BACKGROUND

The value of a life is regularly monetised by government departments for informing resource allocation. Guidance documents indicate how economic evaluation should be conducted, often specifying precise values for different impacts. However, we find different values of life and health are used in analyses by departments within the same government despite commonality in desired outcomes. This creates potential inconsistencies in considering trade-offs within a broader public sector spending budget. We provide evidence to better inform the political process and to raise important issues in assessing the value of public expenditure across different sectors.

METHODS

Our document analysis identifies thresholds, explicitly or implicitly, as observed in government-related publications in the following public sectors: health, social care, transport, and environment. We include both demand-side and supply-side thresholds, understood as societies' and governments' willingness to pay for health gains. We look at key countries that introduced formal economic evaluation processes early on and have impacted other countries' policy development: Australia, Canada, Japan, New Zealand, the Netherlands, and the United Kingdom. We also present a framework to consider how governments allocate resources across different public services.

RESULTS

Our analysis supports that identifying and describing the Value of a Life from disparate public sector activities in a manner that facilitates comparison is theoretically meaningful. The optimal allocation of resources across sectors depends on the relative position of benefits across different attributes, weighted by the social value that society puts on them. The value of a Quality-Adjusted Life Year is generally used as a demand-side threshold by Departments of transport and environment. It exceeds those used in health, often by a large enough proportion to be a multiple thereof. Decisions made across departments are generally based on an unspecified rationing rule.

CONCLUSIONS

Comparing government expenditure across different public sector departments, in terms of the value of each department outcome, is not only possible but also desirable. It is essential for an optimal resource allocation to identify the relevant social attributes and to quantify the value of these attributes for each department.

A theory on ICER pricing and optimal levels of cost-effectiveness thresholds: a bargaining approach

In many health systems around the world, decisions about the reimbursement of-and patient access to-new medicines are based on health technology assessments (HTA) which, in some countries, include the calculation of an incremental cost-effectiveness ratio (ICER). Decision-makers compare the ICER against a pre-specified value for money criterion, known as the cost-effectiveness threshold (CET), to decide in favour of or against reimbursement. We developed a general model of pharmaceutical markets to analyse the relationship between the CET value and the distribution of the health and economic value of new medicines between consumers (payers) and producers (life science industry developers). We added to the existing literature in three ways: including research and development (R&D) cost for developers as a sunk cost; incorporating bargaining using the Nash bargaining solution to model payer bargaining power from regulation and use of competition; and analysing the impact of a non-uniform distribution of developers R&D costs on the supply of innovation. In some circumstances of bargaining power distribution and R&D cost, we found that using a CET value in HTA decision-making higher than the supply-side CET is socially efficient. Decision-makers should consider adjustable levels of the CET or interpretation of ICERs higher than the CET according to the bargaining power effect. The findings of this research pointed to the need for more research on the impact of bargaining power, how R&D investment responds to rewards, i.e. the elasticity of innovation, and pre- and post-patent expiry modelling.

Reducing the basic reproduction number of COVID-19: a model simulation focused on QALYs, hospitalisation, productivity costs and optimal (soft) lockdown

Even if public health interventions are successful at reducing the spread of COVID-19, there is no guarantee that they will bring net benefits to the society because of the dynamic nature of the pandemic, e.g., the risk of a second outbreak if those interventions are stopped too early, and the costs of a continued lockdown. In this analysis, a discrete-time dynamic model is used to simulate the effect of reducing the effective reproduction number, driven by lockdowns ordered in March 2020 in four European countries (UK, France, Italy and Spain), on QALYs and hospitalisation costs. These benefits are valued in monetary terms (€30,000 per QALY assumed) and compared to productivity costs due to reduced economic activity during the lockdown. An analysis of the optimal duration of lockdown is performed where a net benefit is maximised. The switch to a soft lockdown is analysed and compared to a continued lockdown or no intervention. Results vary for two assumptions about hospital capacity of the health system: (a) under unlimited capacity, average benefit ranges from 8.21 to 14.21% of annual GDP, for UK and Spain, respectively; (b) under limited capacity, average benefits are higher than 30.32% of annual GDP in all countries. The simulation results imply that the benefits of lockdown are not substantial unless continued until vaccination of high-risk groups is complete. It is illustrated that lockdown may not bring net benefits under some scenarios and a soft lockdown will be a more efficient alternative from mid-June 2020 only if the basic reproduction number is maintained low (not necessarily below 1) and productivity costs are sufficiently reduced.

Monetary values of increasing life expectancy: Sensitivity to shifts of the survival curve

Individuals' monetary values of decreases in mortality risk depend on the magnitude and timing of the risk reduction. We elicited stated preferences among three time paths of risk reduction yielding the same increase in life expectancy (decreasing risk for the next decade, subtracting a constant from or multiplying risk by a constant in all future years) and willingness to pay (WTP) for risk reductions differing in timing and life-expectancy gain. Respondents exhibited heterogeneous preferences over the alternative time paths, with almost 90 percent reporting transitive orderings. WTP is statistically significantly associated with life-expectancy gain (between about 7 and 28 days) and with respondents' stated preferences over the alternative time paths. Estimated value per statistical life year (VSLY) can differ by time path and averages about $500,000, roughly consistent with conventional estimates obtained by dividing estimated value per statistical life by discounted life expectancy.

The cost of mental health: Where do we stand in France?

Mental disorders often begin early in life and constitute five of the top ten causes of disability. Their total cost across Europe is estimated at more than 4% of GDP (more than € 600 billion). The last study investigating the cost of mental disorders in France by our group was based on data from 2007 and yielded an estimated indirect and direct cost of € 109 billions. The objective of this study was thus to provide an overall updated cost of mental health in France ten years later and before the COVID-19 pandemic. We estimated the costs related to the direct healthcare and medico-social system, loss of productivity and loss of quality of life. We conducted a literature search to identify direct healthcare, medico-social, indirect (loss of productivity and income compensation) and loss of quality of life during 2018. We included costs related to major psychiatric disorders, including autism and intellectual disability, but excluded the costs related to dementia. Our estimate of the total cost of mental disorders in France, including medical (14%), social (8%), indirect (27%) and loss of quality of life (51%), was € 163 billions in 2018. This total cost includes money spend, forgone earnings and DALYs lost. We found a 50% increase in costs relative to our previous 2007 study. Large-scale cost-effective interventions such as specialized consultations or the development of ambulatory care could help decrease direct healthcare costs related to hospitalization and productivity loss while greatly improving the quality of life of patients.

No Time to Waste: An Appraisal of Value at the End of Life

OBJECTIVES

The use of economic evaluations of end-of-life interventions may be limited by an incomplete appreciation of how patients and society perceive value at end of life. The objective of this study was to evaluate how patients, caregivers, and society value gains in quantity of life and quality of life (QOL) at the end of life. The validity of the assumptions underlying the use of the quality-adjusted life-years (QALY) as a measure of preferences at end of life was also examined.

