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European Value of a Quality Adjusted Life Year

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Willingness to Pay

The concept of WTP has existed for a long time (Dupuit, 1844; Davis, 1963). However, not until the 1980s did Government Transport Departments worldwide consider using the method to value lives saved from safety projects, rather than the gross output ('productivity') approach used previously (Jones-Lee, 1989). Arguably, the most natural measure of the extent of a person's preference for anything is the maximum amount that s/he would be willing to pay for it. Under what has naturally come to be known as the 'willingness-to-pay' (WTP) approach to valuation of safety, one seeks to establish the maximum amounts that those affected would individually be willing to pay for (typically small) improvements in their own and others' safety. These amounts are then aggregated across individuals to arrive at an overall value for the safety improvement concerned, thus reflecting society's overall resource constraint.

Estimating a WTP-based monetary value of a QALY can also be viewed as a group-aggregate WTP for marginal gains in health, at least in the case of a randomly-selected sample of the public. Indeed, this argument has been used in promoting an insurance-based approach to valuing publicly-provided health care; whereby respondents are informed of the probabilities of needing care as well as it being successful before providing a valuation (Gafni, 1991; O'Brien and Gafni, 1996).

The WTP method was first applied in health to value heart attack prevention (Acton, 1976). Subsequently, there were few studies in health, probably resulting from the view that such monetary valuation was unethical. In addition, the use of WTP to inform decisions about allocation of health care, which is supposed to be on the basis of (some notion of) need, may look problematic because WTP is obviously associated with ability pay. However, it has been shown that this need not impede the use of WTP in health economic evaluation (Donaldson, 1999) and that using thresholds in decision-making also implicitly reveals monetary values for QALY gains. Since the early 1990s, the feasibility of using WTP in health economics has again been recognised (Gafni, 1991; Johannesson et al., 1991), and more studies undertaken (Olsen and Smith, 2001; Smith, 2003).

Thus, in health, WTP methods historically addressed decision making dilemmas at two main levels: assessing relative utility of treatments for a given group of patients (involving elicitation of values from samples of such patients); and across disparate programmes funded by geographically-defined health organisations (involving elicitation from the community of WTP values for each programme at stake). Methods have been developed which work well in terms of WTP values reflecting patient preferences (Donaldson, 2002). In the latter area, methods have been more problematic, but are improving (Olsen and Donaldson, 1998; Olsen et al., 2005). As in other public sector areas, results have been mixed on how sensitive WTP responses are to the size of the good (i.e. the health change/numbers treated) on offer to respondents (Olsen et al., 2004; Yeung et al., 2003; Smith, 2005) and to other aspects related to framing and programme information presented to respondents (Protiere et al., 2004; van Exel et al., 2006). However, innovations in valuing safety improvements have shown promise in overcoming these issues (Carthy et al., 1999). Methods based on these developments, to be used in the proposed research, are described below.

Through the 1990s, development of national-level technology assessment agencies (such as in the Health Care Insurance Board in the Netherlands, the Norwegian Medicines Control Authority and in the Hungarian Ministry of Health), led to calls for monetary values of a QALY to aid decision making at this third (i.e. national) level (Johannesson, 1995; Garber and Phelps, 1997).