Healthcare rationing by proxy: Cost-effectiveness analysis and the misuse of the $50000 threshold in the US

John F P Bridges, Eberechukwu Onukwugha, C. Daniel Mullins

Research output: Contribution to journalArticle

Abstract

The application of cost-effectiveness analysis in healthcare has become commonplace in the US, but the validity of this approach is in jeopardy unless the proverbial $US50000 per QALY benchmark for determining value for money is updated for the 21st century. While the initial aim of this article was to review the arguments for abandoning the $US50000 threshold, it quickly turned to questioning whether we should maintain a fixed threshold at all. Our consideration of the relevance of thresholds was framed by two important historical considerations. First, cost-effectiveness analysis was developed for a resource allocation exercise where a threshold would be determined endogenously by maximizing a fixed budget across all possible interventions and not for piecemeal evaluation where a threshold needs to be set exogenously. Second, the foundations of the $US50000 threshold are highly dubious, so it would be unacceptable merely to adjust for inflation or current clinical practice.Upon consideration of both sides of the argument, we conclude that the arguments for abandoning the concept for maintaining a fixed threshold outweigh those for keeping one. Furthermore, we document a variety of reasons why a threshold needs to vary in the US, including variations across payer, over time, in the true budget impact of interventions and in the measurement of the effectiveness of interventions. We conclude that while a threshold may be needed to interpret the results of a cost-effectiveness analysis, that threshold must vary across payers, populations and even procedures.

Original languageEnglish (US)
Pages (from-to)175-184
Number of pages10
JournalPharmacoEconomics
Volume28
Issue number3
DOIs
Publication statusPublished - 2010

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ASJC Scopus subject areas

  • Pharmacology
  • Health Policy
  • Public Health, Environmental and Occupational Health

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