METHODS

MEDLINE, Embase, CINAHL, PsycINFO, and PubMed were searched from inception to February 22, 2021. Original research studies reporting empirical data on healthcare priority setting at end of life were included. There was no restriction on the use of either quantitative or qualitative methods. Two reviewers independently screened, selected, and extracted data from studies. Narrative synthesis was conducted for all included studies. The primary outcomes were the value of gains in quantity of life and the value of gains in QOL at end of life.

RESULTS

A total of 51 studies involving 53 981 participants reported that gains in QOL were generally preferred over quantity of life at the end of life across stakeholder groups. Several violations of the underlying assumptions of the QALY to measure preferences at the end of life were observed.

CONCLUSIONS

Most patients, caregivers, and members of the general public prioritize gains in QOL over marginal gains in life prolongation at the end of life. These findings suggest that policy evaluations of end-of-life interventions should favor those that improve QOL. QALYs may be an inadequate measure of preferences for end-of-life care thereby limiting their use in formal economic evaluations of end-of-life interventions.

Willingness to pay for a quality-adjusted life year: a systematic review with meta-regression

The use of a threshold for cost-utility studies is of major importance to health authorities for making the best allocation decisions for limited resources. Regarding the increasing number of studies worldwide that seek to establish a value for a quality-adjusted life year (QALY), it is necessary to review these studies to provide a global insight into the literature. A systematic review on willingness to pay (WTP) studies focusing on QALY was conducted in eight databases up to June 26, 2020. From a total of 9991 entries, 39 studies were selected, and 511 observations were extracted for the meta-analysis using the ordinary least squares method. The results showed a predicted mean empirical value of $52,619.39 (95% CI 49,952.59; 55,286.19) per QALY in US dollars for 2018. A 1% increase in income led to an increase of 0.6% in the WTP value, while a 1-year increase in respondent age led to a decrease of 3.3% in the WTP value. Sex, education level and employment status had significant effects on WTP. Compared to face-to-face interviews, surveys conducted by the internet or telephone were more likely to have a significantly higher value of WTP per QALY, while out-of-pocket payment tended to lower the value. The prediction made for the province of Quebec, Canada, provided a QALY value of approximately USD $98,450 (CAD $127,985), which is about 2.3 times its gross domestic product (GDP) per capita in 2018. This study is consistent with the extant literature and will be useful for countries that do not yet have a preference-based survey for the value of a QALY.

Cost-Effectiveness of Prostate Cancer Detection in Biopsy-Naïve Men: Ultrasound Shear Wave Elastography vs. Multiparametric Diagnostic Magnetic Resonance Imaging

This exploratory study investigates the cost-effectiveness of ultrasound shear wave elastography (SWE) imaging in comparison to pre-biopsy multiparametric magnetic resonance imaging (mpMRI) in men with suspected prostate cancer. This research is motivated by the early evidence of the good performance of SWE in distinguishing cancerous from benign prostate tissues. We used a decision analysis model representing the care-pathways of men referred with a high prostate specific antigen (PSA) and/or abnormal digital rectal examination (DRE) in a UK setting from the payer’s perspective with results reported in 2016 GBP. We then appraised the cost-effectiveness of a novel approach based on SWE compared to the more conventional and widely practiced mpMRI-based approaches using data reported in the literature. Deterministic and probabilistic sensitivity analyses were used to address uncertainty regarding the parameter values utilised. Our exploratory results implied that SWE approach yielded an additional quality-adjusted life year (QALY) at the cost of GBP 10,048 compared to the standard mpMRI-based approach in the UK. This is lower than the official willingness to pay threshold of GBP 20,000 (the UK healthcare system guidelines) and is therefore a suitable replacement for the current practice. Sensitivity analyses confirmed the robustness of our results.

A Systematic Review of Demand-Side Methods of Estimating the Societal Monetary Value of Health Gain

OBJECTIVES

Although many reviews of the literature on cost-effectiveness thresholds (CETs) exist, the availability of new studies and the absence of a fully comprehensive analysis warrant a new review. This study systematically reviews demand-side methods for estimating the societal monetary value of health gain.

METHODS

Several electronic databases were searched from inception to October 2019. To be included, a study had to be an original article in any language, with a clearly described method for estimating the societal monetary values of health gain and with all estimated values reported. Estimates were converted to US dollars ($), using purchasing power parity (PPP) exchange rates and the gross domestic product (GDP) per capita (2019).

RESULTS

We included 53 studies; 45 used direct approach and 8 used indirect approach. Median estimates from the direct approach were PPP$ 24 942 (range 554-1 301 912) per quality-adjusted life-year (QALY), which were typically 0.53 (range 0.02-24.08) GDP per capita. Median estimates using the indirect approach were PPP$ 310 051 (range 36 402-7 574 870) per QALY, which accounted for 7.87 (range 0.68-116.95) GDP per capita.

CONCLUSIONS

Our review found that the societal values of health gain or CETs were less than GDP per capita. The great variety in methods and estimates suggests that a more standardized and internationally agreed methodology for estimating CET is warranted. Multiple CETs may have a role when QALYs are not equally valued from a societal perspective (eg, QALYs accruing to people near death compared with equivalent QALYs to others).

Allocating Public Spending Efficiently: Is There a Need for a Better Mechanism to Inform Decisions in the UK and Elsewhere?

In the UK few if any regular processes explicitly address comparisons of value for money between spending in different government departments, despite the existence of mechanisms that could in principle achieve that. This leaves a very important gap in evidence and means that decisions about public spending allocations are likely to miss opportunities to improve social welfare from existing budgets. Greater attention to the development of methods and evidence to better inform the allocation of public sector spending between departments is therefore urgently needed. We identify a number of possible approaches to this-some of which are being used in different countries-and highlight their strengths and weaknesses. We propose a new, pragmatic approach that incorporates a generic descriptive system to measure the disparate outcomes produced by public sector activities in a commensurate manner. Discrete-choice experiments could be used to generate evidence of the relative importance placed on different aspects of public sector outcomes by members of the general public. The proposed approach would produce evidence on value for money across departments, and the generation of evidence on public preferences to support that.

Operational safety economics: Foundations, current approaches and paths for future research

Due to the COVID-19 pandemic in 2020, the trade-off between economics and epidemic prevention (safety) has become painfully clear worldwide. This situation thus highlights the significance of balancing the economy with safety and health. Safety economics, considering the interdependencies between safety and micro-economics, is ideal for supporting this kind of decision-making. Although economic approaches such as cost-benefit analysis and cost-effectiveness analysis have been used in safety management, little attention has been paid to the fundamental issues and the primary methodologies in safety economics. Therefore, this paper presents a systematic study on safety economics to analyze the foundational issues and explore the possible approaches. Firstly, safety economics is defined as a transdisciplinary and interdisciplinary field of academic research focusing on the interdependencies and coevolution of micro-economies and safety. Then we explore the role of safety economics in safety management and production investment. Furthermore, to make decisions more profitable, economic approaches are summarized and analyzed for decision-making about prevention investments and/or safety strategies. Finally, we discuss some open issues in safety economics and possible pathways to improve this research field, such as security economics, risk perception, and multi-criteria analysis.

