Is it really possible to build a bridge between cost-benefit analysis and cost-effectiveness analysis?

Harms and Benefits of Cancer Screening

In recommending and offering screening, health services make a health claim ('it's good for you'). This article considers ethical aspects of establishing the case for cancer screening, building a service programme, monitoring its operation, improving its quality and integrating it with medical progress. The value of (first) screening is derived as a function of key parameters: prevalence of the target lesion in the detectable pre-clinical phase, the validity of the test and the respective net utilities or values attributed to four health states-true positives, false positives, false negatives and true negatives. Decision makers as diverse as public regulatory agencies, medical associations, health insurance funds or individual screenees can legitimately come up with different values even when presented with the same evidence base. The main intended benefit of screening is the reduction of cause-specific mortality. All-cause mortality is not measurably affected. Overdiagnosis and false-positive tests with their sequelae are the main harms. Harms and benefits accrue to distinct individuals. Hence the health claim is an invitation to a lottery with benefits for few and harms to many, a violation of the non-maleficence principle. While a public decision maker may still propose a justified screening programme, respect for individual rights and values requires preference-sensitive, autonomy-enhancing educational materials-even at the expense of programme effectiveness. Opt-in recommendations and more 'consumer-oriented' qualitative research are needed.

Comparing the Noncomparable: The Need for Equivalence Measures That Make Sense in Health-Economic Evaluations

BACKGROUND

The popularity of quality-adjusted life years (QALYs) has been resistant to concerns about validity and reliability. Utility-theoretic outcome equivalents are widely used in other areas of applied economics. Equivalence values can be derived for time, money, risk, and other metrics. These equivalence measures preserve all available information about individual preferences and are valid measures of individual welfare changes.

OBJECTIVE

The objective of this study was to derive alternative generalized equivalence measures from first principles and illustrate their application in an empirical comparative-effectiveness example.

METHODS

We specify a general-equilibrium model incorporating neoclassical utility functions, health production function, severity-duration preferences, and labor-market tradeoff function. The empirical implementation takes advantage of discrete-choice experiment methods that are widely accepted in other areas of applied economics and increasingly in health economics. We illustrate the practical significance of restrictive QALY assumptions using comparative-effectiveness results based on both QALYs and estimates of welfare-theoretic time-equivalent values for anti-tumor necrosis factor and prolonged corticosteroid treatments for Crohn's disease in three distinct preference classes.

RESULTS

The QALY difference between the two treatments is 0.2 months, while time-equivalent values range between 0.5 and 1.3 months for aggregate and class-specific differences. Thus, the QALY-based analysis understates welfare-theoretic values by 60%-85%.

CONCLUSION

These results suggest that using disease-specific equivalence values offer a meaningful alternative to QALYs to compare global outcomes across treatments. The equivalence values approach is consistent with principles of welfare economics and offers several features not represented in QALYs, including accounting for preference nonlinearities in disease severity and duration, inclusion of preference-relevant nonclinical healthcare factors, representing preferences of clinically-relevant patient subpopulations, and including utility losses related to risk aversion.

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.

Assessment of the societal and individual preferences for fertility treatment in Australia: study protocol for stated preference discrete choice experiments

INTRODUCTION

In Australia, societal and individual preferences for funding fertility treatment remain largely unknown. This has resulted in a lack of evidence about willingness to pay (WTP) for fertility treatment by either the general population (the funders) or infertile individuals (who directly benefit). Using a stated preference discrete choice experiment (SPDCE) approach has been suggested as a more appropriate method to inform economic evaluations of fertility treatment. We outline the protocol for an ongoing study which aims to assess fertility treatment preferences of both the general population and infertile individuals, and indirectly estimate their WTP for fertility treatment.

