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Beyond QALYs: Multi-criteria based estimation of maximum willingness to pay for health technologies

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  • Erik Nord

    (Norwegian Institute of Public Health)

Abstract

The QALY is a useful outcome measure in cost-effectiveness analysis. But in determining the overall value of and societal willingness to pay for health technologies, gains in quality of life and length of life are prima facie separate criteria that need not be put together in a single concept. A focus on costs per QALY can also be counterproductive. One reason is that the QALY does not capture well the value of interventions in patients with reduced potentials for health and thus different reference points. Another reason is a need to separate losses of length of life and losses of quality of life when it comes to judging the strength of moral claims on resources in patients of different ages. An alternative to the cost-per-QALY approach is outlined, consisting in the development of two bivariate value tables that may be used in combination to estimate maximum cost acceptance for given units of treatment—for instance a surgical procedure, or 1 year of medication—rather than for ‘obtaining one QALY.’ The approach is a follow-up of earlier work on ‘cost value analysis.’ It draws on work in the QALY field insofar as it uses health state values established in that field. But it does not use these values to weight life years and thus avoids devaluing gained life years in people with chronic illness or disability. Real tables of the kind proposed could be developed in deliberative processes among policy makers and serve as guidance for decision makers involved in health technology assessment and appraisal.

Suggested Citation

  • Erik Nord, 2018. "Beyond QALYs: Multi-criteria based estimation of maximum willingness to pay for health technologies," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 19(2), pages 267-275, March.
    • Handle: RePEc:spr:eujhec:v:19:y:2018:i:2:d:10.1007_s10198-017-0882-x
    DOI: 10.1007/s10198-017-0882-x
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    References listed on IDEAS

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    1. Richardson, Jeff & Sinha, Kompal & Iezzi, Angelo & Maxwell, Aimee, 2012. "Maximising health versus sharing: Measuring preferences for the allocation of the health budget," Social Science & Medicine, Elsevier, vol. 75(8), pages 1351-1361.
    2. Alan Williams, 1997. "Intergenerational Equity: An Exploration of the ‘Fair Innings’ Argument," Health Economics, John Wiley & Sons, Ltd., vol. 6(2), pages 117-132, March.
    3. Erik Nord & Anja Undrum Enge & Veronica Gundersen, 2010. "QALYs: is the value of treatment proportional to the size of the health gain?," Health Economics, John Wiley & Sons, Ltd., vol. 19(5), pages 596-607, May.
    4. Erik Nord, 2015. "Cost-Value Analysis of Health Interventions: Introduction and Update on Methods and Preference Data," PharmacoEconomics, Springer, vol. 33(2), pages 89-95, February.
    5. Stolk, Elly A. & Pickee, Stefan J. & Ament, Andre H.J.A. & Busschbach, Jan J.V., 2005. "Equity in health care prioritisation: An empirical inquiry into social value," Health Policy, Elsevier, vol. 74(3), pages 343-355, November.
    6. J. Richardson, 1991. "Economic Assessment of Health Care: Theory and Practice," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 24(1), pages 4-21, January.
    7. J. Jaime Caro & Erik Nord & Uwe Siebert & Alistair McGuire & Maurice McGregor & David Henry & Gérard de Pouvourville & Vincenzo Atella & Peter Kolominsky‐Rabas, 2010. "The efficiency frontier approach to economic evaluation of health‐care interventions," Health Economics, John Wiley & Sons, Ltd., vol. 19(10), pages 1117-1127, October.
    8. E. Wetering & E. Stolk & N. Exel & W. Brouwer, 2013. "Balancing equity and efficiency in the Dutch basic benefits package using the principle of proportional shortfall," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 14(1), pages 107-115, February.
    9. Ottersen, Trygve & Førde, Reidun & Kakad, Meetali & Kjellevold, Alice & Melberg, Hans Olav & Moen, Atle & Ringard, Ånen & Norheim, Ole Frithjof, 2016. "A new proposal for priority setting in Norway: Open and fair," Health Policy, Elsevier, vol. 120(3), pages 246-251.
    10. Nord, Erik & Johansen, Rune, 2014. "Concerns for severity in priority setting in health care: A review of trade-off data in preference studies and implications for societal willingness to pay for a QALY," Health Policy, Elsevier, vol. 116(2), pages 281-288.
    11. Nord, Erik, 1993. "The trade-off between severity of illness and treatment effect in cost-value analysis of health care," Health Policy, Elsevier, vol. 24(3), pages 227-238, August.
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    Cited by:

    1. Laura Vallejo-Torres & Borja García-Lorenzo & Oliver Rivero-Arias & José Luis Pinto-Prades, 2020. "The societal monetary value of a QALY associated with EQ-5D-3L health gains," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 21(3), pages 363-379, April.
    2. Christian R. C. Kouakou & Thomas G. Poder, 2022. "Willingness to pay for a quality-adjusted life year: a systematic review with meta-regression," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 23(2), pages 277-299, March.

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    More about this item

    Keywords

    QALY; Societal value; Graded willingness to pay; Proportional shortfall; Absolute shortfall; Cost value analysis;
    All these keywords.

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private

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