How Much for a Year of Human Life?

£20,000 is England’s answer to the above question – this is the threshold price for a year of healthy life according to NICE. This threshold willingness-to-pay (WTP) is based on the concept of the opportunity cost – the value of the treatment that the index intervention should supplant because it is the next best use of money in terms of health benefit per unit cost. The WTP threshold has been the subject of much investigation in England and remains controversial.

The threshold for low- and middle-income countries (LMICs) is also the subject of much discussion and is usually based on mean per capita GDP – for instance the World Bank states that a healthy life year should be valued at the per capita GDP to be highly cost-effective, or three times the per capita GDP to be cost-effective.[1]

A recent article considers methods to determine thresholds for cost-effective interventions [2]; the WTP threshold described above, benchmarking against an intervention already adopted and league tables. Benchmarks invert the logic – they say if it is used, then it is cost-effective. However, health economics is supposed to be normative, and say that if it is cost-effective, then it should be used.

So we can eliminate benchmarks as a credible method, leaving the WTP threshold and league tables in contention. The problem with the latter is that the relative payback of an intervention varies materially across countries. However, it is based on the realism that budgets are limited and ephemeral, and league tables have been constructed for reference purposes, notably the WHO-Choice list [3] and the Tufts cost-effectiveness registry.[4]

The CLAHRC WM Director’s view is that both the WTP threshold and the league table approach have advantages and disadvantages. So, if you have been to all the trouble to calculate an ICER (Incremental Cost-Effectiveness Ratio), then why not use both methods; compare your results with a threshold and also see how the result compares with alternative interventions in a league table?

— Richard Lilford, CLAHRC WM Director

References:

  1. World Bank. World Development Report 1993: Investing in Health. New York: Oxford University Press. 1993.
  2. Marseille E, Larson B, Kazi DS, Kahn JG, Rosen S. Thresholds for the cost-effectiveness of interventions: alternative approaches. Bull World Health Organ. 2015; 93: 118-24.
  3. Tan-Torres Edejer T, Baltussen R, Adam T, et al. Making Choices in Health: WHO guide to cost-effectiveness analysis. Geneva: World Health Organization. 2003.
  4. Tufts Medical Center. Tufts Cost Effectiveness Analysis Registry. 2013.
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2 thoughts on “How Much for a Year of Human Life?”

  1. What is curious about the NICE threshold is that it is not index-linked: it has been £20,000 per QALY for some years. So health economists should deflate prices to the year it was established, rather than inflate them to current prices, which automatically puts new treatments at a disadvantage (unless they are cost-releasing).

  2. Richard Peto (unattributable) once pointed out to me that killing babies costs very little since you can always have another one and killing old guys (like me) is cost saving since people of my age are a drain on the medical and social services of the state. So the worst thing to do is to kill young adults since society has invested in their education, upbringing, training and health care and the deal is that they have to pay all of this back back by working for the next 45 years. The best thing to do is to kill old guys (like me) as soon as we retire and save very large amounts of money. All of which is just to say that the answer all depends on who is asking the question.

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