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Sunday, September 19, 2021

How Does Cost-Effectiveness Analysis Inform Health Care Decisions?

David D. Kim & Anirban Basu
AMA J Ethics. 2021;23(8):E639-647. 
doi: 10.1001/amajethics.2021.639.


Cost-effectiveness analysis (CEA) provides a formal assessment of trade-offs involving benefits, harms, and costs inherent in alternative options. CEA has been increasingly used to inform public and private organizations’ reimbursement decisions, benefit designs, and price negotiations worldwide. Despite the lack of centralized efforts to promote CEA in the United States, the demand for CEA is growing. This article briefly reviews the history of CEA in the United States, highlights advances in practice guidelines, and discusses CEA’s ethical challenges. It also offers a way forward to inform health care decisions.


Ethical Considerations

There have been a few criticisms on ethical grounds of CEA’s use for decision making. These include (1) controversies associated with the use of QALYs, (2) distributive justice, and (3) incomplete valuation. We discuss each of them in detail here. However, it is worth pointing out that cost-effectiveness evidence is only one of many factors considered in resource allocation decisions. We have found that none of the international HTA bodies bases its decisions solely on cost-effectiveness evidence. Therefore, much of CEA’s criticisms, fair or not, can be addressed through deliberative processes.

QALYs. The lower health utility, or health-related quality of life, assigned to patients with worse health (because of more severe disease, disability, age, and so on) raises distributional issues in using QALYs for resource allocation decisions. For example, because patients with disabilities have a lower overall health utility weight, any extension of their lives by reducing the health burden from one disease “would not generate as many QALYs as a similar extension of life for otherwise healthy people.” This distributional limitation arises because of the multiplicative nature of QALYs, which are a product of life-years and health utility weight. Consequently, the National Council on Disability has strongly denounced the use of QALYs.

Alternatives to QALYs have been proposed. The Institute for Clinical and Economic Review has started using the equal value of life-years gained metric, a modified version of the equal value of life (EVL) metric, to supplement QALYs. In EVL calculations, any life-year gained is valued at a weight of 1 QALY, irrespective of individuals’ health status during the extra year. EVL, however, “has had limited traction among academics and decision-making bodies” because it undervalues interventions that extend life-years by the same amount as other interventions but that substantially improve quality of life. More recently, a health-years-in-total metric was proposed to overcome the limitations of both QALYs and EVL, but more work is needed to fully understand its theoretical foundations.