METHODS AND ANALYSIS

Two separate but related SPDCEs will be conducted for two population samples-the general population and infertile individuals-to elicit preferences for fertility treatment to indirectly estimate WTP. We describe the qualitative work to be undertaken to design the SPDCEs. We will use D-efficient fractional experimental designs informed by prior coefficients from the pilot surveys. The mode of administration for the SPDCE is also discussed. The final results will be analysed using mixed logit or latent class model.

ETHICS AND DISSEMINATION

This study is being funded by the Australian National Health and Medical Research Council (NHMRC) project grant AP1104543 and has been approved by the University of New South Wales Human Research Ethics Committee (HEC 17255) and a fertility clinic's ethics committee. Findings of the study will be disseminated in peer-reviewed journals and presented at various conferences. A lay summary of the results will be made publicly available on the University of New South Wales National Perinatal Epidemiology and Statistics Unit website. Our results will contribute to the development of an evidence-based policy framework for the provision of cost-effective and patient-centred fertility treatment in Australia.

Exploring a new method for deriving the monetary value of a QALY

Several studies have sought to determine the monetary value of health gains expressed as quality adjusted life years (QALYs) gained, predominantly using willingness to pay approaches. However, willingness to pay has a number of recognized problems, most notably its insensitivity to scope. This paper presents an alternative approach to estimate the monetary value of a QALY, which is based on the time trade-off method. Moreover, it presents the results of an online study conducted in the Netherlands exploring the feasibility of this novel approach. The results seem promising, but also highlight a number of methodological problems with this approach, most notably nontrading and the elicitation of negative values. Additional research is necessary to try to overcome these problems and to determine the potential of this new approach.

Welfarism versus extra-welfarism: can the choice of economic evaluation approach impact on the adoption decisions recommended by economic evaluation studies?

A long-running debate surrounds the equivalence of the welfarist and extra-welfarist approaches to economic evaluation. There is a growing belief that the extra-welfarist approach may not necessarily provide all the information that decisionmakers require in certain contexts, e.g. evaluation of complex interventions. As the number of these interventions being evaluated increases, it is crucial that the most appropriate economic evaluation approach is used to enable decisionmakers to be confident in their adoption decisions. We conducted a literature review to evaluate the potential for the choice of economic evaluation approach to impact on the adoption decisions recommended by economic evaluation studies. We found that for every five studies applying both approaches, one shows limited or no concordance in economic evaluation results: the different approaches suggest conflicting adoption decisions, and there is no pattern to which approach provides the most convincing adoption evidence. Only one study in ten indicates which results will best inform adoption decisions. We conclude that the choice of approach can significantly impact on the adoption decisions recommended by economic evaluation studies, with conflicting results creating confusion over whether or not interventions provide good value for money. Health economists rarely provide sufficient guidance to decisionmakers to alleviate this confusion.

A systematic review of studies eliciting willingness-to-pay per quality-adjusted life year: does it justify CE threshold?

BACKGROUND

A number of studies have been conducted to estimate willingness to pay (WTP) per quality-adjusted life years (QALY) in patients or general population for various diseases. However, there has not been any systematic review summarizing the relationship between WTP per QALY and cost-effectiveness (CE) threshold based on World Health Organization (WHO) recommendation.

OBJECTIVE

To systematically review willingness-to-pay per quality-adjusted-life-year (WTP per QALY) literature, to compare WTP per QALY with Cost-effectiveness (CE) threshold recommended by WHO, and to determine potential influencing factors.

METHODS

We searched MEDLINE, EMBASE, Psyinfo, Cumulative Index to Nursing and Allied Health Literature (CINAHL), Center of Research Dissemination (CRD), and EconLit from inception through 15 July 2014. To be included, studies have to estimate WTP per QALY in health-related issues using stated preference method. Two investigators independently reviewed each abstract, completed full-text reviews, and extracted information for included studies. We compared WTP per QALY to GDP per capita, analyzed, and summarized potential influencing factors.

