Alternatives to QALY-Based Cost-Effectiveness Analysis for Determining the Value of Prescription Drugs and Other Health Interventions

SCOPE AND PURPOSE: This brief supplements NCD’s 2019 report, Quality-Adjusted Life Years and the Devaluation of Life with a Disability, which examined the design and discriminatory impact of QALY-based cost-effectiveness analysis (Standard CEA) – a method of comparing the cost and effectiveness of two or more healthcare interventions and determining if the value of an intervention justifies its cost. The 2019 report described how use of the QALY in Standard CEA results in undervaluing prescription drugs that extend the lives of people with disabilities, resulting in restricted insurance coverage in countries where it is commonly utilized to inform coverage decisions. The report further described how the discriminatory impact of the QALY on patients overseas led to its prohibition in the United States and to the Affordable Care Act of 2010.  

In this policy brief, NCD describes alternatives to the QALY, aimed at addressing its deficiencies, which have been developed as a result of health economists’ recognition of the ethical concerns and discriminatory aspects of the QALY in Standard CEA regarding people with disabilities. The brief describes these novel methodology alternatives; their strengths and weaknesses; highlights organizations that are using or implementing alternative methodologies for valuing health interventions; and makes recommendations for further research and further development of alternative methodologies.