The quality-adjusted life year or quality-adjusted life-year (QALY) is a generic measure of disease burden, including both the quality and the quantity of life lived. It is used in economic evaluation to assess the value for money of medical interventions. One QALY equates to one year in perfect health.

NICE define cost-effectiveness as ‘the cost of using a drug to provide a year of the best quality of life available’ and then go on to state ‘it could be one person receiving one QALY, but is more likely to be a number of people receiving a proportion of a QALY—for example 20 people receiving 0.05 of a QALY’. This statement is confusing to say the least but also appears to allow a large degree of manipulation of its calculations and, by doing this, NICE covers its processes with a blanket of seeming objectivity.

NICE reviews the QALY gained by a specific treatment and compares this with an existing standard therapy or no intervention. The relative costs of the two interventions are then compared and the cost of the new treatment in excess of relative standard therapy is calculated. This figure is then divided by the QALY gained by the new treatment to give the cost per QALY (£ per QALY). Therefore, a QALY can be used to provide a ‘common currency’, in the form of a cost utility ratio by which one can compare the cost-effectiveness of one treatment with another, or to evaluate the cost of a particular treatment against no intervention.

The cost per QALY is a critical value that NICE takes into account when deciding whether or not the proposed new treatments can be covered by the NHS. The threshold currently in place is that treatments with a cost per QALY of up to £30 000 are likely to be considered for approval for funding, but those treatments that are more costly are highly unlikely to be authorized for use by the NHS.2