RESULTS

Out of 3,914 articles founded, 14 studies were included. Most studies (92.85%) used contingent valuation method, while only one study used discrete choice experiments. Sample size varied from 104 to 21,896 persons. The ratio between WTP per QALY and GDP per capita varied widely from 0.05 to 5.40, depending on scenario outcomes (e.g., whether it extended/saved life or improved quality of life), severity of hypothetical scenarios, duration of scenario, and source of funding. The average ratio of WTP per QALY and GDP per capita for extending life or saving life (2.03) was significantly higher than the average for improving quality of life (0.59) with the mean difference of 1.43 (95% CI, 1.81 to 1.06).

CONCLUSION

This systematic review provides an overview summary of all studies estimating WTP per QALY studies. The variation of ratio of WTP per QALY and GDP per capita depended on several factors may prompt discussions on the CE threshold policy. Our research work provides a foundation for defining future direction of decision criteria for an evidence-informed decision making system.

A multi-criteria decision analysis perspective on the health economic evaluation of medical interventions

A standard practice in health economic evaluation is to monetize health effects by assuming a certain societal willingness-to-pay per unit of health gain. Although the resulting net monetary benefit (NMB) is easy to compute, the use of a single willingness-to-pay threshold assumes expressibility of the health effects on a single non-monetary scale. To relax this assumption, this article proves that the NMB framework is a special case of the more general stochastic multi-criteria acceptability analysis (SMAA) method. Specifically, as SMAA does not restrict the number of criteria to two and also does not require the marginal rates of substitution to be constant, there are problem instances for which the use of this more general method may result in a better understanding of the trade-offs underlying the reimbursement decision-making problem. This is illustrated by applying both methods in a case study related to infertility treatment.

The human and economic cost of hidden hunger

BACKGROUND

Micronutrient malnutrition is a public health problem in many developing countries. Its negative impact on income growth is recognized in principle, but there are widely varying estimates of the related economic cost.

OBJECTIVE

To discuss available studies that quantify the cost of micronutrient malnutrition, and to develop an alternative framework and apply it to India.

METHODS

Detailed burden of disease calculations are used to estimate the economic cost of micronutrient malnutrition based on disability-adjusted life years (DALYs) lost.

RESULTS

The short-term economic cost of micronutrient malnutrition in India amounts to 0.8% to 2.5% of the gross domestic product.

CONCLUSIONS

Although the results confirm that micronutrient malnutrition is a huge economic problem, the estimates are lower than those of most previous studies. The differences may be due to differences in underlying assumptions, quality of data, and precision of calculation, but also to dynamic interactions between nutrition, health, and economic productivity, which are difficult to capture. Clear explanation of all calculation details would be desirable for future studies in order to increase credibility and transparency.

Burden of micronutrient deficiencies by socio-economic strata in children aged 6 months to 5 years in the Philippines

Background

Micronutrient deficiencies (MNDs) are a chronic lack of vitamins and minerals and constitute a huge public health problem. MNDs have severe health consequences and are particularly harmful during early childhood due to their impact on the physical and cognitive development. We estimate the costs of illness due to iron deficiency (IDA), vitamin A deficiency (VAD) and zinc deficiency (ZnD) in 2 age groups (6–23 and 24–59 months) of Filipino children by socio-economic strata in 2008.

Methods

We build a health economic model simulating the consequences of MNDs in childhood over the entire lifetime. The model is based on a health survey and a nutrition survey carried out in 2008. The sample populations are first structured into 10 socio-economic strata (SES) and 2 age groups. Health consequences of MNDs are modelled based on information extracted from literature. Direct medical costs, production losses and intangible costs are computed and long term costs are discounted to present value.

Results

Total lifetime costs of IDA, VAD and ZnD amounted to direct medical costs of 30 million dollars, production losses of 618 million dollars and intangible costs of 122,138 disability adjusted life years (DALYs). These costs can be interpreted as the lifetime costs of a 1-year cohort affected by MNDs between the age of 6–59 months. Direct medical costs are dominated by costs due to ZnD (89% of total), production losses by losses in future lifetime (90% of total) and intangible costs by premature death (47% of total DALY losses) and losses in future lifetime (43%). Costs of MNDs differ considerably between SES as costs in the poorest third of the households are 5 times higher than in the wealthiest third.

