Question

Homework problem 2: Traders brought infected goods to market and a new disease is spreading through the population. The disease is not fatal, but is severely disfiguring. Assume no discounting of future years. A survey is done and respondents claim to be indifferent between living 6 years without the disease and 10 years covered with scars. Most respondents do not want to live with the stigma of scars. a. What is the implied quality weight, q, for a year lived in the aftermath of the infection? Show your work b. A new drug is developed that reduces scarring and costs $10,000 for a full course of treatment. The quality weight improves from your answer to part a (the quality weight without the treatment) to 0.7 with the treatment. What is the ICER for taking the drug over doing nothing for a 20-year-old victim? Use QALY as a measure of effectiveness in your calculation, with individuals expecting to live until they are 70 years old. Write a one sentence interpretation of your results c. The residents believe that a QALY is worth $5K. Will a 20 year old decide to take the treatment? d. Will a 69 year old decide to take the treatment?

Answer 1

(a) Living without the disease and with the disease is 6:10

Therefore the implied quality weight is 6/10 = 0.6 , that is 60%

A year lived in aftermath of infection would be 60% as satisfying as living a year full of health.

(b) ICER for taking the drug over doing nothing for a 20-year-old victim=

10000 - 0 (0.7 -0.6) (70 - 20)

per QALY

- 10000 - $2000

(c)  By the calculation above in part (b) we see that it costs 20 year old only $10,000 for five QALYs.

Thus a 20-year-old victim will take the treatment.

(d) For a 69 year old victim

10000 - 0 (0.7 -0.6) (70 - 69)

= $out 10000 - = $100000

Clearly, a 69 year old will not take the treatment.as it is not worth it, given his/her valuation of QALY