It’s uncommon for us, as paediatricians, to be asked about how cost-effective our treatments are. Glancing at the media shows health stories about the new wonder drugs in adult cancer, or in Alzheimer’s disease, and how they are being restricted by a heartless and miserly health system. Where do these statements about ‘cost-effectiveness’ come from?

The basics of health economic analysis are simple. If you are comparing treatment Adrug and Bepill, and they both work well, you want the one that is cheapest. (A ‘cost minimisation’ process.) But if Adrug works better than Bepill, then the element of costs becomes more important. (Obviously, if the Adrug is cheaper, it’s a no-brainer!) The question becomes “How much is society/your insurance company/your patient prepared to pay for the extra benefit?”.

If you have two treatments which have the same outcome, this can be a difficult question to answer (it’s a cost-effectiveness analysis). Imagine the difficulty that is added by asking the same question, but needing the answer to compare different conditions, for example asthma and neurodevelopmental disability (a cost-utility analysis). What you need is a common metric to compare the ‘benefit’ across these conditions: that is what the Quality Adjusted Life Year (QALY) is intended to be. There are lots of things to think about with QALYs – you can read about some of them here and more intelligently here – but QALY’s are a good starting point and may help avoid the divisive judgement issues which would come out of comparing surgery for chronic constipation, chemotherapy for relapsed-refractory leukaemia and treatment for alcohol and drug dependence in teenagers. (To answer the question of ‘How much?’ in the UK there’s been a rough guide of £20,000-£30,000 per QALY fixed by NICE – but this is a guide.)

The advanced bits of health economics are not simple. They compare the presumptions about how effective and costly things are, perform analysis on how sensitive the results are to variations in the ‘truths’ that the model has supposed, and add factors that balance for the fact that we value health now much greater than health in the future. (You know this is true – what happens when you’re offered another piece of fruit cake?) These all lead to clouds of data, odd looking graphs, but usually a relatively straightforward answer — along the lines of ‘It probably costs £10,000 or so per QALY, and the truth might be between £5,000 and £42,000’.

Which then puts you back to the beginning – it works, but at what cost?