An empiric estimate of the value of life: Updating the renal dialysis cost-effectiveness standard

Abstract

Objectives: Proposals to make decisions about coverage of new technology by comparing the technology's incremental cost-effectiveness with the traditional benchmark of dialysis imply that the incremental cost-effectiveness ratio of dialysis is seen a proxy for the value of a statistical year of life. The frequently used ratio for dialysis has, however, not been updated to reflect more recently available data on dialysis. Methods: We developed a computer simulation model for the end-stage renal disease population and compared cost, life expectancy, and quality-adjusted life expectancy of current dialysis practice relative to three less costly alternatives and to no dialysis. We estimated incremental cost-effectiveness ratios for these alternatives relative to the next least costly alternative and no dialysis and analyzed the population distribution of the ratios. Model parameters and costs were estimated using data from the Medicare population and a large integrated health-care delivery system between 1996 and 2003. The sensitivity of results to model assumptions was tested using 38 scenarios of one-way sensitivity analysis, where parameters informing the cost, utility, mortality and morbidity, etc. components of the model were by perturbed +/-50%. Results: The incremental cost-effectiveness ratio of dialysis of current practice relative to the next least costly alternative is on average $129,090 per quality-adjusted life-year (QALY) ($61,294 per year), but its distribution within the population is wide; the interquartile range is $71,890 per QALY, while the 1st and 99th percentiles are $65,496 and $488,360 per QALY, respectively. Higher incremental cost-effectiveness ratios were associated with older age and more comorbid conditions. Sensitivity to model parameters was comparatively small, with most of the scenarios leading to a change of less than 10% in the ratio. Conclusions: The value of a statistical year of life implied by dialysis practice currently averages $129,090 per QALY ($61,294 per year), but is distributed widely within the dialysis population. The spread suggests that coverage decisions using dialysis as the benchmark may need to incorporate percentile values (which are higher than the average) to be consistent with the Rawlsian principles of justice of preserving the rights and interests of society's most vulnerable patient groups. © 2008, International Society for Pharmacoeconomics and Outcomes Research (ISPOR).