For more than 30 years, the quality-adjusted life year (QALY) has been regarded as the gold standard for measuring how well medical interventions improve patients’ quality of life (QoL) and/or lengthen their life expectancy in cost-effectiveness analyses (CEAs). For just as long, however, academics and policymakers have been debating the breadth and usefulness of the measure and raising concerns around its impact on equality. In 2008, Amanda Bower, a Senior Contributing Editor to Biotechnology Healthcare, asked a bold question at the beginning of her article titled ‘Is It Time to Take a Harder Look at the QALY?’: “How much should maintaining a person’s health actually cost…is the QALY metric a good academic exercise but more or less meaningless in the real world?” In 2019, an article(1) published by the Wall Street Journal criticised the metric for placing “a dollar value on the health medicines can restore”. In the same year, STAT news(2) asserted that “the US shouldn’t use the ‘QALY’ in drug cost-effectiveness reviews.” Their piece claimed that QALYs disadvantage the disabled, who cannot achieve maximum utility scores because they will never achieve the highest ‘quality of life’, thus limiting their ability to gain QALYs.(2) This would ultimately result in reduced innovation and availability of medicines for people with chronic illnesses and disabilities, as well as publicly-funded healthcare programmes which are often critical for those in these disadvantaged groups.
In 2023, US policymakers decided to try and address these issues. The Protecting Health Care for All Patients Act of 2023 bill(3) was introduced on 24th January 2023 with the sole registered aim of prohibiting “all federal healthcare programs, including the Federal Employees Health Benefits Program, and federally funded state health care programs (e.g., Medicaid) from using prices that are based on quality-adjusted life years (i.e., measures that discount the value of a life based on disability, age, or terminal illness) to determine relevant thresholds for coverage, reimbursements, or incentive programs.” The ensuing debate divided economists, policymakers, and news columnists alike. Forbes published an article(4) in April 2023 which considered the legislation to be a Himalayan blunder, arguing that the QALY is a flexible concept that can accommodate some of the issues cited by QALY critics, including being able to account for severity of disease. However, an article by Sawhney et al., 2023(5) concluded that the QALY was an inappropriate metric of drug and treatment cost-effectiveness not only for disabled persons, but also for the nondisabled. To the authors of this paper, the QALY is not aligned to societal values and does not have the consistent, linear, and symmetrical properties that would make it suitable to use in healthcare decision-making. Towards the end of 2023, the debate seemed to lean towards the position that the QALY framework does not represent how the US wants to value healthcare.
It was therefore no surprise when, on February 7th 2024, the US House of Representatives passed legislation to prohibit federal agencies, Medicare Advantage plans, and Medicaid-managed care organisations from using QALYs and “similar measures” in coverage and payment determinations.(6) With the response from US policymakers being firmly against the QALY, what’s next for valuing quality and length of life in US health technology assessments (HTAs)? To answer this question, we’ll be looking at the institution at the centre of this row – the Centers for Medicare & Medicaid Services (CMS).
- Before this bill was passed, how was the CMS assessing the cost-effectiveness of interventions to establish the maximum fair price (MFP)?
- Now that legislation against the QALY is firmly in place, what alternatives could manufacturers use in their potential submitted evidence?
In MFP price negotiations, the CMS is required by law to consider: 1) unmet need, 2) therapeutic alternatives, 3) comparative effectiveness, 4) financial considerations including research and development (R&D) investment, current unit costs of production and distribution, prior federal funding, and market/revenue/sales data, 5) pending and approved patent applications, and Federal Drug Agency (FDA) exclusivities, applications, and approvals, and 6) prescribing information. Before receiving an initial MFP offer, manufacturers of interventions selected for MFP negotiation can submit relevant data to the CMS. Typically, this has included long-term clinical data, treatment guidelines, real world evidence (RWE) studies versus therapeutic alternatives (with claims analysis), indirect treatment comparisons (of key competitor trials), burden of illness studies, key opinion leader (KOL) and patient statements for therapeutic alternatives, sales data, R&D investment data, and economic evaluations. The CMS has a long-standing policy to not consider cost-effectiveness analyses when making judgements concerning the “reasonable and necessary” eligibility of interventions for Medicare coverage. However, it is unclear whether CEAs have formed part of the ‘other health economic analyses’ submitted as relevant evidence by manufacturers, which are assessed informally by the CMS.
It will likely remain ambiguous what evidence (other than what is explicitly stated) is considered by the CMS, as submitted CEAs as part of the negotiation process are considered proprietary information. Still, if the CMS does informally assess cost-effectiveness evidence, what alternatives can manufacturers turn to now that the QALY has been eighty-sixed?