Conclusions

MNDs lead to substantial costs in 6-59-month-old children in the Philippines. Costs are highly concentrated in the lower SES and in children 6–23 months old. These results may have important implications for the design, evaluation and choice of the most effective and cost-effective policies aimed at the reduction of MNDs.

Axiomatic foundations for cost-effectiveness analysis

We show that individual utilities can be measured in units of healthy life years. Social preferences over these life metric utilities are assumed to satisfy the Pareto principle, anonymity, and invariance to a change in origin. These axioms generate a utilitarian social welfare function implying the use of cost-effectiveness analysis in ordering health projects, based on maximizing the healthy years equivalents gained from a fixed health budget. For projects outside the health sector, our cost-effectiveness axioms imply a form of cost-benefit analysis where both costs and benefits are measured in equivalent healthy life years.

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.

Balancing equity and efficiency in the Dutch basic benefits package using the principle of proportional shortfall

Economic evaluations are increasingly used to inform decisions regarding the allocation of scarce health care resources. To systematically incorporate societal preferences into these evaluations, quality-adjusted life year gains could be weighted according to some equity principle, the most suitable of which is a matter of frequent debate. While many countries still struggle with equity concerns for priority setting in health care, the Netherlands has reached a broad consensus to use the concept of proportional shortfall. Our study evaluates the concept and its support in the Dutch health care context. We discuss arguments in the Netherlands for using proportional shortfall and difficulties in transitioning from principle to practice. In doing so, we address universal issues leading to a systematic consideration of equity concerns for priority setting in health care. The article thus has relevance to all countries struggling with the formalization of equity concerns for priority setting.

Disentangling WTP per QALY data: different analytical approaches, different answers

A large random sample of the Danish general population was asked to value health improvements by way of both the time trade-off elicitation technique and willingness-to-pay (WTP) using contingent valuation methods. The data demonstrate a high degree of heterogeneity across respondents in their relative valuations on the two scales. This has implications for data analysis. We show that the estimates of WTP per QALY are highly sensitive to the analytical strategy. For both open-ended and dichotomous choice data we demonstrate that choice of aggregated approach (ratios of means) or disaggregated approach (means of ratios) affects estimates markedly as does the interpretation of the constant term (which allows for disproportionality across the two scales) in the regression analyses. We propose that future research should focus on why some respondents are unwilling to trade on the time trade-off scale, on how to interpret the constant value in the regression analyses, and on how best to capture the heterogeneity in preference structures when applying mixed multinomial logit.

The monetary value of a life year: evidence from a qualitative study of treatment costs

A small number of studies have provided suggestive evidence that the general public rejects the idea of giving higher priority to low-cost patients, in the context of a limited budget, in order to maximise health benefits. The study reported here used semi-structured group discussions to investigate the normative bases of such views among the Australian public. Discussion groups help participants reflect critically upon their own reasoning processes and go some way towards revealing underlying values rather than unreflective preferences. As a part of the exercise, participants were asked to allocate a hospital budget. After discussion and deliberation only three out of 41 chose to allocate all of the money to the low-cost patients. Reasons were not based on conceptual confusion or lack of insight into the implications of the different strategies, but rather on views about fairness, including the importance of giving all groups a 'chance' of being treated and of not removing 'hope' from high-cost patients. The results suggest that as costs rise people are willing to pay more than the minimum cost of a quality-adjusted life year for equity reasons, indicating that caution must be exercised in estimating a single monetary value for a QALY.

Willingness to pay for a quality-adjusted life-year: the individual perspective

OBJECTIVE

The aim of this study was to elicit the individual willingness to pay (WTP) for a quality-adjusted life-year (QALY).

