Assessing cost-effectiveness in healthcare: history of the $50,000 per QALY threshold

TLDR

In the United States, cost‑effectiveness analyses routinely use a $50,000 per QALY threshold, a convention that emerged in 1992, gained widespread adoption after 1996, and is thought to stem more from the convenience of a round number than from the economics of dialysis. The study argues that instead of arbitrary thresholds, estimates of willingness to pay and the opportunity cost of healthcare resources are required.

Abstract

Cost-effectiveness analyses, particularly in the USA, commonly use a figure of $50,000 per life-year or quality-adjusted life-year gained as a threshold for assessing the cost-effectiveness of an intervention. The history of this practice is ill defined, although it has been linked to the end-stage renal disease kidney dialysis cost-effectiveness literature from the 1980s. The use of $50,000 as a benchmark for assessing the cost-effectiveness of an intervention first emerged in 1992 and became widely used after 1996. The appeal of the $50,000 figure appears to lie in the convenience of a round number rather than in the value of renal dialysis. Rather than arbitrary thresholds, estimates of willingness to pay and the opportunity cost of healthcare resources are needed.