### QALYs AND COST-UTILITY RATIOS-COMPARING ORANGES TO ORANGES, ORANGES TO APPLES

Yesterday’s post introduced the concept of QALYs (Quality-Adjusted Life Years). QALY is a formula for measuring the long-term effectiveness of a healthcare treatment or intervention. QALYs are often combined with a cost factor to assess and compare the relative value of a treatment or intervention. QALYs give healthcare economists and policy makers an important, if somewhat limited, method of valuing the cost and effectiveness of treatments across populations.**KEEP YOUR EYES ON THE COIN**

More examples. The cost of Treatment B for a disease is $50,000 and it yields 5 QALYs. The cost of Treatment A is $70,000 and it yields 6 QALYs. The calculation to compare the cost-utility ratios is:

Cost of Treatment A – Cost of Treatment B

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No. of QALYs produced by Intervention A -

No. of QALYs produced by Intervention B

But before we run the calculation, let’s look at the cost of CALYs for each treatment. Treatment B yields 5 QALYs and costs $50,000. Five CALYs/ $50,000 = $10,000 per CALY.

Treatment A yields 6 QALYs but costs $70,000. Six CALYs/ $70,000 = $11,666 per CALY. So on its face, Treatment B is the more cost effective deal. But it should also be remembered that Treatment B yields 6 CALYs, one more year than Treatment A. Maybe that extra CALY is “worth it”. Let’s see what the cost-utility ratio is and then decide.

$70,000 (cost of treatment A) - $50,000 (cost of treatment B)

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6 QALYs (treatment A) – 5 QALY’s

$20,000

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1

This means it costs $20,000 to yield 1 additional QALY. Cost effective? Who knows. But under current “QALY” cost-utility quidelines”, $20,000 per QALY is often seen as cost-effective. And for reasons we will look at in the next post, anything up to $50,000 per QALY is usually seen a “cost-effective”.

COST-UTLILITY RATIOS DRIVE THE SUN AND WIND IN THE DESERT OF THE REAL!

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