Advocating a Paradigm Shift in Health-State Valuations: The Estimation of Time-Preference Corrected QALY Tariffs

Despite evidence of nonproportional trade-offs in time trade-off exercises and the explicit incorporation of exponential discounting in health technology assessment calculations, quality-adjusted life-year (QALY) tariffs are currently still established under the assumption of linear time preferences.

The aim of this study was to introduce a general method of accommodating for nonlinear time preferences in discrete choice experiment (DCE) duration studies and to evaluate its impact on estimated QALY tariffs.

A parsimonious utility function is proposed that accommodates any discounting function and preserves linear time preferences as a special case. Based on an efficient DCE design and 1775 respondents from a nationally representative scientific household panel, preferences and QALY tariffs for the Dutch SF-6D were estimated while accommodating for nonlinear time preferences via exponential and hyperbolic discounting functions.

When the discount rate was estimated directly, we found strong evidence of nonlinear time preferences (with an exponential and hyperbolic discount rate of 5.7% and 16.5%, respectively). When the discount rate was estimated as a function of health state severity, we found that years lived in better health states are discounted minus years lived in impaired health states. Finally, the best statistical fit was obtained when using a hyperbolic discount function, which resulted in smaller QALY decrements and fewer health states classified as worse than immediate death.

Our results highlight the relevance and even necessity of a paradigm shift in health valuation studies in favor of time-preference corrected QALY tariffs, with potentially important implications for health technology assessment calculations and regulatory decisions.