Cost per DALY ‘thresholds’ and health opportunity costs: informing choices in global health

  • Ochalek, J. M. (Organiser)
  • Claxton, K. P. (Invited speaker)
  • Ijeoma Peace Edoka (Invited speaker)
  • Lisa Robinson (Invited speaker)
  • Dean Jamison (Invited speaker)

Activity: Participating in or organising an eventConference


All healthcare systems face difficult decisions around how to allocate scare resources to generate improvements in population health. In low- and middleincome countries (LMICs) these challenges are compounded by considerably greater resource constraints than those faced by high-income countries. Determining whether an intervention, be it a drug, diagnostic, device or otherwise, is good value for money requires a comparison with an appropriate benchmark value, often referred to in the literature as a “threshold”. To date, there is little clarity and much confusion around what benchmark values are appropriate for informing choices in global health and how these values should be estimated. This confusion is evident in the values recommended or cited by decision making and advisory bodies. In particular, there has been a failure to clearly distinguish the ‘demand side’ (what the value of health and health care expenditure should be) and the ‘supply side’ (what improvement in health is possible given existing resources). ‘Demand side’ estimates, which tend to reflect the social value of health (i.e., what society ought to pay for improvements in health) are generally based on evidence of how much consumption individuals are willing to give up to improve their health. Some agencies have adopted or recommended explicit thresholds informed by these types of ‘demand side’ estimates. For example, in 2005 the World Health Organization recommended explicit cost per DALY thresholds to serve as a guide alongside WHO-CHOICE. They have been used as generic and internationally applicable criteria to classify interventions despite their widely recognised shortcomings (Newall et al. 2014; Marseille et al. 2015; Robinson et al 2016; Bertram et al 2016). Such estimates, if they reflect willingness to trade-off spending on the health improvement versus spending on other goods and services, can be useful in cost-benefit analysis to support regulatory and other policy decisions. As such, even if not used as a benchmark, information on preferences is likely to be of interest to decision- makers and other stakeholders. ‘Supply side’ benchmark values representing the health opportunity cost (or the shadow price of the resource constraint) is consistent with an objective of maximising health within a constrained optimisation problem (Epstein et al.; Stinnett & Paltiel 1996; Weinstein & Zeckhauser 1973). As health care systems in all countries face some restrictions on the growth in health care expenditure, the benchmark value used should reflect these supply side health opportunity costs. As well as having a well worked and sound theoretical foundation, recent research has sought to inform its assessment by estimating the health effects of changes in health expenditure. Such estimates represent health opportunity costs (of marginal changes). LMICs increasingly are looking toward using cost-effectiveness analysis to inform decision making in healthcare; however, the benchmark values commonly recommended for use by advisory bodies are those that reflect ‘demand side’ estimates. To date, the only existing estimates of health opportunity costs for LMICs are based on cross-country data. Work is currently underway in South Africa to estimate a ‘supply side’ benchmark value representing health opportunity cost using a similar approach to that undertaken in the United Kingdom and other high-income countries. This may become the first within country ‘supply side’ estimate of health opportunity costs in a LMIC, potentially paving the way for further research in other countries with similar contexts. This session provides a forum for one of the most important areas in health economics, health policy and health care decision making. It brings together both researchers at the front line of the debate around cost per DALY ‘thresholds’ and health opportunity costs for use in decision making in LMICs and the empirical estimation of these values in LMICs. The discussant will apply several filters through which to view the presented papers. For each paper he will reflect on the following four considerations: To what extent does the paper assume that the cost of producing outcomes — or the value of outcomes -- is equal across the following margins — mortality at different ages, reduction in disability of different types, and different diseases? How does the paper deal with (potential) differences in the cost of producing outcomes with public finance versus private finance? Does the paper take the perspective that the mortality outcomes being valued are life years lost at different times over the coming 80 years, or does it take the perspective that the outcomes being valued are changes in today’s age-specific mortality rates? Does the paper develop a perspective on the relative desirability, for informing policy, of BCA versus appending thresholds to the outcomes of CEAs?
Period10 Jul 2017
Event typeOther
LocationBoston, United States, MassachusettsShow on map
Degree of RecognitionInternational