The value of health-Empirical issues when estimating the monetary value of a quality-adjusted life year based on well-being data

Decisions on interventions or policy alternatives affecting health can be informed by economic evaluations, like cost-benefit or cost-utility analyses. In this context, there is a need for valid estimates of the monetary equivalent value of health (gains), which are often expressed in € per quality-adjusted life years (QALYs). Obtaining such estimates remains methodologically challenging, with a recent addition to the health economists' toolbox, which is based on well-being data: The well-being valuation approach. Using general population panel data from Germany, we put this approach to the test by investigating several empirical and conceptual challenges, such as the appropriate functional specification of income utility, the choice of health utility tariffs, or the health state dependence of consumption utility. Depending on specification, the bulk of estimated € per QALY values ranged from €20,000-60,000, with certain specifications leading to more considerable deviations, underlining persistent practical challenges when applying the well-being valuation methodology to health and QALYs. Based on our findings, we formulate recommendations for future research and applications.

Examining Willingness-to-Pay and Zero Valuations for a Health Improvement with Logistic Regression

Study aim was to elicit the Greek general population’s willingness-to-pay (WTP) for a health improvement (recovery to perfect health), examine attitudinal differences between willing- and unwilling-to-pay individuals regarding healthcare services provision, and investigate —using a logistic regression model—demographic/socioeconomic factors impact on their intention to pay for a health improvement. A research tool was developed to conduct a cross-sectional stated-preference telephone-based survey (January-February 2019) and a representative sample (n = 1342) of the Greek general population was queried. The computer-assisted telephone-interview (CATI) method was used to ensure random sampling. WTP was elicited using the iterative bidding technique. Participants’ attitudes toward healthcare services provision were assessed through pre-defined statements. Test-retest reliability of these statements was assessed using intraclass correlation coefficients (ICC). Logistic regression was employed to identify sociodemographic factors’ effect on WTP intention. Differences among individuals’ attitudes were assessed using the chi-square test. All analyses were conducted using the IBM SPSS Software v.25.0. Analysis showed acceptable reliability for WTP estimates (ICC = .67) and good reliability for healthcare services assessment statements (ICC = .83-.94). Mean WTP was estimated at €439.8. Respondents with higher educational level and higher household income were more likely to be willing to pay for a health improvement. On the contrary, older participants were less likely to be willing to pay. Most participants who considered public healthcare services to be of high quality were unwilling to pay. Logistic regression analysis led to the development of an effective predictive model regarding factors affecting individuals’ WTP intention for a health improvement. Further classification of unwilling-to-pay individuals into protest responders and “true” zero valuators showed that protest responders are unlikely to be representative of the population. Hence, study results can be used for debiasing WTP responses, leading to a more accurate use of WTP estimates by policy makers, exploiting WTP values in medical interventions cost-benefit analysis within reimbursement decisions framework.

Cost per DALY averted in low, middle- and high-income countries: evidence from the global burden of disease study to estimate the cost-effectiveness thresholds

BACKGROUND

Determining the cost-effectiveness thresholds for healthcare interventions has been a severe challenge for policymakers, especially in low- and middle-income countries. This study aimed to estimate the cost per disability-adjusted life-year (DALY) averted for countries with different levels of Human Development Index (HDI) and Gross Domestic Product (GDP).

METHODS

The data about DALYs, per capita health expenditure (HE), HDI, and GDP per capita were extracted for 176 countries during the years 2000 to 2016. Then we examined the trends on these variables. Panel regression analysis was performed to explore the correlation between DALY and HE per capita. The results of the regression models were used to calculate the cost per DALY averted for each country.

RESULTS

Age-standardized rate (ASR) DALY (DALY per 100,000 population) had a nonlinear inverse correlation with HE per capita and a linear inverse correlation with HDI. One percent increase in HE per capita was associated with an average of 0.28, 0.24, 0.18, and 0.27% decrease on the ASR DALY in low HDI, medium HDI, high HDI, and very high HDI countries, respectively. The estimated cost per DALY averted was $998, $6522, $23,782, and $69,499 in low HDI, medium HDI, high HDI, and very high HDI countries. On average, the cost per DALY averted was 0.34 times the GDP per capita in low HDI countries. While in medium HDI, high HDI, and very high HDI countries, it was 0.67, 1.22, and 1.46 times the GDP per capita, respectively.

CONCLUSIONS

This study suggests that the cost-effectiveness thresholds might be less than a GDP per capita in low and medium HDI countries and between one and two GDP per capita in high and very high HDI countries.

Estimating the monetary value of health and capability well-being applying the well-being valuation approach

BACKGROUND

Quality of life measures going beyond health, like the ICECAP-A, are gaining importance in health technology assessment. The assessment of the monetary value of gains in this broader quality of life is needed to use these measurements in a cost-effectiveness framework.

METHODS

We applied the well-being valuation approach to calculate a first monetary value for capability well-being in comparison to health, derived by ICECAP-A and EQ-5D-5L, respectively. Data from an online survey administered in February 2018 to a representative sample of UK citizens aged 18-65 was used (N = 1512). To overcome the endogeneity of income, we applied an instrumental variable regression. Several alternative model specifications were calculated to test the robustness of the results.

RESULTS

The base case empirical estimate for the implied monetary value of a year in full capability well-being was £66,597. The estimate of the monetary value of a QALY, obtained from the same sample and using the same methodology amounted to £30,786, which compares well to previous estimates from the willingness to pay literature. Throughout the conducted robustness checks, the value of capability well-being was found to be between 1.7 and 2.6 times larger than the value of health.

CONCLUSION

While the applied approach is not without limitations, the generated insights, especially concerning the relative magnitude of valuations, may be useful for decision-makers having to decide based on economic evaluations using the ICECAP-A measure or, to a lesser extent, other (capability) well-being outcome measures.

Value of a QALY for France: A New Approach to Propose Acceptable Reference Values

OBJECTIVE

France has included health economic assessment (HEA) as an official criterion for innovative drug pricing since 2013. Until now, no cost-effectiveness threshold (CET) has been officially proposed to qualify incremental cost-effectiveness ratios (ICERs). Although the French health authorities have publicly expressed the need for such reference values, previous initiatives to determine these have failed. The study aims to propose a locally adapted method for estimating a preference-based value for a quality-adjusted life-year (QALY) based on a rational approach to public policy choices in France.

