Cost-effectiveness and Resource Allocation—Reply

Anthony Harris*, Suzanne R. Hill, David A. Henry

*Corresponding author for this work

Research output: Contribution to journalLetterResearch

1 Citation (Scopus)


[Extract] In Reply: Decisions on health care resource allocation, made with incomplete information, will always be imperfect. When faced with a fixed health budget and a goal of maximizing population health, as measured by an index such as the QALY, the optimal rule is to rank all independent health interventions in descending order of efficiency determined by dollar per QALY gained and then run down the list funding interventions until running out of money.1 At that point the last intervention funded would have a threshold ICER that reflected our willingness to pay for an extra QALY for a given budget. In cases in which budgets are small (as in low-income countries), the threshold ICER will have to be much lower than in high-income countries; this is the basis of proposals for differential pricing of essential medicines, which attempts to equalize opportunity costs in different settings.2 In cases in which a new drug is likely to have a major impact on the total budget (and perhaps displace interventions that have a low cost per QALY), we should use a higher threshold value. So the cost-effectiveness threshold, budgets, and affordability are always linked.
Original languageEnglish
Pages (from-to)2723-2724
Number of pages2
JournalJournal of the American Medical Association
Issue number23
Publication statusPublished - 21 Jun 2006
Externally publishedYes


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