METHODS

In a Web-based questionnaire containing contingent valuation exercises, respondents valued health changes in five scenarios. In each scenario, the respondents first valued two health states on a visual analog scale (VAS) and expressed their WTP for avoiding a decline in health from the better health state to the worse, using a payment scale followed by a bounded open contingent valuation question.

ANALYSIS

WTP per QALY was calculated for QALY gains calculated using VAS valuations, as well as the Dutch EQ-5D tariffs, the two steps in the WTP estimations and each scenario. Heterogeneity in WTP per QALY ratios was examined from the perspective of: 1) household income; and 2) the level of certainty in WTP indicated by respondents. Theoretical validity was analyzed using clustered multivariate regressions.

RESULTS

A total of 1091 respondents, representative of the Dutch population, participated in the survey. Mean WTP per QALY was € 12,900 based on VAS valuations, and € 24,500 based on the Dutch EuroQoL tariffs. WTP per QALY was strongly associated with income, varying from € 5000 in the lowest to € 75,400 in the highest income group. Respondents indicating higher certainty exhibited marginally higher WTP. Regression analyses confirmed expected relations between WTP per QALY, income, and other personal characteristics.

CONCLUSION

  Individual WTP per QALY values elicited in this study are similar to those found in comparable studies. The use of individual valuations in social decision-making deserves attention, however.

Data Quality Assessment for In Silico Methods: A Survey of Approaches and Needs

As indicated in Chapter 3, there are a large number of potential sources of data now available for modelling purposes. These range from historical literature references for a few compounds to highly curated databases of hundreds of thousands of compounds, available via the internet. Before including any data in an in silico model, the question of data quality must be addressed. Although it is difficult to define the quality of data in absolute terms, it is possible to assess the suitability of data for a given purpose. There are many reasons for variability within data and the degree of error that is acceptable for one model may not be the same as for another. For example generating a global model intended to pre-screen large numbers of compounds does not require the same degree of accuracy as performing an individual risk assessment for a chemical of interest. In this chapter, sources of data variability and error will be discussed and formal methods to score data quality, such as use of the Klimisch criteria, will be described. Examples of data quality issues will be given for specific endpoints relating to both environmental and human health effects. Mathematical approaches (Dempster-Schafer theory and Bayesian networks) demonstrating how this information relating to confidence in the data can be incorporated into in silico models is also discussed.

Contingent valuation: what needs to be done?

Contingent valuation (CV) has been argued to have theoretical advantages over other approaches for benefit valuation used by health economists. Yet, in reality, the technique appears not to have realised these advantages when applied to health-care issues, such that its influence in decision-making at national levels has been non-existent within the health sector. This is not a result of a lack of methodological work in the area, which has continued to flourish. Rather, it is a result of such activities being undertaken in a rather uncoordinated and unsystematic fashion, leading CV to be akin to a 'ship without a sail'. This paper utilises a systematic review of the CV literature in health to illustrate some important points concerning the conduct of CV studies, before providing a comment on what the remaining policy and research priorities are for the technique, and proposing a guideline for such studies. It is hoped that this will initiate some wider and rigorous debate on the future of the CV technique in order to make it seaworthy, give it direction and provide the right momentum.

Review: the net benefits of depression management in primary care

Depression is often diagnosed and treated in primary care settings. Organizational and systems interventions that restructure primary care practices and train staff have been shown to be cost-effective strategies for treating depression. Funders are increasingly calling for a cost-benefit assessment of such programs. In this study, the authors review existing cost-effectiveness studies of primary care depression treatments, classify them into categories, translate the results into net benefit terms, and assess whether more costly programs generate greater net benefit. The authors find that interventions that provide training to primary care teams in how to manage depression most consistently produce net benefits, with more costly interventions of this type generating larger net benefits than less costly interventions. Collaborative care interventions, which add specialized staff to primary care practices, and therapy interventions, in which clinicians are trained to provide therapy, also generate net social benefits at conventional valuations of quality-adjusted life years.

