Friday, 14 February 2014

The cost/effectiveness of successful clinical actions

In this second post I want to talk about health care that is considered to be truly effective, despite the fact that it should be noted that there are effective actions not without controversy in their application in the community. At this point I think it’s appropriate to introduce a metric known as QALY (Quality Adjusted Life Year).

What is a QALY?

A QALY is a unit that measures the cost attributable for each year of added life that healthcare intervention is supposed to bring. In the NICE website (National Health and Clinical Excellence, a English National Health Service Agency which supports the health system to provide the best possible care with the best available evidence) there is a suitable explanation for non-epidemiologists on how to calculate a QALY.

How a QALY is calculated
Patient x has a serious, life-threatening condition.
If he continues receiving standard treatment he will live for 1 year and his quality of
  life will be 0.4 (0 or below = worst possible health, 1= best possible health)
If he receives the new drug he will live for 1 year 3 months (1.25 years), 
  with a quality of life of 0.6.
 The new treatment is compared with standard care in terms of the QALYs gained:
Standard treatment: 1 (year's extra life) x 0.4 = 0.4 QALY
New treatment: 1.25 (1 year, 3 months extra life) x 0.6 = 0.75 QALY
  Therefore, the new treatment leads to 0.35 additional QALYs
  (that is: 0.75 -0.4 QALY = 0.35 QALYs).
The cost of the new drug is assumed to be £10,000, standard treatment costs £3000.
  The difference in treatment costs (£7000) is divided by the QALYs gained (0.35) to   
  calculate the cost  per QALY. So the  new treatment would cost £20,000 per QALY.

I think the NICE explanation is very educational (in fact I haven’t found a better one) and can be a good reminder for everyone.

According to NICE, if a treatment costs more than £30,000 ($47,000) it is not considered cost/effective. According to OMS, if a treatment costs between one and three times the income per capita of a country, it can be considered cost/effective. If it costs more than three times it is not cost/effective. If you take into account the article in the New England Journal of Medicine presented later in this article, in the USA the limit of the cost/effectiveness of a QALY would be around $100,000.

Until today, the QALY has served basically to assess the cost/effectiveness attributed to expensive treatments and to the use of new technologies. See for example, in the following table, in which there are QALY values for two chemotherapies for breast cancer, one for pancreatic cancer, one for spinal surgery, one for cardiac defibrillator and, curiously, an unusual one for a preventive technique: a screening for lung cancer with CT for former smokers, of which we must take note of its value ($2.3M):

This table appears in the New England Journal of Medicine article shown below, which aims to put emphasis on the assessment of the cost/effectiveness of health interventions in order to facilitate the health care reform in the USA.

According to this work, the American Health Care System should fight against all practices that are not adding value. I have chosen this article as an example of the extension of the measure of QALY for preventive care practices or standard health care and not only for new treatments. For example, besides the case of screening for lung cancer already mentioned, the article mentions a source that states that annual screening for cervical cancer has a cost of $800,000 per QALY compared to screening every two years, a figure clearly showing that annual screening for cervical cancer isn’t cost/effective, according to the OMS criteria in none of the world's economies.

I also want to present below a summary of a review published in the European Journal of Public Health, so you can see that the cost/effectiveness evaluation in QALY is already reaching many levels of health activity in this case, preventive, albeit still in a reticent manner.


According to John Wennberg’s categories of health care problems introduced in the first blog post, 15% of health activities fall within the range of actions with proven efficacy, although within the content of this second post I want to specify that many of the actions of this category are subject to controversy when a balance between the costs of action and results in social terms is made. An example is the human papilloma virus vaccine, as well as the two screenings for lung and cervical cancer referenced in the text.

Jordi Varela

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