METHODS

We used the official French value of statistical life (VSL) of €3 million (USD 3.25 million), proposed in 2013 by the French General Commission on Strategy and Prediction. We first estimated the value of life-year (VoLY) by age category according to life expectancy and official discounts recommended for HEA in France. We then estimated a value of statistical QALY (VSQ) by weighting VoLYs with demographic data and French EQ-5D-3L tariffs.

RESULTS

The estimated average VoLYs and VSQs were €120 185 (USD 130 000) and €147 093 (USD 159 022), respectively, assuming a discount rate of 2.5% and €166 205 (USD 179 681) and €201 398 (USD 217 728), respectively, assuming a discount rate of 4.5%.

CONCLUSION

Assuming that, as in other public domains, equity in access to healthcare across all disease areas and between all users is desirable, we propose an estimate of VSQ that is consistent with this goal. Our estimates of €147 093 (USD 179,681) to €201 398 (USD 217 728) should be perceived as breakeven costs for a QALY rather than a market access threshold. Such VSQs could be used as reference values for ICERs in HEA in France.

Economic Analysis and Long-term Follow-up of Distant Referral for Degenerative Mitral Valve Repair

BACKGROUND

Despite the superiority of mitral valve repair (MVr) over replacement for degenerative disease, repair rates vary widely across centers. Traveling to a mitral reference center (MRC) is 1 way to increase the odds of MVr. This study assessed the economic value (quality/cost) and long-term outcomes of distant referral to an MRC.

METHODS

Among 746 mitral surgery patients between January 2011 and June 2013, low-risk patients with an ejection fraction greater than 40% undergoing isolated degenerative MVr were identified and included 26 out-of-state (DISTANT) and 104 in-state patients (LOCAL). Short- and long-term outcomes and institutional financial data (including travel expenses) were used to compare groups. National average and MRC-specific MVr rates, clinical outcomes, and marginal value of quality-adjusted life-years collected from The Society of Thoracic Surgeons database and Medicare estimates were used to perform a nationally representative cost-benefit analysis for distant referral.

RESULTS

Age, ejection fraction, operative time, blood transfusions, and annuloplasty ring size did not differ between groups. Median charges were $76,022 for LOCAL and $74,171 for DISTANT (P = .35), whereas median payments (including travel expenses) were $57,795 for LOCAL and $58,477 for DISTANT (P = .70). Short- and long-term outcomes were similar between groups and median follow-up was 7.1 years. Estimated 5-year survival was 97% (96% for LOCAL and 100% for DISTANT; P = .24). Cost-benefit analysis showed a net benefit through distant referral to an MRC ranging from $436 to $6078 to the payer and $22,163 to $30,067 to the patient, combining for an estimated $22,599 to $32,528 societal benefit.

CONCLUSIONS

These data suggest that distant referral to an MRC is achievable and reasonable.

Theoretical bounds on the value of improved health

Policies that improve health and longevity are often valued by combining expected gains in quality-adjusted life years (QALYs) with a constant willingness-to-pay (WTP) per QALY. This constant is derived by dividing value per statistical life (VSL) estimates by expected future QALYs. We explore the theoretical validity of this practice by studying the properties of WTP for improved health and longevity in a framework that makes minimal assumptions about the shape of an agent's utility function. We find that dividing VSL by expected QALYs results in an upper bound on the WTP for a marginal improvement in the quality of life, as measured by gains in health status or longevity. Calibration results suggest that analysts using this approach to monetize health benefits overestimate the value of a program or policy by a factor of two on average. We also derive a lower bound on the WTP for improved health and longevity that permits a novel empirical test for the descriptive validity of the QALY model. Our calibrations suggest that this lower bound is on average 20% smaller than the actual WTP.

The relative value of different QALY types

The oft-applied assumption in the use of Quality Adjusted Life Years (QALYs) in economic evaluation, that all QALYs are valued equally, has been questioned from the outset. The literature has focused on differential values of a QALY based on equity considerations such as the characteristics of the beneficiaries of the QALYs. However, a key characteristic which may affect the value of a QALY is the type of QALY itself. QALY gains can be generated purely by gains in survival, purely by improvements in quality of life, or by changes in both. Using a discrete choice experiment and a new methodological approach to the derivation of relative weights, we undertake the first direct and systematic exploration of the relative weight accorded different QALY types and do so in the presence of equity considerations; age and severity. Results provide new evidence against the normative starting point that all QALYs are valued equally.

Willingness to pay for a quality-adjusted life year among advanced non-small cell lung cancer patients in Viet Nam, 2018

To examine the willingness to pay (WTP) for a quality-adjusted life year (QALY) gained among advanced non-small cell lung cancer (NSCLC) patients in Viet Nam and to analyze the factors affecting an individual's WTP.A cross-sectional, contingent valuation study was conducted among 400 NSCLC patients across 6 national hospitals in Viet Nam. Self-reported information was recorded from patients regarding their socio-demographic status, EQ-5D (EuroQol-5 dimensions) utility, EQ-5D vas, and WTP for 1 QALY gained. To explore the factors related to the WTP, Gamma Generalized Linear Model and multiple logistic regression tools were applied to analyze data.The overall mean and median of WTP/QALY among the NSCLC patients were USD $11,301 and USD $8002, respectively. Strong association was recorded between WTP/QALY amount and the patient's education, economic status, comorbidity status, and health utility.Government and policymakers should consider providing financial supports to disadvantaged groups to improve their access to life saving cancer treatment.

Value of a QALY and VSI estimated with the chained approach

The value of a quality-adjusted life-year (QALY) and the value of a statistical injury (VSI) are important measures within health economics and transport economics. Several studies have, therefore, estimated people's willingness to pay (WTP) for these estimates, but most results show scale insensitivity. The 'original' chained approach (CA) is a method developed to mitigate this problem by combining the contingent valuation (CV) with standard gamble (SG). In contrast to the version of the CA applied by the previous research of the WTP for a QALY, the original version allows the value of major health gains to be estimated without having the respondents express their WTP directly. The objective of this study was to estimate the value of a QALY and VSI in the context of non-fatal road traffic accidents using the original CA to test if the approach, applied to a wide range of health gains, is able to derive valid estimates and a constant value of a QALY which the previous research has not been able to show. Data were collected from a total of 800 individuals in the Swedish adult general population using two web-based questionnaires. The values of a QALY based on trimmed estimates were close to constant at €300,000 irrespective of the size of the QALY gain. The study shows that the original CA method may be a valid method to estimate the value of a QALY and VSI for major health losses. It also supports the use of a higher threshold value for a QALY than that which is currently applied by several health technology assessment agencies in different countries.