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

Debate about the monetary value of a quality-adjusted life year (QALY) has existed in the health economics literature for some time. More recently, concern about such a value has arisen in UK health policy. This paper reports on an attempt to 'model' a willingness-to-pay-based value of a QALY from the existing value of preventing a statistical fatality (VPF) currently used in UK public sector decision making. Two methods of deriving the value of a QALY from the existing UK VPF are outlined: one conventional and one new. The advantages and disadvantages of each of the approaches are discussed as well as the implications of the results for policy and health economic evaluation methodology.

Trying to estimate a monetary value for the QALY

In this paper we study the feasibility of estimating a monetary value for a QALY (MVQ). Using two different surveys of the Spanish population (total n = 892), we consider whether willingness to pay (WTP) is (approximately) proportional to the health gains measured in QALYs. We also explore whether subjects' responses are prone to any significant biases. We find that the estimated MVQ varies inversely with the magnitude of health gain. We also find two other (ir)regularities: the existence of ordering effects; and insensitivity of WTP to the duration of the period of payment. Taken together, these effects result in large variations in estimates of the MVQ. If we are ever to obtain consistent and stable estimates, we should try to understand better the sources of variability found in the course of this study.

Longevity bias in cost-effectiveness analysis

We use a simple lifetime utility maximization model to study the problem of medical resource allocation. This model leads to a welfare specification with a QALY (quality-adjusted life-year) component that captures an individual's preferences over both life expectancy and health status. The goal of medical cost-effectiveness analysis (CEA) is characterized as maximizing the QALY measure for a given total medical expenditure. We show that the CEA with such a goal has a longevity bias: the CEA-based division of a given total medical expenditure between extending life and improving health gives the former a larger share than is called for by welfare maximization.

On the aggregation of health status measures

In the present paper, we address the problem of finding conditions under which aggregation of individual health status measurements (e.g. QALYs) is meaningful in the sense that there is a universal unit of measurement for health. The problem is studied in a model where different aspects of health take the form of Lancasterian characteristics to be produced by the individuals using commodities obtained in the market. For a meaningful unit of measurement to exist, marginal rates of substitution between different aspects of health should not differ among individuals, and for this to happen in an equilibrium of the economy considered, certain assumptions of separability (of technology and/or preferences) must be satisfied. This means that universal measures of health will be meaningful only if there are not too many spillovers in achieving different aspects of health.

Can we estimate the ‘social’ value of a QALY?

There is growing interest in estimating the 'societal' willingness to pay (WTP) for a quality adjusted life year (QALY) to help public health system decision-makers determine whether a health care programme should/not be undertaken. However, there is a lack of clarity in this debate concerning four core issues: (i) is 'social' WTP simply the sum of 'individual' WTP; (ii) will 'individual' WTP map directly into 'social' WTP; (iii) is 'personal' income the appropriate budget constraint; (iv) should WTP be adjusted for ability to pay? This paper outlines the relevance and importance of each of these issues in the hope of encouraging a wider debate on the core issues that empirical studies will have to explore to discover whether such a value may be obtained.

Empiricism, ethics and orthodox economic theory: what is the appropriate basis for decision-making in the health sector?

Economics is commonly defined in terms of the relationship between people's unlimited wants and society's scarce resources. The definition implies a central role for an understanding of what people want, i.e. their objectives. This, in turn, suggests an important role for both empirical research into people's objectives and debate about the acceptability of the objectives. In contrast with this expectation, economics has avoided these issues by the adoption of an orthodoxy that imposes objectives. However evidence suggests, at least in the health sector, that people do not have the simple objectives assumed by economic theory. Amartya Sen has advocated a shift from a focus on "utility" to a focus on "capabilities" and "functionings" as a way of overcoming the shortcomings of welfarism. However, the practicality of Sen's account is threatened by the range of possible "functionings", by the lack of guidance about how they should be weighted, and by suspicions that they do not capture the full range of objectives people appear to value. We argue that "empirical ethics", an emerging approach in the health sector, provides important lessons on overcoming these problems. Moreover, it is an ethically defensible methodology, and yields practical results that can assist policy makers in the allocation of resources.

