Cost-per-QALY in the US and Britain

In his OHE Annual Lecture Professor Milt Weinstein compares the use of cost-per-QALY approaches to health care resource allocation in the UK and the US. He notes that the Affordable Care Act prohibits the Patient-Centered Outcomes Research Institute from using the QALY in a threshold for determining access to care.  He explores ten common reasons used in the US to justify the exclusion of cost-effectiveness analysis from the US decision-making process.

One of these is that there is no relation between health care expenditures and health outcomes across US hospitals and geographic regions. He finds that the data is best explained by grouping hospitals according to different “health production functions” reflecting different degrees of underlying efficiency. Cutting spending in less efficient parts of the country is likely to reduce health unless cost-effectiveness analysis is used to increase the use of highly cost-effective interventions and reduce the use of less cost-effective technologies.

However, he notes that the UK’s HTA focus on cost-per-QALY thresholds for decision making faces some legitimate challenges. In particular:

  • Reliance on the EQ-5D system to measure the QALY needs to recognise that important aspects of health are not captured such as fatigue, energy and sexual function;
  • Use of Probabilistic Sensitivity Analysis (PSA) to show uncertainty is not particularly useful unless it is being used to assess if new data can be collected to suggest how a decision may need to be changed. Compared to PSA, deterministic analyses are relatively easy for decision makers to understand, relatively flexible, and more transparent;
  • Cost-effectiveness analysis is only one input to decision making about health resource allocation.

If forced to choose he says Britain has got it closer to right, but Britain may go a little too far in its tendency to virtually enshrine cost per QALY as the basis for decisions.

Professor Weinstein is Henry J. Kaiser Professor of Health Policy and Management, Harvard University School of Public Health, Professor of Medicine at the Harvard Medical School, and Director of the Program on Economic Evaluation of Medical Technology. He is best known for his research on cost-effectiveness of medical practices and for developing methods of economic evaluation and decision analysis in health care.

He is an author of four books and more than 300 papers in peer-reviewed medical, public health, and economics journals. He is an elected member of the Institute of Medicine of the National Academy of Sciences, and a recipient of the Award for Career Achievement from the Society for Medical Decision Making and the Avedis Donabedian Lifetime Achievement Award from the International Society of Pharmacoeconomics and Outcomes Research.

Download the full publication here.

Posted in EQ-5D and PROMs, Health Care Systems, Health Technology Assessment, NICE | Tagged annual lecture