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The Department of Health is preparing for its budget allocation process for the upcoming year. The Department has identified a number of potential treatment alternatives

The Department of Health is preparing for its budget allocation process for the upcoming year. The Department has identified a number of potential treatment alternatives (including no treatment, A) across the following disease areas: Cancer, Cardiovascular Disease, Dementia, Sexually Transmitted Disease, and Childhood Obesity. To inform its decision making process, the Department wishes to consider cost effectiveness evidence. They have generated data on health care costs and health outcomes, in terms of Quality Adjusted Life Years (QALYs), for each option. On the basis of the information provided in Table 1, please answer the questions listed below. The Department will apply a cost effectiveness threshold value of 45,000 per QALY to inform its decision making process.

Table 1: Cost and QALY estimates for treatment alternatives

Treatment

Cost ()

QALYs Gained

Cancer

A (no treatment)

0

0

B

200,000

8

C

600,000

9

D

500,000

12

E

700,000

14

Sexually Transmitted Disease

A (no treatment)

0

0

F

100,000

10

G

200,000

21

H

375,000

35

Childhood Obesity

A (no treatment)

0

0

I

100,000

11

J

250,000

27

K

200,000

21

L

500,000

48

M

600,000

56

From a cost effectiveness perspective, which treatment options, if any, would you recommend to the Department for the above three disease areas? Briefly explain your recommendation. Please show all your computations.

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