Measuring the value of life: Exploring a new method for deriving the monetary value of a QALY

Tilling C, Krol M, Tsuchiya A, Brazier J, van Exel J, Brouwer W

Introduction: Economic evaluations of new health technologies now typically produce an incremental cost per Quality Adjusted Life Year (QALY) value. The QALY is a measure of health benefit that combines length of life with quality of life, where quality of life is assessed on a scale where zero represents a health state equivalent to being dead and one represents full health (Weinstein and Stason, 1977). The challenge for decision makers, such as the Treasury, is to determine the appropriate size of the healthcare budget. Bodies, such as the National Institute for Health and Clinical Excellent (NICE) in the U.K., must then determine how much it can afford to pay for a gain of one QALY, while operating under this fixed budget. While there is no fixed cost-effectiveness threshold and each intervention is assessed on a case by case basis (Rawlins and Culyer, 2004), under normal circumstances the threshold will not be below £20,000 and not above £30,000 per QALY (NICE, 2008). Recent research has sought to determine the monetary value individuals place on a QALY to inform the size of the healthcare budget and the level of the cost-effectiveness threshold. This research has predominantly used Willingness to Pay (WTP) approaches (Johannesson and Meltzer 1998, Hirth et al. 2000, Abelson 2003, Johannesson and Johansson 1997, Johnson et al. 1998,