Patient BN is a 36-year-old female with a type of organ failure that reduces her quality of life to half of what it would be in good health. Without treatment she can expect to live only two years. With a successful transplant, BN can expect to live four years and have a quality of life that is near (80 percent) of what she would enjoy in good health. However, the transplant costs $100,000, plus $10,000 each year for drugs and follow-up care, and carries a 15 percent risk of rejection resulting in immediate death. What is the cost per additional year of life gained (without discounting for time or quality of life)? What is the cost per discounted QALY gained (assuming a 5 percent time discount rate)?

Initial cost of surgery = $100,000 Surgical mortality = 15% (i.e., 85% realize successful transplant life expectancy, 15% lose the baseline life expectancy)
Unadjusted for quality or time				= [0.85*(4.0) + 0.15*(0.0)] - 2.0 = 1.4
Discounted for Quality only Discounted for QALY and time				= [0.85*(3.2) + 0.15*(0.0)] - 0.98 = 1.7 = [0.85*(2.98) + 0.15*(0.0)] - 0.98 = 1.55
Undiscounted cost				= 0.85($140,000) + 0.15($100,000) = $134,000
Time Discounted cost				= 0.85($137,200) + 0.15($100,000) = $131,620

(You are using the data above to answer the following questions)

a. Cost per QUALY gained Undiscounted

b. Cost per QUALY gained Discounted