Cost-Effectiveness, the QALY, and the evLYG

Clinicians play a vital role in helping individual patients decide what treatment is best for them. In contrast, cost-effectiveness analysis looks at evidence for entire patient populations, comparing the health benefits and economic costs of different treatment options. The goal of cost-effectiveness analysis is to help inform policy so that treatments that improve patients’ lives are rewarded fairly, while neither patients nor society overpays for care that doesn’t offer a significant benefit to patients.

What follows is an explanation of how cost-effectiveness is appropriately used throughout the US health system. Additional related materials, including a legal brief confirming that cost-effectiveness analyses are consistent with the Americans with Disabilities Act, can be found in the sidebar to the right.

The QALY and the EVLYG

The quality-adjusted life year (QALY) is the academic standard for measuring how well all different kinds of medical treatments lengthen and/or improve patients’ lives, and therefore the metric has served as a fundamental component of cost-effectiveness analyses in the US and around the world for more than 30 years. If evidence shows that a treatment helps lengthen life or improve quality of life, these benefits are comprehensively summed up to calculate how many additional QALYs the treatment provides, and this added health benefit is then compared to the added health benefit of other treatments for the same patient population.

To complement the use of the QALY, ICER’s reports also include a calculation of the Equal Value of Life Years Gained (evLYG), which evenly measures any gains in length of life, regardless of the treatment’s ability to improve patients’ quality of life. In other words, if a treatment adds a year of life to a vulnerable patient population – whether treating individuals with cancer, multiple sclerosis, diabetes, epilepsy, or a severe lifelong disability – that treatment will receive the same evLYG as a different treatment that adds a year of life for healthier members of the community.

By understanding a treatment’s cost per evLYG, as well as its traditional cost per QALY, policymakers can take a broader view of cost-effectiveness and be reassured that they are considering information that poses no risk of discrimination against any patient group.

Ensuring the Ethical and Appropriate Use of QALY-Based Analysis

Cost effectiveness is one of the tools that policymakers depend on to understand the benefits and harms of health care interventions. As researchers that understand the appropriate and ethical use of cost-effectiveness, ICER has drafted a blueprint for policymakers seeking solutions on how to ensure proper use of the QALY in legislation:

In considering cost-effectiveness, [the state ] cannot use cost-effectiveness analyses that use the cost-per-quality adjusted life year or similar measure to identify subpopulations for which a treatment would be less cost-effective due to severity of illness, age, or pre-existing disability. In addition, for any prescription drug that extends life, the [state’s ] analysis of cost-effectiveness must not employ a measure or metric which assigns a reduced value to the life extension provided by a treatment based on a pre-existing disability or chronic health condition of the individuals whom the treatment would benefit.

Longstanding and Appropriate Use of Cost-Effectiveness

Cost-effectiveness analysis has a long track record in academic work done by researchers across the US and internationally. It is the cornerstone of research comparing the value of different drugs and other health care interventions. Cost-effectiveness using the QALY is used by federal researchers at the CDC and NIH to evaluate questions such as whether new pediatric vaccines should be recommended. 

As a nonprofit, nonpartisan organization, ICER produces publicly available cost-effectiveness reports on drugs to help inform policymaking. The State of New York has used these reports as an input into its Medicaid program of negotiating drug prices, joining many other groups who have been using ICER reports for more than 5 years, including the Veterans’ Administration, Harvard Pilgrim Health Care, Blue Cross Blue Shield of Massachusetts, UnitedHealthcare, Aetna, Kaiser Permanente, and Express Scripts. 


Americans deserve to know if a treatment improves or harms patients’ quality of life. To throw out cost-effectiveness is to reject patients’ lived experience – an experience that has taught us that quality of life should serve as the guide to fair drug pricing and fair patient access.

We all want good access to treatment that can help us. And it is easy to understand the concerns of some disability groups who have historically had to fight hard for equal access to services. True discrimination against people with disabilities continues in this country and happens every day when people can’t afford or access the care they need. But a fundamental reality is that high prices for drugs without any anchoring in how well those drugs actually work is driving up overall health care costs, and those spiraling prices lead directly to reduced access and higher out of pocket costs for all patients. Especially for people with disabilities who often have more health care needs.

Cost-effectiveness should never be the sole factor in deciding fair pricing of health care interventions. But rejecting it would only serve to keep patients locked into the status quo – a broken system where drug makers charge whatever price they like, insurers respond with barriers to access, and patients struggle to afford and access the care they need. That would be a true ethical tragedy for our nation. Patients deserve better.