A QALY, or quality-adjusted life year, is a measure that combines how long someone lives with how well they live into a single number. One QALY equals one year of life in perfect health. A year lived with a serious illness or disability counts as less than one QALY, and the worse the health state, the lower the value. Governments and health organizations use QALYs to decide whether a medical treatment is worth its cost.
How the Calculation Works
The math behind a QALY is straightforward. You multiply a health quality score by the number of years spent in that health state. The quality score sits on a scale from 0 to 1, where 1 means perfect health and 0 means death. Some health states can actually receive negative scores, representing conditions considered worse than death.
For example, if a treatment gives someone five extra years of life at a quality score of 0.8, that treatment produces 4 QALYs (5 × 0.8 = 4). A different treatment that gives someone two years at perfect health also produces 2 QALYs (2 × 1.0 = 2). This lets policymakers compare treatments that work in very different ways, like a cancer drug that extends life versus a knee replacement that improves daily functioning.
Measuring Quality of Life
The trickiest part of calculating QALYs is figuring out what quality score to assign a given health state. There are two broad approaches: direct and indirect.
The most common indirect method uses a standardized questionnaire called the EQ-5D. It asks people to rate themselves across five dimensions: mobility, self-care, usual activities, pain or discomfort, and anxiety or depression. Each dimension has several severity levels. The combination of answers maps onto a pre-calculated quality score. So a person who can walk without difficulty, care for themselves, carry out normal activities, but has moderate pain and mild anxiety would land somewhere between 0 and 1 based on a formula derived from large population surveys.
Direct methods ask people to make harder choices. In the time trade-off approach, a person is asked how many years of life in poor health they would give up in exchange for fewer years in perfect health. If someone says they’d accept 7 years of perfect health instead of 10 years in a particular health state, that state gets a quality score of 0.7. The standard gamble method works differently: it asks people to choose between living with certainty in a health state versus taking a gamble with some chance of perfect health and some chance of death. The point where a person becomes indifferent between the sure thing and the gamble reveals how they value that health state.
How QALYs Shape Drug Pricing
QALYs matter most in health policy because they let decision-makers ask a simple question: how much does it cost to gain one additional QALY with this treatment? That figure, called the cost per QALY, becomes the basis for deciding whether a drug or procedure offers good value.
In the United Kingdom, the National Institute for Health and Care Excellence (NICE) has historically used a threshold of £20,000 to £30,000 per QALY gained. Treatments that fall below this range are generally considered cost-effective and recommended for use in the National Health Service. NICE recently confirmed it will raise this threshold to £25,000 to £35,000 per QALY, a change expected to allow an additional three to five new medicines to be recommended each year.
In the United States, the picture is more complicated. The Institute for Clinical and Economic Review (ICER), an influential independent organization, uses a benchmark of $100,000 to $150,000 per QALY gained when evaluating whether drug prices align with their clinical benefits. ICER calculates threshold prices at $50,000, $100,000, $150,000, and $200,000 per QALY to show how a drug’s price would need to change to meet different value standards.
The Controversy Over Disability
QALYs have drawn sharp criticism, particularly from disability rights advocates. The core concern is straightforward: because the measure assumes people with disabilities have a lower baseline quality of life, treating their medical conditions produces fewer QALYs than treating the same condition in a non-disabled person. A treatment that cures pneumonia in someone who already lives with a chronic disability would register fewer QALYs gained than the same treatment given to someone starting at full health. Critics argue this systematically steers resources away from disabled people and those with chronic illnesses.
This concern has had real legislative consequences in the United States. The U.S. House of Representatives passed the Protecting Care for All Patients Act (H.R. 485) by a vote of 211 to 208, which would ban the use of QALYs and similar measures across all federal health programs. Current law already restricts Medicare from using QALYs in a limited fashion, but this bill would expand the prohibition significantly. Supporters of the ban described QALYs as a metric “used to deny care for people with disabilities and chronic illnesses.”
QALYs Versus DALYs
The QALY has a counterpart called the DALY, or disability-adjusted life year. While QALYs measure health gained, DALYs measure health lost. A DALY represents one year of healthy life lost to illness, disability, or early death. The scales run in opposite directions: for QALYs, higher numbers are better; for DALYs, lower numbers are better.
The two metrics also differ in how they assign weights to health states. QALY weights come from surveys of patients or the general public rating how they feel about living in various conditions. DALY weights come from expert panels estimating the level of functioning lost to specific diseases. DALYs also incorporate an age-weighting function, meaning a year of life lost at age 25 can count differently than a year lost at age 70. QALYs treat a year the same regardless of age.
In practice, the World Health Organization and global health organizations tend to use DALYs when measuring the overall burden of disease across populations. QALYs dominate in cost-effectiveness analyses of individual treatments, particularly in wealthier countries with established health technology assessment programs like the UK, Canada, and Australia.
Limitations Beyond the Disability Debate
Even setting aside the disability concern, QALYs have practical limitations. The quality score assigned to a health state can vary dramatically depending on who you ask and which method you use. Patients living with a condition often rate their quality of life higher than healthy people imagining the same condition, a phenomenon known as adaptation. This means the same disease can receive different quality scores depending on the study design.
The calculation also assumes that two QALYs gained are always worth the same, regardless of context. Ten people each gaining 0.1 QALYs is treated as equivalent to one person gaining a full QALY. Most people, when asked directly, don’t actually feel that way. They tend to prioritize giving larger benefits to severely ill individuals over spreading small benefits across many people. QALYs, by design, are indifferent to how the gains are distributed.
Despite these issues, QALYs remain the most widely used measure in health economics because they solve a genuine problem: they provide a common unit for comparing treatments that affect different diseases, different body systems, and different aspects of health. Without some standardized measure, there is no systematic way to evaluate whether a healthcare system is spending its limited budget wisely.