Concept Architecture
Concept
Theoretically, QALY Calculation Method is the recognised methodological approach used to estimate Quality-Adjusted Life Years by combining the duration of survival with preference-based health utility values over time. It is founded on health utility theory and the additive QALY framework, assuming that the value of a health outcome is determined jointly by both length and quality of life. The method exists to provide a consistent and reproducible procedure for quantifying health outcomes in cost-utility analysis and health technology assessment.
Mathematically, the QALY calculation method estimates quality-adjusted survival by multiplying the utility associated with each health state by the time spent in that state and summing these values across the evaluation horizon. Where health utility changes continuously, the calculation is performed using the area-under-the-curve approach. Future health outcomes are commonly discounted in accordance with national methodological guidance.
In practice, QALYs are calculated using survival data from clinical trials, observational studies or decision-analytic models together with utility values obtained from validated preference-based instruments such as the EQ-5D, HUI or SF-6D. The method is implemented in health technology assessments, reimbursement submissions and economic evaluations to estimate incremental health benefits associated with competing healthcare interventions.
Purpose
Used to estimate Quality-Adjusted Life Years, quantify health outcomes for cost-utility analysis, compare healthcare interventions, calculate incremental health benefits, and support health technology assessment and reimbursement decisions.
Mathematical Formulae
Primary Formula
QALY = ????? u? ? ?t
where:
- QALY = quality-adjusted life years
- u? = health utility during period t
- ?t = duration of the period
- T = evaluation horizon
Supporting Formulae
Continuous area-under-the-curve formulation:
QALY = ??? u(t) dt
Discounted QALYs:
QALY = ????? (u??t) / (1 + r)?
Incremental QALYs:
?QALY = QALY?Intervention? ? QALY?Comparator?
Related Mathematical Methods
- Area-under-the-curve estimation
- Health utility measurement
- Survival analysis
- Cost-utility analysis
- Decision-analytic modelling
- Discounting
Example
A patient receives a new treatment and survives for three years with utility values of 0.90, 0.80 and 0.70.
Using the QALY calculation method:
QALY = (0.90 ? 1) + (0.80 ? 1) + (0.70 ? 1)
QALY = 2.40
If the comparator treatment produces 2.05 QALYs, the incremental health benefit is:
?QALY = 2.40 ? 2.05 = 0.35
The intervention therefore generates an additional 0.35 Quality-Adjusted Life Years.
Excel Implementation
| Function | Example Formula | Health Economics Application |
|---|---|---|
| SUMPRODUCT | =SUMPRODUCT(B2:B10,C2:C10) | Calculate QALYs by multiplying utility weights by time intervals |
| SUM | =SUM(D2:D10) | Sum quality-adjusted survival across all periods |
| NPV | =NPV(0.035,D2:D10) | Discount future QALYs in accordance with health technology assessment guidance |
| IF | =IF(B2>1,""Invalid"",B2) | Validate utility values before calculation |
VBA (Optional)
Automate QALY calculations using patient-level utility profiles, survival estimates and discounting assumptions across multiple economic evaluation scenarios.
Sources
- Drummond MF, Sculpher MJ, Claxton K, Stoddart GL, Torrance GW. Methods for the Economic Evaluation of Health Care Programmes. Oxford University Press.
- Weinstein MC, Torrance G, McGuire A. QALYs: The Basics. Value in Health. 2009.
- Torrance GW. Measurement of Health State Utilities for Economic Appraisal. Journal of Health Economics. 1986.
- Briggs A, Claxton K, Sculpher M. Decision Modelling for Health Economic Evaluation. Oxford University Press.
- NICE. Health Technology Evaluation Manual.
- CHEERS 2022 Statement.
Related Concepts (2)
Library
Tools & Resources
1
Tufts CEA Registry — Center for the Evaluation of Value and Risk in Health (CEVR), Tufts Medical Center, Ongoing database ed., 2024 (Tufts Medical Center)
A comprehensive database of more than 14,500 standardised cost-effectiveness (cost-per-QALY) ratios and over 21,900 utility weights, extracted from thousands of peer-reviewed cost-utility analyses — an essential reference for benchmarking ICERs and sourcing utility values.
Registry / DatabaseView source →
Frequently Asked Questions (6)
How is a QALY calculated?
The process of computing quality-adjusted life years by multiplying time spent in a health state by its utility value, then summing across states.
Source: Weinstein & Stason 1977
Why is time in a health state multiplied by its utility?
A quality-adjusted life year rests on the idea that a period of life can be valued by weighting its length by how good the health is during it. Multiplying the years spent in a state by a utility between zero and one converts imperfect health into an equivalent quantity of full health, so a year at a utility of one half counts as half a year in full health. Summing these weighted periods over time gives the total. The multiplication assumes length and quality can be traded in this way. Drummond and colleagues (2015) explain this structure.
Source: Drummond et al. 2015
What inputs does the QALY calculation require?
The QALY calculation requires two inputs for each health state a person experiences: the length of time spent in the state and the utility value of that state, on a scale where full health is one and death is zero. The time may be measured in years or fractions of years, and the utilities are drawn from valuation studies of health states. Multiplying time by utility for each state and summing gives the QALYs, so the calculation depends on both duration data and health-state values.
Source: Weinstein & Stason 1977
How are health-state utilities obtained for the QALY calculation?
Health-state utilities for the QALY calculation are obtained from valuation studies that measure how people value different states of health on the zero-to-one scale. Methods include the standard gamble, the time trade-off, and the visual analogue scale, and preference-based instruments such as generic quality-of-life measures provide utilities for the states they describe. These values, whether from the general public or patients, supply the weights by which time in each state is multiplied, so the source and method of the utilities affect the result.
Source: Weinstein & Stason 1977
How does discounting enter the QALY calculation?
Discounting enters the QALY calculation when health effects occur over time, since QALYs gained in the future are usually valued less than those gained now, in line with the treatment of future costs. Future QALYs are reduced by a discount rate to express them in present terms before summing. This means a QALY gained many years ahead contributes less than one gained immediately. The choice of discount rate affects the total, particularly for interventions whose benefits accrue far in the future.
Source: Weinstein & Stason 1977
What assumptions underlie the QALY calculation?
The QALY calculation rests on assumptions that have been questioned. It assumes the value of a health state is constant per unit time regardless of its duration or sequence, that time and quality can be traded off in the way the multiplication implies, and that QALYs can be added across states and people. These conditions may not hold for real preferences, which is why alternatives such as the healthy-year equivalent were proposed. The calculation's simplicity depends on these assumptions, so its results carry their qualifications.
Source: Weinstein & Stason 1977
Trust Record
Verified by Dr Darrin Baines
British health economist
Professional identity: darrinbaines.org
Verification date: 17 Sep 2025
Content version: 1.0.0
Canonical Identity
- Term code
- HE-EE-QALY-006
Stable URI · Machine-readable · Resolvable · CC BY 4.0