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PharmacoEconomics

, Volume 23, Issue 5, pp 423–432 | Cite as

Willingness to pay for a QALY

Theoretical and methodological issues
Current Opinion

Abstract

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.

Keywords

Marginal Utility Contingent Valuation Health Gain Healthcare Programme Cardinal Utility 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Notes

Acknowledgements

No sources of funding were used to assist in the preparation of this manuscript. The author has no conflicts of interest directly relevant to the contents of this manuscript.

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Copyright information

© Adis Data Information BV 2005

Authors and Affiliations

  1. 1.Health Economics Unit, Institute of Public HealthUniversity of Southern DenmarkOdenseDenmark

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