This caseaddresses the concepts of estimating the value of life in health economic analysis The cost effectivenessfrontier helps us find the best treatments for a given budget, but it is agnostic about how much weshould be willing to spend to obtain more life years or QALYs In other words, how much is a QALYworth When are more expensive and more effective treatments worth their higher cost Thesequestions weigh on the coverage decisions of both private and public insurers, and economists havedevised several methods to try to estimate the value of life based on the actions of people andgovernments Jachucketal (1982)report on an analysis of a certain drug designed to reduce hyper tension (high blood pressure) Such hypotensive drugs are frequently effective but are also linked to side effects like irritability, a decline in energy, and a loss of sexual interest Seventy five patients with mild hypertension were put on hypotensive drugs and their progress was monitored by doctors and relatives (typically spouses) Suppose that everyone agrees that the quality weight for hypertension is q 0 8 That is, one year spent with mild hypertension is equivalent to 0 8 years of full health a When asked to rate the treated patients as improved, worse, or unchanged, the doctors rated all 75 patients as improved Meanwhile, the spouses rated 74 of the 75 patients as worse Why might spouses and doctors differ in their opinions about the effect of undertaking hypotensive therapy b Explain why the drugs might be a dominant treatment and indicate what other treatment(s) might dominate it cMake a one sentence argument for each of two viewpoints The doctors' opinions should be used to determine how beneficial hypotensive drugs are for the purposes of CEA The spouses' opinions should be used to determine how beneficial hypotensive drugs are for the purposes of CEA Suppose that everyone agrees that the quality weight for hypotensive therapy is q 0 6, which is less than the quality weight for living with hypertension ( q 0 8) And we know that hypotensive therapy costs more than no treatment Can we conclude that hypotensive therapy is dominated What other information would we need When would we conclude that hypotensive treatment is not dominated

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This caseaddresses the concepts of estimating the value of life in health economic analysis. The cost-effectivenessfrontier helps us find the best treatments for a given

This caseaddresses the concepts of estimating the value of life in health economic analysis. The cost-effectivenessfrontier helps us find the best treatments for a given budget, but it is agnostic about how much weshould be willing to spend to obtain more life years or QALYs. In other words, how much is a QALYworth? When are more expensive and more effective treatments worth their higher cost? Thesequestions weigh on the coverage decisions of both private and public insurers, and economists havedevised several methods to try to estimate the value of life-based on the actions of people andgovernments.

Jachucketal. (1982)report on an analysis of a certain drug designed to reduce hyper-tension (high blood pressure). Such hypotensive drugs are frequently effective but are also linked to side effects like irritability, a decline in energy, and a loss of sexual interest. Seventy-five patients with mild hypertension were put on hypotensive drugs and their progress was monitored by doctors and relatives (typically spouses). Suppose that everyone agrees that the quality weight for hypertension isq=0.8. That is, one year spent with mild hypertension is equivalent to 0.8 years of full health.

a. When asked to rate the treated patients as improved, worse, or unchanged, the doctors rated all 75 patients as "improved." Meanwhile, the spouses rated 74 of the 75 patients as "worse." Why might spouses and doctors differ in their opinions about the effect of undertaking hypotensive therapy?

b.Explain why the drugs might be a dominant treatment and indicate what other treatment(s) might dominate it.

cMake a one-sentence argument for each of two viewpoints:
The doctors' opinions should be used to determine how beneficial hypotensive drugs are for the purposes of CEA.
The spouses' opinions should be used to determine how beneficial hypotensive drugs are for the purposes of CEA.

Suppose that everyone agrees that the quality weight for hypotensive therapy is

q=0.6, which is less than the quality weight for living with hypertension (q=0.8). And we know that hypotensive therapy costs more than no treatment. Can we conclude that hypotensive therapy is dominated? What other information would we need? When would we conclude that hypotensive treatment isnotdominated?