Cost-Effectiveness Threshold for Healthcare: Justification and Quantification

Abstract

Every public health expenditure, including the one that saves lives or extends life expectancy of particular persons (target population), bears a cost. Although cost-effectiveness analysis (CEA) is routinely performed in health policy, ethical justification of CEA is rarely discussed. Also, there is neither consensus value nor even consensus method for determining cost-effectiveness threshold (CET) for life-extending measures. In this study, we performed ethical analysis of CEA by policy impact assessment based on connection of health and wealth (poorer people have statistically shorter life expectancies) and concluded that CEA is not only a practical but also an ethical necessity. To quantify CET, we used three independent methods: (1) literature survey of analyzing salaries in risky occupations, (2) utilizing Prospect Theory suggesting that people value their lives in monetary terms twice more than their lifetime earnings, and (3) literature survey of the U.S. current legal practice. To the best of our knowledge, nobody applied method (2) to determine CET. The three methods yielded rather similar results with CET about 1.0 ± 0.4 gross domestic product per capita (GDPpc) per quality-adjusted life-year. Therefore, a sum of not higher than 140% GDPpc is statistically sufficient to “purchase” an additional year of life—or, alternatively, to “rob” one year of life if taken away. Therefore, 140% GDP per capita per quality-adjusted life-year should be considered as the upper limit of prudent and ethically justified expenditure on life extension programs.

Does natural and hybrid immunity obviate the need for frequent vaccine boosters against SARS‐CoV‐2 in the endemic phase?

“…Although we present only a rough estimate and not an accurate cost‐effectiveness analysis, such considerations are required for the discussion on the justification of any measures against COVID‐19. 24 , 25 , 26 , 27 Economic evaluations including determining cost‐effectiveness thresholds are also considered an ethical necessity since every public expenditure has unwanted side effects in terms of shortening expenditures and probably life expectancies related to other health problems. 25 , 27 Common cost‐effectiveness thresholds per quality‐adjusted life year (QALY) gained vary significantly across different countries but are approximately 50.000–100.000 US Dollars for high‐income countries—or the gross domestic product (GDP) per capita.…”

“… 24 , 25 , 26 , 27 Economic evaluations including determining cost‐effectiveness thresholds are also considered an ethical necessity since every public expenditure has unwanted side effects in terms of shortening expenditures and probably life expectancies related to other health problems. 25 , 27 Common cost‐effectiveness thresholds per quality‐adjusted life year (QALY) gained vary significantly across different countries but are approximately 50.000–100.000 US Dollars for high‐income countries—or the gross domestic product (GDP) per capita. 25 As shown in Table 3 , in general, the NNTs for vaccinations against SARS‐CoV‐2 are relatively high compared with other interventions such as drugs for heart failure with NNTs of 11–24 to prevent one death, or an NNT of 2 for thoracoabdominal aortic aneurysm repair.…”

“… 25 , 27 Common cost‐effectiveness thresholds per quality‐adjusted life year (QALY) gained vary significantly across different countries but are approximately 50.000–100.000 US Dollars for high‐income countries—or the gross domestic product (GDP) per capita. 25 As shown in Table 3 , in general, the NNTs for vaccinations against SARS‐CoV‐2 are relatively high compared with other interventions such as drugs for heart failure with NNTs of 11–24 to prevent one death, or an NNT of 2 for thoracoabdominal aortic aneurysm repair. 28 , 29 The costs per death averted also tend to be extremely high, except in very old age groups, based on the current cost per dose (approximately $20) and even if the costs were to decrease to $5 per dose.…”

Are Lockdowns Effective in Managing Pandemics?

“…In the case of the COVID-19 crisis management, the extent of human life lost due to lockdowns can be roughly estimated based on the value of about 150% GDP per capita per quality-adjusted life-year (QALY) as the upper limit of prudent expenditure on healthcare and safety [ 40 ]. Yanovskiy et al [ 41 ] quantified the human life loss in Israel: The total cost of lockdowns during the year 01.04.2020–31.03.2021 was estimated as about US$ 30 billion based on (a) the data of Bank of Israel and (b) the Oxford COVID-19 Government Response Tracker; while the Israeli population was about 9.2 million, and GDP per capita—about US $45,000. By dividing 30 billion by 1.5 × 45,000, the estimation of 500,000 QALY lost to lockdowns was obtained.…”

“…To put the above number of 500,000 QALY into proportion, such life loss was found to be the equivalent of life years lost in Israel to cancer for 4 years [ 41 ]. Probably, in other developed countries, the human cost of lockdowns was also comparable with several years of life lost to cancer.…”