Accounting for Timing when Assessing Health-Related Policies

The primary focus of this paper is to offer guidance on the analysis of time streams of effects that a project may have so that they can be discounted appropriately. This requires a framework that identifies the common parameters that need to be assessed, whether conducting cost-effectiveness or benefit-cost analysis. The quantification and conversion of the time streams of different effects into their equivalent health, health care cost or consumption effects avoids embedding multiple arguments in discounting policies. This helps to identify where parameters are likely to differ in particular contexts, what type of evidence would be relevant, what is currently known and how this evidence might be strengthened. The current evidence available to support the assessment of the key parameters is discussed and possible estimates and default assumptions are suggested. Reporting the results in an extensive way is recommended. This makes the assessments required explicit so the impact of alternative assumptions can be explored and analysis updated as better estimates evolve. Some projects will have effects across different countries where some or all of these parameters will differ. Therefore, the net present value of a project will be the sum of the country specific net present values rather than the sum of effects across countries discounted at some common rate.

A Cost-Benefit Analysis of Hearing Aids, Including the Benefits of Reducing the Symptoms of Dementia

We carried out a CBA of hearing aids (HAs) in which we estimated the direct utility benefits, and included the indirect utility benefits working through a reduction in dementia symptoms. The benefits methodology involved using QALYs as the outcome measure and then applying the price of a QALY to convert the outcome measure into monetary terms. The price of a QALY was derived from an age specific VSL estimate. The effects of HAs on utility were estimated from a fixed effects regression on a large national panel data set provided by NACC where we used a negative proxy for the QoL. We also used a fixed effects regression for the estimate of the indirect benefits involving HAs reducing dementia symptoms. We found that the total benefits, mainly coming from the direct benefits, were extremely large relative to the costs, with benefit-cost ratios over 30.

Measuring the end-of-life premium in cancer using individual ex ante willingness to pay

For the assessment of value of new therapies in healthcare, Health Technology Assessment (HTA) agencies often review the cost per quality-adjusted life-year (QALY) gained. Some HTA agencies accept a higher cost per QALY gained when treatment is aimed at prolonging survival for patients with a short expected remaining lifetime, a so-called end-of-life (EoL) premium. The objective of this study is to elicit the existence and size of an EoL premium in cancer. Data was collected from 509 individuals in the Swedish general population 20-80 years old using a web-based questionnaire. Preferences were elicited using subjective risk estimation and the contingent valuation (CV) method. A split-sample design was applied to test for order bias. The mean value of a QALY was MSEK4.8 (€528,000), and there was an EoL premium of 4-10% at 6 months of expected remaining lifetime. Using subjective risk resulted in more robust and valid estimates of the value of a QALY. Order of scenarios did not have a significant impact on the WTP and the result showed scale sensitivity. Our result provides some support for the use of an EoL premium based on individual preferences when expected remaining lifetime is short and below 24 months. Furthermore, we find support for a value of a QALY that is above the current threshold of several HTA agencies.

New findings from the time trade-off for income approach to elicit willingness to pay for a quality adjusted life year

In this paper we empirically investigate how to appropriately model utility of wealth and health. We use a recently proposed alternative approach to value willingness to pay (WTP) for health, making use of trade-offs between income and life years or quality of life, which we extend to allow for a more realistic multiplicative utility function over health and money. Moreover, we show how reference-dependency can be incorporated into this model and derive its predictions for WTP elicitation. We propose three experimental elicitation procedures and test these in a feasibility study, analysing the responses under different assumptions about the discount rate. Several interesting results are reported: first, the data are highly skewed, but if we trim the 5% lowest and highest values, we obtain plausible WTP estimates. Second, the results differ considerably between procedures, indicating that WTP estimates are sensitive to the assumed utility function. Third, respondents appear to be loss averse for both health and money, which is consistent with assumptions from prospect theory. Finally, our results also indicate that respondents are more willing to trade quality of life than life years.

The economic impact of sight loss and blindness in the UK adult population

BACKGROUND

To quantify the economic impact of sight loss and blindness in the United Kingdom (UK) population, including direct and indirect costs, and its burden on health.

METHODS

Prevalence data on sight loss and blindness by condition, Census demographic data, data on indirect costs, and healthcare cost databases were used. Blindness was defined as best corrected visual acuity (BCVA) of < 6/60, and sight loss as BCVA < 6/12 to 6/60, in the better-seeing eye.

RESULTS

Sight loss and blindness from age-related macular degeneration (AMD), cataract, diabetic retinopathy, glaucoma and under-corrected refractive error are estimated to affect 1.93 (1.58 to 2.31) million people in the UK. Direct health care system costs were £3.0 billion, with inpatient and day care costs comprising £735 million (24.6%) and outpatient costs comprising £771 million (25.8%). Indirect costs amounted to £5.65 (5.12 to 6.22) billion. The value of the loss of healthy life associated with sight loss and blindness was estimated to be £19.5 (15.9 to 23.3) billion or £7.2 (5.9 to 8.6) billion, depending on the set of disability weights used. For comparison with other published results using 2004 disability weights and the 2008 estimates, the total economic cost of sight loss and blindness was estimated to be £28.1 (24.0 to 32.5) billion in 2013. Using 2010 disability weights, the estimated economic cost of sight loss and blindness was estimated to be £15.8 (13.5 to 18.3) billion in 2013.

CONCLUSIONS

The large prevalence of sight loss and blindness in the UK population imposes significant costs on public funds, private expenditure, and health. Prevalence estimates relied on dated epidemiological studies and may not capture recent advances in treatment, highlighting the need for population-based studies that track the prevalence of sight-impairing eye conditions and treatment effects over time.

A method for the inclusion of physical activity-related health benefits in cost-benefit analysis of built environment initiatives

The built environment has a significant influence on population levels of physical activity (PA) and therefore health. However, PA-related health benefits are seldom considered in transport and urban planning (i.e. built environment interventions) cost-benefit analysis. Cost-benefit analysis implies that the benefits of any initiative are valued in monetary terms to make them commensurable with costs. This leads to the need for monetised values of the health benefits of PA. The aim of this study was to explore a method for the incorporation of monetised PA-related health benefits in cost-benefit analysis of built environment interventions. Firstly, we estimated the change in population level of PA attributable to a change in the built environment due to the intervention. Then, changes in population levels of PA were translated into monetary values. For the first step we used estimates from the literature for the association of built environment features with physical activity outcomes. For the second step we used the multi-cohort proportional multi-state life table model to predict changes in health-adjusted life years and health care costs as a function of changes in PA. Finally, we monetised health-adjusted life years using the value of a statistical life year. Future research could adapt these methods to assess the health and economic impacts of specific urban development scenarios by working in collaboration with urban planners.

REFLECTIONS ON THE NICE DECISION TO REJECT PATIENT PRODUCTION LOSSES

Objectives: Patient production losses occur when individuals’ capacities to work, whether paid or unpaid, are impaired by illness, treatment, disability, or death. There is controversy about whether and how to include patient production losses in economic evaluations in health care. Patient production losses have not previously been considered when evaluating medications for reimbursement under the U.K. National Health Service. Proposals for value-based assessment of health technologies in the United Kingdom created renewed interest in whether and how to include costs from a wider societal perspective, such as patient production losses, within economic evaluation of healthcare interventions.

