Putting a price on treatment

Understanding the Quality Adjusted Life Years measurement (QALY)

Health care is changing more rapidly than at any time in history. It would be impossible for a state funded healthcare system to provide all things to all people. So that they can make choices in a theoretical way the National Health Service having been using a tool for some years called the QALY system. QALY stands for Quality Adjusted Life Year and does exactly that; it looks at not only how much longer the treatment will allow you to live, but more importantly how it improves the life you have.

The way they do that is to assess how you are living at the moment. If you are in perfect health you would be judged at 1. If you were in less than perfect health you score would be less than 1; initially it went down to 0 which was death. However it was decided that some things were worse than death (persistent pain for instance) and now they measure down to -0.5. Of course problems exist, such as how do you define perfect health, how do you measure pain and other subjective questions. QALY has its admirers and detractors but one thing is for sure, it’s here for a while.

In many ways it can be seen as a positive. It creates an equals the playing field between chronic and terminal diseases. It allows the clinical team to target areas that can significantly help those with long term, non debilitating disease, such as narcolepsy. On the negative it can be used as a charter to drive down costs, and costs are a central component of the QALY process.

One treatment might make the patient quite sick but increases life span while another treatment might not increase life expectancy BUT does increase the quality of life. The QALY method allows them to consider all factors before deciding on drug use and that of course includes cost.
 

How the QUALY system works

The clinicians meet a patient and ask them questions about the existing quality of life. This will include things like, freedom from pain, mobility and general mood. They then give this a numerical rating from 1 (perfectly healthy) through to 0 (dead or very near death) and now down to - 0.5 (in long term pain, no mobility, severe depress etc) which is the worst possible setting.

Looking at the advantages of the procedure or drug the patient is then reassessed to see what the differences would be. Then cost comes into it; existing treatment costs are considered against new treatment costs. From this they can determine the cost of providing a year of the best quality of life. Cost effectiveness is then shown as £ per QALY, a price on life! NICE have indicated that a QALY over £20,000 per patient would not be considered cost effective. How do they get to that figure?

Let me show you an example.

Patient A has a serious life threatening disease.
He gets standard treatment and he will live a year but his quality of life will be 0.4, so not good.
Standard treatment cost £3,000 p.a.
If he gets the new drug he will live for 1 year and 3 months and his quality of life will increase to 0.6
New treatment costs £10,000 p.a.
So, standard treatment, one year’s life at 0.4 = 0.4 QALY
New treatment gives 1.25 (1 year three months) and improves life to 0.6 so QALY increases to 0.75 (1.25 x 0.6 = 0.75)
New treatment therefore provides an additional 0.35 QALY (0.75 - 0.4 = 0.35)
The difference in treatment costs is then divided by the QALY gained to calculate the cost per QALY. In this case £7,000 (which is £10,000 less the £3,000 standard cost of treatment) is divided by 0.35 giving a QALY of £20,000 and the patient is probably refused treatment.

That is one of the main ways they decide if you should be provided new drugs or treatments or not. It is not about if the drug will make your life better or longer but how it stacks up against the QALY.

As narcolepsy is not considered a life threatening disease the only difference can be in quality of life. In the case of Xyrem against Modafinil the treatment would have to take the patient up to 1 before the QALY would be considered and the patients existing quality of life must be low, say below 0.4.

The figures are simple. With Modafinil costing about £2,000 pa and Xyrem £14,000 pa (average figures rounded up) the difference is £12,000. If that is divided by 0.6 (1 - .4 the existing QALY against the anticipated QALY) we end with a figure of £20,000, which makes a decision borderline.

However if you have cataplexy with narcolepsy the QALY can be split between the two conditions reducing the QALY figures quite considerably.

And that is how you can put a price on a drug regime.