How Much is a Year of Your Life Worth?

A few days ago I published a post which was a view of the current situation in the UK. One of the issues mentioned by the contributor was the parlous state of their socialized medical system called the National Heath Service, (NHS). Because of the impending legislation to implement a similar disaster here I thought that American readers may be interested in one aspect, namely the rationing of proven prescription drugs.

The UK has a body called the National Institute for Health and Clinical Excellence (NICE) which reviews treatments to decide which treatments the NHS should pay for. A new drug has to fit certain criteria and if it doesn’t, whether it’s lifesaving or not, NICE won’t approve it and the NHS won’t dispense it.

NICE uses a metric called “quality-adjusted life year" (QALY), which grades a person’s health-related quality of life from 0 to 1. Say a new drug for a previously untreatable condition comes on the market and is shown to improve a patient’s quality of life from 0.5 to 0.7 on the scale. Let’s also say that actuarial data suggests that a patient on the drug can expect to live an average of 15 years following the new treatment. Taking the new drug thus earns the patient 3 QALYs (15 years multiplied by the 0.2 gain in quality of life). If the treatment costs $15,000 over the period then the cost per QALY is $5000. Still with me? Isn’t it fun to see your pain and suffering and even your very life itself being reduced to “accountant speak”?

Taking its lead from Britain’s Department for Transport – which has a cost-per-life saved threshold for new-road schemes of about $2.2 million per life, or about $45,000 per life year gained – NICE will not approve a drug that costs more than this number.

And so there you have it!

In the meantime, take 2 aspirin and call your CPA in the morning!