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Willingness to pay for a QALY: theoretical and methodological issues
1Health Economics Unit, Institute of Public Health, University of Southern Denmark, Odense, Denmark. dgh@sam.sdu.dk
Pharmacoeconomics
|May 18, 2005
Summary
Establishing a single monetary value for a Quality-Adjusted Life Year (QALY) is theoretically unattainable due to varying individual preferences and economic factors. Addressing income
Area of Science:
- Health Economics
- Decision Analysis
- Welfare Economics
Background:
- Cost-effectiveness analysis (CEA) and cost-benefit analysis (CBA) are distinct economic evaluation methods.
- CEA focuses on maximizing health outcomes, while CBA incorporates individual preferences for health relative to other goods.
- Translating Quality-Adjusted Life Years (QALYs) into monetary units requires a consistent willingness to pay (WTP) per QALY.
Purpose of the Study:
- To explore the theoretical and practical obstacles in establishing a unique monetary value for a QALY.
- To analyze the implications of different normative perceptions in CEA and CBA for QALY valuation.
- To identify factors contributing to the non-constant marginal utility of income and its impact on health valuation.
Main Methods:
- Literature review of arguments concerning the establishment of a unique willingness to pay (WTP) for a QALY.
- Theoretical analysis of the relationship between CEA, CBA, and the concept of QALYs.
- Examination of the role of marginal utility of income in monetary valuation of health gains.
Main Results:
- A single, context-independent willingness to pay (WTP) per QALY is theoretically unattainable.
- Discrepancies between CEA and CBA frameworks, stemming from welfarist versus extra-welfarist perceptions, preclude linear translation.
- Non-constant marginal utility of income, influenced by income level and health status, creates variability in health valuation.
Conclusions:
- Establishing a unique monetary value for a QALY is theoretically impossible, as it would override individual preferences and context-specific valuations.
- While a universal WTP is unattainable, addressing the variance in the marginal utility of income is a solvable problem.
- Ensuring the respondent's marginal utility of income aligns with the financiers' perspective is crucial for accurate WTP estimations.
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