Alternatives to the QALY:
- Disability-adjusted life year (DALYs) are frequently used by international organisations such as the World Bank and World Health Organization.(7) It is an indicator of the relative impact of illnesses and injuries on healthy life years.(7, 8) Although it uses a similar model – quality of life multiplied by quantity of life – as the QALY, the DALY approach gives greater weight to a year lived by a young adult compared with a child or an elderly person.(7, 8) Although it is useful in quantifying disease burden, it focuses on the illness rather than the intervention.(8)
- Healthy Years Equivalents (HYE) stem directly from the individual’s utility function, to reflect their preferences. A value for a series of health states in a health profile (lifetime utility) is derived from an underlying expected utility curve.(8,9) HYE is not applicable to health state transition models.(8)
- The equal value of Life Years Gained (evLYG), a modified version of the Equal Value of Life (EVL) framework (10), values any gains in length of life at the same level regardless of a treatment’s effect on QoL. Although the evLYG does not discriminate against people with conditions that affect their QoL or undervalue treatments that extend life, it does not fully capture the benefits of new therapies which do improve quality of life.(8)
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- The Health Years in Total (HYT) method was introduced in 2019 by researchers from the University of Washington as a solution to QALY, EVL, and evLYG criticisms.(12) Although HYT disentangles life expectancy impacts from QoL effects to enable patients with lower QoL to fully benefit from interventions that extend life expectancy, it does not address the question of whether populations with higher QALY shortfalls or other equity factors should receive more resources.(11)
- The Generalised Risk-Adjusted QALY (GRA-QALY) framework uses a formula which implies that people with ‘lower quality of life’ are more willing to trade life expectancy for improved quality of life – it therefore accommodates permanent disability in its formulation, as well as a wider range of risk preferences.(11) Although GRA-QALY incorporates the effects of uncertain health outcomes in HTAs, it does not necessarily incorporate health equity issues and it is not yet well understood if the discriminatory attributes of the QALY may continue to be considered in the framework’s formula.(11)
- The Burden Augmented by Deadliness and Impact (BADI) measure as a QALY alternative addresses how a disease reduces life span (deadliness) and increases the negative consequences on quality of life (impact).(11) The BADI is novel and does not yet have practical ways to measure the effectiveness of interventions.(11)
- The Capability Model, which measures wellbeing in capability or potential rather than health utility, is a method that can capture important non-health benefits.(8) However, there are limitations to its use in CEAs, as there is no universally agreed-upon set of ‘capabilities’; existing instruments are still in development.(8)
- The Load Model, at this point still theoretical, represents morbidity rather than death. Minimising suffering rather than maximising health of the population is the objective, so that interventions are not rewarded for extending poor QoL.(8)
In truth, there might not be a single metric capable of addressing the criticisms that the QALY has received, while also being able to effectively capture both benefits in QoL and life expectancy. To slightly corrupt a Winston Churchill quote, the QALY might be the worst measure of health benefits, except for all the others. Nevertheless, the future will likely see decision-makers evaluating a set of assumptions before choosing which instrument or valuation method to use.(13) Is there a sufficient difference between simply using the QALY framework for all assessments and sifting through a basket of alternative methods before choosing an instrument, to justify censoring the QALY? Will the ban of “similar measures” impact the alternatives that may be left in the basket to try to fill the QALY’s big shoes? Will all these have a negative impact on the CMS’s authority (gained from the Inflation Reduction Act) to negotiate the MFP? Only time will tell.
References
1.Roland D. Obscure Model Puts a Price on Good Health—and Drives Down Drug Costs2019 15th February 2024.
2.Smith WS. The U.S. shouldn’t use the ‘QALY’ in drug cost-effectiveness reviews2019 15th February 2024.
3.H.R.485 – Protecting Health Care for All Patients Act of 2023, US House Republicans, 118th Congress (2023-2024) Sess. (2023).
4.Cohen J. Throwing The Baby Out With The Bath Water: Congress Considers Banning The QALY2023 15th February 2024.
5.Sawhney TG, Dobes A, O’Charoen S. QALYs: The Math Doesn’t Work. Journal of Health Economics and Outcomes Research. 2023;10(2):10.
6.Wehrwein P. House Passes QALY Ban Bill2024 15th February 2024.
7.Whitehead SJ, Ali S. Health outcomes in economic evaluation: the QALY and utilities. British medical bulletin. 2010;96(1):5-21.
8.Carlson JJ, Brouwer ED, Kim E, Wright P, McQueen RB. Alternative approaches to quality-adjusted life-year estimation within standard cost-effectiveness models: literature review, feasibility assessment, and impact evaluation. Value in Health. 2020;23(12):1523-33.
9.Mehrez A, Gafni A. Quality-adjusted life years, utility theory, and healthy-years equivalents. Medical decision making. 1989;9(2):142-9.
10.Nord E, Pinto JL, Richardson J, Menzel P, Ubel P. Incorporating societal concerns for fairness in numerical valuations of health programmes. Health economics. 1999;8(1):25-39.
11.NCD. Alternatives to QALY-Based Cost-Effectiveness Analysis for Determining the Value of Prescription Drugs and Other Health Interventions. https://www.ncd.gov/report/alternatives-to-qaly-based-cost-effectiveness-analysis-for-determining-the-value-of-prescription-drugs-and-other-health-interventions/: National Council on Disability; 2022 November 28, 2022.
12.Basu A, Carlson J, Veenstra D. Health years in total: a new health objective function for cost-effectiveness analysis. Value in Health. 2020;23(1):96-103.
13.Frick K, Ballreich J. Evaluating Alternatives to QALYs2021; 9(2):[14-5 pp.].