Methods: A narrative review was undertaken of theoretical, ethical, and policy issues that might inform decisions that involve the normative question of whether or not to include patient production losses in economic evaluation.

Results: It seems difficult to reconcile the implications of including patient production losses with the objectives of a healthcare system dedicated to providing universal healthcare coverage without regard to patients’ ability to pay.

Conclusions: Tax payer funded healthcare systems may legitimately adopt maximands other than health gain, but these will be at the opportunity cost of less than maximum health gains.

On the Estimation of the Cost-Effectiveness Threshold: Why, What, How?

BACKGROUND

Many health care systems claim to incorporate the cost-effectiveness criterion in their investment decisions. Information on the system's willingness to pay per effectiveness unit, normally measured as quality-adjusted life-years (QALYs), however, is not available in most countries. This is partly because of the controversy that remains around the use of a cost-effectiveness threshold, about what the threshold ought to represent, and about the appropriate methodology to arrive at a threshold value.

OBJECTIVES

The aim of this article was to identify and critically appraise the conceptual perspectives and methodologies used to date to estimate the cost-effectiveness threshold.

METHODS

We provided an in-depth discussion of different conceptual views and undertook a systematic review of empirical analyses. Identified studies were categorized into the two main conceptual perspectives that argue that the threshold should reflect 1) the value that society places on a QALY and 2) the opportunity cost of investment to the system given budget constraints.

RESULTS

These studies showed different underpinning assumptions, strengths, and limitations, which are highlighted and discussed. Furthermore, this review allowed us to compare the cost-effectiveness threshold estimates derived from different types of studies. We found that thresholds based on society's valuation of a QALY are generally larger than thresholds resulting from estimating the opportunity cost to the health care system.

CONCLUSIONS

This implies that some interventions with positive social net benefits, as informed by individuals' preferences, might not be an appropriate use of resources under fixed budget constraints.

Economic issues involved in integrating genomic testing into clinical care: the case of genomic testing to guide decision-making about chemotherapy for breast cancer patients

The use of taxanes to treat node-positive (N+) breast cancer patients is associated with heterogeneous benefits as well as with morbidity and financial costs. This study aimed to assess the economic impact of using gene expression profiling to guide decision-making about chemotherapy, and to discuss the coverage/reimbursement issues involved. Retrospective data on 246 patients included in a randomised trial (PACS01) were analyzed. Tumours were genotyped using DNA microarrays (189-gene signature), and patients were classified depending on whether or not they were likely to benefit from chemotherapy regimens without taxanes. Standard anthracyclines plus taxane chemotherapy (strategy AT) was compared with the innovative strategy based on genomic testing (GEN). Statistical analyses involved bootstrap methods and sensitivity analyses. The AT and GEN strategies yielded similar 5-year metastasis-free survival rates. In comparison with AT, GEN was cost-effective when genomic testing costs were less than 2,090€. With genomic testing costs higher than 2,919€, AT was cost-effective. Considering a 30% decrease in the price of docetaxel (the patent rights being about to expire), GEN was cost-effective if the cost of genomic testing was in the 0€-1,139€, range; whereas AT was cost-effective if genomic testing costs were higher than 1,891€. The use of gene expression profiling to guide decision-making about chemotherapy for N+ breast cancer patients is potentially cost-effective. Since genomic testing and the drugs targeted in these tests yield greater well-being than the sum of those resulting from separate use, questions arise about how to deal with extra well-being in decision-making about coverage/reimbursement.

Methods for the estimation of the National Institute for Health and Care Excellence cost-effectiveness threshold

BACKGROUND

Cost-effectiveness analysis involves the comparison of the incremental cost-effectiveness ratio of a new technology, which is more costly than existing alternatives, with the cost-effectiveness threshold. This indicates whether or not the health expected to be gained from its use exceeds the health expected to be lost elsewhere as other health-care activities are displaced. The threshold therefore represents the additional cost that has to be imposed on the system to forgo 1 quality-adjusted life-year (QALY) of health through displacement. There are no empirical estimates of the cost-effectiveness threshold used by the National Institute for Health and Care Excellence.

OBJECTIVES

(1) To provide a conceptual framework to define the cost-effectiveness threshold and to provide the basis for its empirical estimation. (2) Using programme budgeting data for the English NHS, to estimate the relationship between changes in overall NHS expenditure and changes in mortality. (3) To extend this mortality measure of the health effects of a change in expenditure to life-years and to QALYs by estimating the quality-of-life (QoL) associated with effects on years of life and the additional direct impact on QoL itself. (4) To present the best estimate of the cost-effectiveness threshold for policy purposes.

METHODS

Earlier econometric analysis estimated the relationship between differences in primary care trust (PCT) spending, across programme budget categories (PBCs), and associated disease-specific mortality. This research is extended in several ways including estimating the impact of marginal increases or decreases in overall NHS expenditure on spending in each of the 23 PBCs. Further stages of work link the econometrics to broader health effects in terms of QALYs.

RESULTS

The most relevant 'central' threshold is estimated to be £12,936 per QALY (2008 expenditure, 2008-10 mortality). Uncertainty analysis indicates that the probability that the threshold is < £20,000 per QALY is 0.89 and the probability that it is < £30,000 per QALY is 0.97. Additional 'structural' uncertainty suggests, on balance, that the central or best estimate is, if anything, likely to be an overestimate. The health effects of changes in expenditure are greater when PCTs are under more financial pressure and are more likely to be disinvesting than investing. This indicates that the central estimate of the threshold is likely to be an overestimate for all technologies which impose net costs on the NHS and the appropriate threshold to apply should be lower for technologies which have a greater impact on NHS costs.

LIMITATIONS

The central estimate is based on identifying a preferred analysis at each stage based on the analysis that made the best use of available information, whether or not the assumptions required appeared more reasonable than the other alternatives available, and which provided a more complete picture of the likely health effects of a change in expenditure. However, the limitation of currently available data means that there is substantial uncertainty associated with the estimate of the overall threshold.

CONCLUSIONS

The methods go some way to providing an empirical estimate of the scale of opportunity costs the NHS faces when considering whether or not the health benefits associated with new technologies are greater than the health that is likely to be lost elsewhere in the NHS. Priorities for future research include estimating the threshold for subsequent waves of expenditure and outcome data, for example by utilising expenditure and outcomes available at the level of Clinical Commissioning Groups as well as additional data collected on QoL and updated estimates of incidence (by age and gender) and duration of disease. Nonetheless, the study also starts to make the other NHS patients, who ultimately bear the opportunity costs of such decisions, less abstract and more 'known' in social decisions.

FUNDING

The National Institute for Health Research-Medical Research Council Methodology Research Programme.