Willingness to pay for a QALY: theoretical and methodological issues

What is a QALY worth in monetary units? This paper presents the main arguments in the literature regarding the obstacles involved in establishing one unique willingness to pay (WTP) estimate for the value of a QALY. To directly translate QALYs into monetary units, and in this manner translate existing and forthcoming cost-effectiveness analyses (CEA) to cost-benefit analyses (CBA), it is necessary that one unique WTP per QALY can be established irrespective of context-specific characteristics such as severity of illness, magnitude of health gain, patient characteristics, etc. Because CEA and CBA are two methods of economic evaluation that are based on two very different normative perceptions of the role of health versus other goods in society, the task of performing a linear translation from QALYs to WTP is theoretically unattainable. CBA is based on the welfarist perception that the welfare associated with health is measured by way of individual preferences for health outcomes relative to other goods in society. In contrast, CEA is based on the extra-welfarist notion, which focuses on maximising health and not welfare, and suppresses any variation across income/social groups in utility derived from improvements in health. Another obstacle to one unique WTP per QALY value is that marginal utility of income is non-constant, and a function of income level and possibly health status. When marginal utility of income varies across individuals as well as contexts, measuring the value of health in monetary units may result in valuations of health increments that are very different from valuations retrieved had another unit of measure been applied. In conclusion, from a theoretical point of view, establishing one unique WTP cannot be attained. Applying one sole WTP per QALY value will entail overriding individual preferences such as diminishing marginal utility of health and potential differences in the value of incremental health across population groups. However, one problem that can, and should, be overcome when seeking to establish a monetary value for a QALY is the problem of variance in the marginal utility of income. The importance of applying the appropriate perspective when formulating WTP questions to ensure that the marginal utility of income of the respondents equals that of the financiers of the costs invested to produce the health gains should not be overlooked.

Anti-social welfare functions: a reply to Hansen et al

We could reasonably expect society to give at least the same weight to the marginal utility of the poor as to the rich, and to the marginal utility of the ill as compared to the healthy. Whilst Hansen et al. [Journal of Health Economics (2004)], may be said to link CEA and CBA within a welfarist framework, the assumptions they require are inconsistent with these types of ethical preferences. Thus, the degree to which they employ a reasonable social welfare function is doubtful. This paper argues that any link between CEA and CBA will occur not within a welfarist framework but instead within a non-welfarist one in which it is unlikely that CBA results could be easily transformed into cost-effectiveness ratios.

On the possibility of a bridge between CBA and CEA: comments on a paper by Dolan and Edlin

In a recent work by Dolan and Edlin, it is concluded that no link can be established between cost-benefit analysis (CBA) and cost-effectiveness analysis (CEA). However, the conclusion seems to depend rather heavily on what is understood by a link between CBA and CEA as well as on the exact meaning of the latter two terms. We argue that there is at least one approach to CBA and CEA in which the two are very intimately linked. On the other hand, the limitations in the access to preference information has consequences for the kind of questions that can be meaningfully addressed in both CBA and CEA.

Adjusting to changes in health: implications for cost-effectiveness analysis

This article introduces a model in which individuals incur adjustment costs associated with adaptations made following changes in their health. With adjustment costs, patients' preferences for health states depend on their initial health in such a way that improvements have lower values than corresponding deteriorations. Improvement and deterioration must therefore be treated asymmetrically in CEA. The inclusion of adjustment costs also has other consequences. It produces a more stringent CEA criterion, and may affect the relative rankings of interventions. In addition, when health is multi-dimensional, and adjustment costs are incorporated, we show that a consensus on even ordinal rankings of health states becomes impossible.