Assessing cost-effectiveness in healthcare: history of the $50,000 per QALY threshold

Abstract

Cost–effectiveness analyses, particularly in the USA, commonly use a figure of $50,000 per life-year or quality-adjusted life-year gained as a threshold for assessing the cost-effectiveness of an intervention. The history of this practice is ill defined, although it has been linked to the end-stage renal disease kidney dialysis cost-effectiveness literature from the 1980s. The use of $50,000 as a benchmark for assessing the cost-effectiveness of an intervention first emerged in 1992 and became widely used after 1996. The appeal of the $50,000 figure appears to lie in the convenience of a round number rather than in the value of renal dialysis. Rather than arbitrary thresholds, estimates of willingness to pay and the opportunity cost of healthcare resources are needed.

Keywords::

• cost–effectiveness analysis
• cost–utility analysis
• health policy
• league tables
• quality-adjusted life -year
• willingness to pay

Acknowledgements

Byung-Kwang Yoo contributed to an earlier version of this paper. I acknowledge helpful comments from Brian Armour, Ahmed Bayoumi, Scott Braithwaite, Sajal Chattopadhyay, Wilhelmine Miller, Peter Neumann, Douglas Owens, Lisa Robinson, Wolf Rogowski, Louise Russell, George Torrance and Milton Weinstein, participants in the Centers for Disease Control and Prevention Prevention Effectiveness and Health Economics Seminar, and three anonymous reviewers. Any remaining errors of fact or interpretation are my own.

Disclaimer

The findings and conclusions in this report are those of the author and do not necessarily represent the views of the Centers for Disease Control and Prevention.

Financial & competing interests disclosure

The author has no relevant affiliations or financial involvement with any organization or entity with a financial interest in or financial conflict with the subject matter or materials discussed in the manuscript. This includes employment, consultancies, honoraria, stock ownership or options, expert testimony, grants or patents received or pending, or royalties.

No writing assistance was utilized in the production of this manuscript.