Suppose you are tasked with evaluating the merits of a new prostate cancer treatment regimen relative to the current treatment regimen on behalf of a US health insurance company. Given the information below, answer the questions that follow.

CostResult

Current Treatment$50,0004 life-years gained

New Treatment$75,0005 life-years gained

a)Which treatment is more effective in terms of prolonging life? Why?

b)Which treatment is more cost-effective in terms of prolonging life? Why? Show your calculations.

c)Now assume that the new treatment has far fewer side-effects than the current treatment. As a result, the average QALY weight per life-year gained is 0.8 for the new treatment, compared to 0.5 for the current treatment. Which treatment is more cost-effective in terms of quality-adjusted life-years gained? Why? Show your calculations.

d)Would the new treatment be considered acceptably cost-effective, given commonly used QALY thresholds in the US? Why or why not?