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Education And Debate

Is economic evaluation in touch with society's health values?

BMJ 2004; 329 doi: (Published 18 November 2004) Cite this as: BMJ 2004;329:1233

Rapid Response:

Diminishing Returns on Complex Calculations of QALY

Joanna Coast (1) quotes the paper by Drammond et al to shown that
decision makers find the concepts behind QALYs difficult to understand
(2). As if to solve this and other problems with QALY, she suggests an
alternative route ‘where outcome is based on QALYs formed from a five
dimension quality of life scale’. This so complex that the author gets
tied up in knots while making the calculations in the illustrative-case.
The purpose of this letter is not to detract from the brilliance of the
tool suggested by the author, but only to correct the error in the
illustrative case published. There is also another dimension to the
problem of calculating of cost of QALY. We will deal briefly with this in
the concluding paragraph

In the illustrative case described by Joanna Coast, the cost of
treating the hospitalised patient at home (home care) was £1200 in excess
of the cost of treating the condition in hospital. Either way, the mean
number of QALYs gained is the same (0.02). According to the author this
represents in an incremental-cost-per-QALY of £60,000 (If home care costs
£1200 extra, and the QALY achieved is 0.02. then, to achieve 1.0 QALY, the
cost is 1200 multiplied by 1 divided by 0.02 = £60,000.)

This argument, unfortunately, is fallacious. £60,000 would not yield
one QALY. There was no improvement in QALY for the extra expenditure of £
1200. In essence this was so much money down the drain. Pouring more
money (£60,000) down the same drain, is not going to improve QALY either.
We need to be told the ‘total cost of care’ to achieve the 0.02 QALY,
before we can calculate the cost of 1.0 QALY. The incremental cost of home
care did not yield any increase in QALY and so cannot be used to make the

Coast is right in drawing attention to the pseudoscientific aura
around economic evaluation that ‘camouflages critical weaknesses in
current techniques’. We would like to draw attention to another facet of
QALY. We believe the problem with QALY is not it’s complexity but its lack
of sophistication. As understood now, the simplistic model for QALY
assumes the relationship between ‘money spent’ and QALY, to be linear and
directly proportional. This assumption is false. If I spent £ 50,000 for a
renal transplant and the resultant QALY is 0.5, it does not follow that if
I spent twice the amount (£ 100,000), my QALY would become 1. QALY obeys
the economist’s rule-of-diminishing-returns. Given that decision makers
already find the concepts behind QALY difficult to understand (2) it is
likely, there will be little demand for more complex models that
incorporates the factor of diminishing returns.


1. Coast J. Is economic evaluation in touch with society's health
values? BMJ 2004;329:1233-1236

2. Drummond M, Brown R, Fendrick AM, Fullerton P, Neumann P, Taylor
R. Use of pharmacoeconomics information—report of the ISPOR task force on
use of pharmacoeconomic/health economic information in health-care
decision making. Value Health 2003;6: 407-16

Competing interests:
None declared

Competing interests: No competing interests

25 November 2004
Jacob M. Puliyel
Consultant Pediatrician
Sujith K Dhanasiri
West Middlesex University Hospital, Middlesex TW7 6AF