The Willingness to Pay for a Quality Adjusted Life Year: A Review of the Empirical Literature

There has been a rapid increase in the use of cost-effectiveness analysis, with quality adjusted life years (QALYs) as an outcome measure, in evaluating both medical technologies and public health interventions. Alongside, there is a growing literature on the monetary value of a QALY based on estimates of the willingness to pay (WTP). This paper conducts a review of the literature on the WTP for a QALY. In total, 24 studies containing 383 unique estimates of the WTP for a QALY are identified. Trimmed mean and median estimates amount to 74,159 and 24,226 Euros (2010 price level), respectively. In regression analyses, the results indicate that the WTP for a QALY is significantly higher if the QALY gain comes from life extension rather than quality of life improvements. The results also show that the WTP for a QALY is dependent on the size of the QALY gain valued. Copyright © 2014 John Wiley & Sons, Ltd.

Reduced population burden of road transport-related major trauma after introduction of an inclusive trauma system

This population-based study found that since the introduction of an inclusive, regionalized trauma system in Victoria, Australia, the burden of road transport–related serious injury has decreased. Hospitalized major trauma cases increased, but disability burden per case declined. Increased survival did not result in an overall increase in nonfatal injury burden.

Objective:

To describe the burden of road transport–related serious injury in Victoria, Australia, over a 10-year period, after the introduction of an integrated trauma system.

Background:

Road traffic injury is a leading cause of death and disability worldwide. Efforts to improve care of the injured are important for reducing burden, but the impact of trauma care systems on burden and cost of road traffic injury has not been evaluated.

Methods:

All road transport–related deaths and major trauma (injury severity score >12) cases were extracted from population-based coroner and trauma registry data sets for July 2001 to June 2011. Modeling was used to assess changes in population incidence rates and odds of in-hospital mortality. Disability-adjusted life years, combining years of life lost and years lived with disability, were calculated. Cost of health loss was calculated from estimates of the value of a disability-adjusted life year.

Results:

Incidence of road transport–related deaths decreased (incidence rate ratio 0.95, 95% confidence interval: 0.94–0.96), whereas the incidence of hospitalized major trauma increased (incidence rate ratio 1.03, 95% confidence interval: 1.02–1.04). Years of life lost decreased by 43%, and years lived with disability increased by 32%, with an overall 28% reduction in disability-adjusted life years over the decade. There was a cost saving per case of A$633,446 in 2010–2011 compared with the 2001–2002 financial year.

Conclusions:

Since introduction of the trauma system in Victoria, Australia, the burden of road transport–related serious injury has decreased. Hospitalized major trauma cases increased, whereas disability burden per case declined. Increased survival does not necessarily result in an overall increase in nonfatal injury burden.

Comparing WTP values of different types of QALY gain elicited from the general public

BACKGROUND

The appropriate thresholds for decisions on the cost-effectiveness of medical interventions remain controversial, especially in 'end-of-life' situations. Evidence of the values placed on different types of health gain by the general public is limited.

METHODS

Across nine European countries, 17,657 people were presented with different hypothetical health scenarios each involving a gain of one quality adjusted life year (QALY) and asked about their willingness to pay (WTP) for that gain. The questions included quality of life (QoL) enhancing and life extending health gains, and a scenario where respondents faced imminent, premature death.

RESULTS

The mean WTP values for a one-QALY gain composed of QoL improvements were modest (PPP$11,000). When comparing QALY gains obtained in the near future, the valuation of life extension exceeded the valuation of QoL enhancing gains (mean WTP PPP$19,000 for a scenario in which a coma is avoided). The mean WTP values were higher still when respondents faced imminent, premature death (PPP$29,000).

CONCLUSIONS

Evidence from the largest survey on the value of health gains by the general public indicated a higher value for life extending gains compared with QoL enhancing gains. A further modest premium may be indicated for life extension when facing imminent, premature death.

STAR—People-Powered Prioritization

The aim of cost effectiveness analysis (CEA) is to inform the allocation of scarce resources. CEA is routinely used in assessing the cost-effectiveness of specific health technologies by agencies such as the National Institute for Health and Clinical Excellence (NICE) in England and Wales. But there is extensive evidence that because of barriers of accessibility and acceptability, CEA has not been used by local health planners in their annual task of allocating fixed budgets to a wide range of types of health care. This paper argues that these planners can use Socio Technical Allocation of Resources (STAR) for that task. STAR builds on the principles of CEA and the practice of program budgeting and marginal analysis. STAR uses requisite models to assess the cost-effectiveness of all interventions considered for resource reallocation by explicitly applying the theory of health economics to evidence of scale, costs, and benefits, with deliberation facilitated through an interactive social process of engaging key stakeholders. In that social process, the stakeholders generate missing estimates of scale, costs, and benefits of the interventions; develop visual models of their relative cost-effectiveness; and interpret the results. We demonstrate the feasibility of STAR by showing how it was used by a local health planning agency of the English National Health Service, the Isle of Wight Primary Care Trust, to allocate a fixed budget in 2008 and 2009.

A pilot study to assess feasibility of value based pricing in Cyprus through pharmacoeconomic modelling and assessment of its operational framework: sorafenib for second line renal cell cancer

Background

The continuing increase of pharmaceutical expenditure calls for new approaches to pricing and reimbursement of pharmaceuticals. Value based pricing of pharmaceuticals is emerging as a useful tool and possess theoretical attributes to help health system cope with rising pharmaceutical expenditure.

Aim

To assess the feasibility of introducing a value-based pricing scheme of pharmaceuticals in Cyprus and explore the integrative framework.

Methods

A probabilistic Markov chain Monte Carlo model was created to simulate progression of advanced renal cell cancer for comparison of sorafenib to standard best supportive care. Literature review was performed and efficacy data were transferred from a published landmark trial, while official pricelists and clinical guidelines from Cyprus Ministry of Health were utilised for cost calculation. Based on proposed willingness to pay threshold the maximum price of sorafenib for the indication of second line renal cell cancer was assessed.

Results

Sorafenib value based price was found to be significantly lower compared to its current reference price.

Conclusion

Feasibility of Value Based Pricing is documented and pharmacoeconomic modelling can lead to robust results. Integration of value and affordability in the price are its main advantages which have to be weighed against lack of documentation for several theoretical parameters that influence outcome. Smaller countries such as Cyprus may experience adversities in establishing and sustaining essential structures for this scheme.

