(2003; 49 pages)
4.4 Cost-utility analysis
Cost-utility analysis is used to determine cost in terms of utilities, especially quantity and quality of life. This type of analysis is controversial because it is difficult to put a value on health status or on an improvement in health status as perceived by different individuals or societies. Unlike cost-benefit analysis, cost-utility analysis is used to compare two different drugs or procedures whose benefits may be different.
Cost-utility analysis expresses the value for money in terms of a single type of health outcome. The ICER in this case is usually expressed as the incremental cost to gain an extra quality-adjusted life-year (QALY). This approach incorporates both increases in survival time (extra life-years) and changes in quality of life (with or without increased survival) into one measure. An increased quality of life is expressed as a utility value on a scale of 0 (dead) to one (perfect quality of life). An increased duration of life of one year (without change in quality of life), or an increase in quality of life from 0.5 to 0.7 utility units for five years, would both result in a gain of one QALY. This allows for easy comparison across different types of health outcome, but still requires value judgements to be made about increases in the quality of life (utility) associated with different health outcomes. The use of incremental cost-utility ratios enables the cost of achieving a health benefit by treatment with a drug to be assessed against similar ratios calculated for other health interventions (e.g. surgery or screening by mammography). It therefore provides a broader context in which to make judgements about the value for money of using a particular drug.