Health Economics

hi my name is dr. sanjay sharma I'm a professor of Ophthalmology and epidemiology at Queen's University as a researcher I'm very interested in a particular area of Epidemiology called health economics part of the goal of health economics is to work out the cost-benefit numbers for new interventions in a way that can help doctors and policymakers make the often difficult decision on which interventions to pay for and which may be too expensive for the public healthcare system to fund I want to give you a high-level overview on how we do this the key thing is being able to put a value on a new drug or procedure in healthcare we measure value as a unit called qualies or quality adjusted life years one quality is equal to living for one year in perfect health so how do we work this out well what we do is we look at the average person with a specific disease and then we look at all the outcomes of that disease both with and without the intervention that we were evaluating for each possible outcome we assign a probability and a utility score the utility score is a measure of how much your quality of life would decrease with a certain outcome for example someone with wet macular degeneration might say that if they went blind their quality of life would decrease by 55% this would mean a utility score of 0.45 using a mathematical model called a Markov model we combined the utility scores and probabilities and other factors to determine the average benefit to someone with the disease who takes a drug which we were evaluating we calculate that benefit over the course of the treatment and end up with the increase in qualities caused by the drug the next thing we do is look at the cost to society as a result of each outcome most obviously we have to look at the cost of paying for the drug treatments but then we also have to take into account the total cost of each possible outcome associated with both receiving the treatment and not receiving the treatment for example in eyecare we also have to consider the cost of the healthcare system if a patient went blind including personal assistance patient education and continued medical care in this case the blindness could have been caused by an adverse effect from the drug or through not taking the drug at all once we have determined the cost we can then calculate the cost per quality or how much does it cost us to gain the equivalent of a year in perfect health for a patient this cost per quality becomes a standardized metric to evaluate new interventions the typical scenario is that a new intervention provides an improvement in either the length or quality of life but costs money and health economists and doctors argue it out as to whether the government should pay for the intervention most governments find things that cost less than $50,000 per quality and do not pay for others at a more costly it is a complex analysis and we've only brushed on surface but I hope that we've been able to give you a small glimpse into how health economists work and how their analyses help us to run our health care system with a reasoned approach you


  1. Oops! I believe Health Economics is about the use of economic tools applied to heatlh and not "a particular area of epidemiology". Thank you.

  2. Your name is Sanjay Sharma and you are a doctor. So it's either "I AM Dr. Sanjay Sharma" or "My name is Sanjay Sharma and I am a doctor." 🙂

    (I am sure your driver's license does not have you name as "Doctor"

  3. Why drugs and not more subsidies for fruits and vegetables? I mean.. drugs aren't always the best answer

  4. wonderfull

    this is the best exlaination of QALY thank you . I am a pharmacis and specialised in HTA health technoly assesments and I study every comparing medicaitons or technolies and evlauate in QALY or EUros or Dollars or pounds hat is the way of a goos health care system

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