Welfare, QALYs, and costs - a comment.

Area of Science:

• Health Economics
• Welfare Theory
• Decision Analysis

Background:

• Cost-effectiveness analysis (CEA) commonly includes healthcare costs and Quality-Adjusted Life-Years (QALYs).
• Debate exists on including survivor consumption and leisure foregone in CEA.
• Inclusion of these costs hinges on whether their benefits are captured within QALYs.

Purpose of the Study:

• To determine the theoretical basis for including or excluding survivor consumption and leisure foregone in CEA.
• To re-evaluate Nyman's argument for excluding these costs based on empirical QALY assessment.
• To propose a theoretical framework for handling these costs in economic evaluations.

Main Methods:

• Theoretical analysis based on welfare economics principles.
• Examination of the consistency between QALYs and utility functions incorporating consumption and leisure.
• Discussion of implications for non-medical costs when survival is unaffected.

Main Results:

• Survivor consumption and leisure costs should be excluded from CEA based on theoretical, not empirical, considerations.
• QALYs are generally inconsistent with utility functions that include consumption and leisure.
• Exclusion of these costs is theoretically justified regardless of their empirical inclusion in QALYs.

Conclusions:

• CEA should theoretically exclude survivor consumption and leisure costs.
• Focus should be on instructing analysts about this exclusion rather than debating empirical inclusion in QALYs.
• These findings have implications for the assessment of non-medical costs in health interventions.