Willingness to pay for a quality-adjusted life year: In search of a standard

Cost-benefit analysis (CBA) provides a clear decision rule: undertake an in tervention if the monetary value of its benefits exceed its costs. However, due to a reluctance to characterize health benefits in monetary terms, use rs of cost-utility and cost-effectiveness analyses must rely on arbitrary s tandards (e.g., < $50,000 per QALY) to deem a program "cost-effective." Mor eover, there is no consensus regarding the appropriate dollar value per QAL Y gained upon which to base resource allocation decisions. To address this, the authors determined the value of a QALY as implied by the value-of-life literature and compared this value with arbitrary thresholds for cost-effe ctiveness that have come into common use. A literature search identified 42 estimates of the value of life that were appropriate for inclusion. These estimates were classified by method: human capital (HK), contingent valuati on (CV), revealed preference/job risk (RP-JR) and revealed preference/non-o ccupational safety (RP-S), and by U.S. or non-U.S, origin. After converting these value-of-life estimates to 1997 U.S, dollars, the life expectancy of the study population, age-specific QALY weights, and a 3% real discount ra te were used to calculate the implied Value of a QALY. An ordinary least-sq uares regression of the value of a QALY on study type and national origin e xplained 28.4% of the variance across studies. Most of the explained varian ce was attributable to study type; national origin did not significantly af fect the values. Median values by study type were $24,777 (HK estimates), $ 93,402 (RP-S estimates), $161,305 (CV estimates), and $428,286 (RP-JR estim ates). With the exception of HK, these far exceed the "rules of thumb" that are frequently used to determine whether an intervention produces an accep table increase in health benefits in exchange for incremental expenditures.