Quality-Adjusted Life Year (QALY)

Quality-Adjusted Life Year (English: Quality-Adjusted Life Year, abbreviated as QALY), is a unit used to measure the outcome of a health intervention or health condition. This metric combines changes in both the length of life (quantity) and the quality of life during that time into a single index. QALY was developed particularly in the field of health economics to assist decision-making processes regarding the allocation of limited resources among different health programs and technologies.

QALY is calculated by multiplying the duration of life spent in a specific health state by the quality-of-life weight assigned to that state. In this calculation, quality of life is typically rated on a scale from 0 to 1. On this scale, a value of 1 represents perfect health while a value of 0 represents death. In some cases, negative values may also be used for health states considered worse than death.

One QALY is equivalent to one year lived in perfect health. For example, an individual who lives 10 years in a health state rated at a quality-of-life index of 0.8 has a total QALY value of 8 (10 years × 0.8). The benefit provided by a health intervention is expressed as a “QALY gain”. This gain reflects the difference in both quality of life and life expectancy before and after the intervention. An example calculation can be performed as follows^【1】 :

• If an individual has a quality-of-life index of 0.6 before a surgical intervention and this improves to 0.9 after the intervention, the treatment provides a gain of 0.3 QALY per year (0.9 - 0.6).
• If the individual’s life expectancy after treatment is 10 years, the total QALY gain is 3 (0.3 × 10).

This calculation method aims to provide a common basis for comparing different diseases, patient groups and treatment regimens.

The emergence of the QALY concept is closely linked to changes in the understanding of health. The World Health Organization's (WHO) 1946 definition of health as not merely the absence of disease or infirmity but as "a state of complete physical, mental and social well-being^【2】 " elevated the importance of quality of life in health assessments. As life expectancy increased and chronic diseases became more prevalent, the goals of medical interventions expanded to include not only extending life but also improving quality of life. In this context, a standardized unit for measuring the efficiency of different health outcomes became necessary.

The theoretical foundation of the QALY approach is based on neoclassical welfare economics theory. According to this theory, under a fixed health budget, the objective is to maximize the total health benefit to society measured in QALYs. The validity of this model depends on a set of assumptions^【3】 :

1. The health budget is fixed.
2. The sole objective is to maximize health benefits to the population measured in QALYs.
3. Complete information is available on the cost and effectiveness of all interventions (ICER).
4. Health programs can be divided to any desired level (perfect divisibility).
5. Programs exhibit constant returns to scale (i.e., expanding the program increases costs and effects proportionally).

In practice, it is generally not possible to satisfy all these assumptions, which leads to practical limitations and criticisms of the QALY approach.

QALY is most commonly used in health technology assessments and resource allocation decisions.

QALY forms the basis of cost-utility analyses. In these analyses, the cost-effectiveness of a health intervention relative to another intervention (or no intervention) is determined by calculating the Incremental Cost-Effectiveness Ratio (ICER). ICER is obtained by dividing the difference in cost between two interventions by the difference in QALY gain between them^【4】 :

$\text{ICER}=\frac{\text{Cost A}-\text{Cost B}}{\text{Effectiveness A}-\text{Effectiveness B}}=\text{Cost per QALY}$

The resulting ICER value is compared with a pre-determined “payment threshold”. If the cost per QALY of an intervention is below this threshold, the intervention is considered “cost-effective”. Institutions such as the National Institute for Health and Care Excellence (NICE) in the United Kingdom use such threshold values as a reference in reimbursement decisions. WHO suggests a potential threshold range of 1 to 3 times a country’s gross domestic product per capita. However, the use of a fixed threshold and how it should be determined remain subjects of significant debate, particularly across different health systems (for example, fixed-budget Beveridge-type systems versus unfunded Bismarck-type systems).

Quality-of-life weights (utility values) required for QALY calculations are obtained through various methods. These methods are categorized as “direct” and “indirect”:

These directly measure individuals’ preferences.

• Standard Gamble: The individual is asked to choose between continuing to live in their current health state or taking a gamble with a probability of achieving perfect health and a probability of immediate death. The probability of death at which the individual is indifferent between the two options determines the utility value of the health state.

• Time Trade-Off: The individual is asked to choose between living a longer period in a less-than-perfect health state or a shorter period in perfect health. The amount of time the individual is willing to trade off indicates the quality-of-life value.

Multidimensional questionnaires are used to describe individuals’ health states. The health profiles obtained from these questionnaires are converted into a single QALY score using previously established utility value sets (algorithms) derived from general population samples. Commonly used indirect scales include EQ-5D, SF-6D and Health Utility Index (HUI)^【5】. EQ-5D assesses five dimensions: mobility, self-care, usual activities, pain/discomfort, and anxiety/depression.

Although QALY is presented as a tool for the rational allocation of health resources, it has faced numerous theoretical and ethical criticisms. Critiques generally focus on its utilitarian foundations, concerns about equity and discrimination, and the narrow scope of value judgments.

QALY maximization is based on a utilitarian approach that seeks to achieve “the greatest good for the greatest number^【6】 ”. Ethicists argue that this approach may overlook other moral values such as individual rights and justice.

• Ageism: QALY calculations tend to assign higher value to interventions that save the lives of younger individuals who have longer life expectancies. This is interpreted as discrimination against older patients. Counterarguments such as the “fair innings” argument assert that every individual has a right to a certain lifespan and that priority should be given to those who have not yet lived that span.

• Disability and Chronic Illness: Because QALY assigns a lower value to the best achievable health state of individuals with chronic illness or disability than to perfect health (value of 1), it may undervalue interventions that save their lives. This has led to criticism that QALY discriminates against people with disabilities.

• Other Factors: Some critics argue that QALY may indirectly create a basis for discrimination based on the patient’s lifestyle (e.g., diseases caused by smoking), social role (e.g., having dependent children), or gender.

• Initial Severity of Illness: QALY focuses only on the “change” in health status and does not directly account for the severity of the health state before intervention. However, public opinion surveys show that people often prefer to prioritize those in the worst condition—even if the health gain is smaller—reflecting the “rule of rescue”.

• Distribution of Benefits: The QALY approach is indifferent to how health gains are distributed (“distributional neutrality”). For example, it makes no distinction between distributing 100 QALYs to 100 people (1 QALY each) or to 2 people (50 QALYs each). However, society may often prefer that benefits be spread more widely.

Criticisms of QALY have led to the development of alternative or complementary models. Some of these include:

• Weighted QALYs: Models that propose assigning greater weight to QALYs gained by specific patient groups (e.g., severely ill patients, children) to address equity concerns.

• Cost-Value Analysis: Approaches that explicitly incorporate factors such as illness severity or the patient’s potential benefit, offering a broader value framework than QALY.

• Disaggregated Presentation of Outcomes: Some experts argue that decision-makers should be presented with separate values for costs and outcomes (e.g., years of life gained, improvement in quality of life, patient financial burden) rather than a single QALY or ICER value. This “cost-consequence” approach allows decision-makers to weigh different values according to their own priorities.