Valuing QALYs at the end of life

The possibility of weighting QALYs differently for different groups of patients has been a source of debate. Most recently, this debate has been extended to the relative value of QALYs at the end of life (EoL). The objective of this study is to provide evidence of societal preferences in relation to this topic. Three cross-sectional surveys were conducted amongst Spanish general population (n = 813). Survey 1 compared increases in life expectancy for EoL patients with health gains from temporary health problems. Survey 2 compared health gains for temporary health problems with quality of life gains at the EoL (palliative care). Survey 3 compared increases in life expectancy with quality of life gains, both for EoL patients. Preferences were elicited using Person Trade-Off (PTO) and Willingness to pay (WTP) techniques presenting two different durations of health benefit (6 and 18 months). Health benefits, measured in QALYs, were held constant in all comparisons. In survey 1 mean WTP was higher for life extending treatments than for temporary health problems and the majority of respondents prioritised life extension over temporary health problems in response to the PTO questions. In survey 2 mean WTP was higher for palliative care than for temporary health problems and 83% prioritized palliative care (for both durations) in the PTO questions. In survey 3 WTP values were higher for palliative care than for life extending treatments and more than 60% prioritized palliative care in the PTO questions. Our results suggest that QALYs gained from EoL treatments have a higher social value than QALYs gained from treatments for temporary health problems. Further, we found that people attach greater weight to improvements in quality of life than to life extension at the end of life.

Methods for identifying the cost-effective case definition cut-off for sequential monitoring tests: an extension of Phelps and Mushlin

The arrival of personalized medicine in the clinic means that treatment decisions will increasingly rely on test results. The challenge of limited healthcare resources means that the dissemination of these technologies will be dependent on their value in relation to their cost, i.e., their cost effectiveness. Phelps and Mushlin have described how to optimize tests to meet a cost-effectiveness target. However, when tests are applied repeatedly the case mix of the patients tested changes with each administration, and this impacts upon the value of each subsequent test administration. In this article, we present a modification of Phelps and Mushlin's framework for diagnostic tests; to identify the cost-effective cut-off for monitoring tests. Using the Ca125 test monitoring for relapse in ovarian cancer, we show how the repeated use of the initial cut-off can lead to a substantially increased false-negative rate compared with the monitoring cut-off-over 4% higher than in this example-with the associated harms for individual and population health.

Assessing whether there is a cancer premium for the value of a statistical life

This article estimates whether there is a cancer risk premium for the value of a statistical life using stated preference valuations of cancer risks for a large, nationally representative US sample. The present value of an expected cancer case that occurs after a one decade latency period is $10.85m, consistent with a cancer premium that is 21% greater than the median value of a statistical life estimates for acute fatalities. This cancer premium is smaller than the premium proposed for policy analyses in the UK and the USA. There is also a greater premium for policies that reduce cancer risks to zero and for risk reductions affecting those who perceive themselves to have a greater than average probability of having cancer.

Worker replacement and cost-benefit analysis of life-saving health care programs, a precautionary note

The assumption according to which ill individuals can be replaced at work that underpins the 'friction cost method' (FCM) to value productivity costs has been primarily discussed within the framework of cost-utility analysis. This paper investigates the consequences of this assumption for cost-benefit analysis (CBA). It makes three contributions. First, it provides the first analytical account of the overall consequences of ill worker replacement on social welfare and it analyzes the associated compensation effects within a CBA framework. Second, it highlights a double counting problem that arises when ill worker replacement is assumed in the CBA of life-saving health care programs. To the best of our knowledge, no satisfactory solution to this problem has yet been provided in the literature. Third, this paper suggests and discusses two original ways to address this double counting issue. One consists in adjusting value of a statistical life estimations for the well-being provided by future incomes. Another possibility lies in the estimation of marginal rates of substitution between health and wealth so as to directly monetize the value of life over and above consumption. We show that both solutions raise unresolved questions that should be addressed in future research to enable appropriate use of the FCM in CBA.

Did people "buy" what was "sold"? A qualitative evaluation of a contingent valuation survey information set for gains in life expectancy

A number of stated preferences studies have estimated a monetary value for the gains in life expectancy resulting from pollution control, using a Value of a Life Year (VOLY) approach. However, life expectancy gains are a complex concept and no attempt has been made, to date, to investigate peoples' understanding of what it is they are being asked to value. Past practice has been to focus on the outcome of a policy i.e. a gain to the average person of X months', providing no details on how the individual receives, or experiences this gain, a potentially important attribute to value. This paper sets up and reports the results from a structured debriefing exercise to qualitatively investigate an alternative approach which explicitly emphasises how this gain is delivered (on-going reductions in the risk of death). We find that, for the majority of respondents, the approach is effective in communicating the on-going nature of the gain and reduces or eliminates the use of the (incorrect) heuristic that it is an 'add-on' at the end of life, in poor health. Further refinements are required, however, to communicate the cumulative nature of these risk reductions and the lack of impact on quality of life. The lesson for stated preference studies in general is that structured debriefings can be very useful, highlighting such issues as the persistence of ill-defined attributes and the difficulties that respondents may encounter setting aside their preferences over attributes of the good that should not be included in the valuation.

The value of a QALY: individual willingness to pay for health gains under risk

BACKGROUND

There is an increased interest in the monetary value of a quality-adjusted life-year (QALY). Past studies commonly derived willingness to pay (WTP) for certain future QALY gains. However, obtaining valid WTP per QALY estimates proved to be difficult.

OBJECTIVE

We conducted a contingent valuation study and estimated the individual WTP per QALY under risk. We demonstrate the impact of probability weighting on WTP per QALY estimates in the Netherlands.

RESULTS

Our estimates of the value of a QALY are in the range of €80,000-110,000 when the weighting correction was applied, and €250,500 without correction. The validity of these estimates, applying probability weighting, appears to be good.

CONCLUSIONS

Given the reasonable support for their validity and practical meaningfulness, the estimates derived while correcting for probability weighting may provide valuable input for the debate on the consumption value of health. While decision makers should not apply these estimates without further consideration, since strictly individual valuations may not carry all relevant information and values for societal decision-making, the current estimates may provide a good and informed basis for further discussion and study of this important topic.

Estimating a WTP-based value of a QALY: the 'chained' approach

A major issue in health economic evaluation is that of the value to place on a quality adjusted life year (QALY), commonly used as a measure of health care effectiveness across Europe. This critical policy issue is reflected in the growing interest across Europe in development of more sound methods to elicit such a value. EuroVaQ was a collaboration of researchers from 9 European countries, the main aim being to develop more robust methods to determine the monetary value of a QALY based on surveys of the general public. The 'chained' approach of deriving a societal willingness-to-pay (WTP) based monetary value of a QALY used the following basic procedure. First, utility values were elicited for health states using the standard gamble (SG) and time trade off (TTO) methods. Second, a monetary value to avoid some risk/duration of that health state was elicited and the implied WTP per QALY estimated. We developed within EuroVaQ an adaptation to the 'chained approach' that attempts to overcome problems documented previously (in particular the tendency to arrive at exceedingly high WTP per QALY values). The survey was administered via Internet panels in each participating country and almost 22,000 responses achieved. Estimates of the value of a QALY varied across question and were, if anything, on the low side with the (trimmed) 'all country' mean WTP per QALY ranging from $18,247 to $34,097. Untrimmed means were considerably higher and medians considerably lower in each case. We conclude that the adaptation to the chained approach described here is a potentially useful technique for estimating WTP per QALY. A number of methodological challenges do still exist, however, and there is scope for further refinement.