Concept Architecture
Concept
Theoretically, a Tariff is a scoring system that assigns preference-based utility values to health states described by a standardised health-related quality-of-life instrument. It is grounded in utility theory and health-state valuation, translating combinations of dimension levels into values representing societal or patient preferences. In health economics, tariffs enable questionnaire responses to be converted into utility scores for calculating quality-adjusted life-years.
Mathematically, a tariff is commonly represented as a regression-based scoring function in which coefficients are assigned to health-state dimensions and severity levels. The value of a health state is obtained by applying the relevant coefficients to its descriptive profile, often relative to full health. Tariffs may be estimated using ordinary least squares, generalised linear models, censored regression, hybrid models or other statistical approaches applied to time trade-off, standard gamble or discrete choice data.
In practice, analysts apply a country-specific or population-specific tariff to each respondent?s health-state profile. The resulting utility values are used to estimate mean health-related quality of life, changes following treatment and accumulated quality-adjusted life-years. Tariff selection should reflect the jurisdiction, valuation protocol and reference population relevant to the economic evaluation.
Purpose
Used to convert descriptive health-state profiles into preference-based utility values for quality-adjusted life-year estimation and cost-utility analysis.
Mathematical Formulae
Primary Formula
U(s) = 1 ? ???x?
where:
- U(s) = utility assigned to health state s
- ?? = estimated tariff coefficient
- x? = indicator for a specified dimension level
Supporting Formulae
Regression-based valuation model:
y? = ?? + ???x?? + �?
Quality-adjusted life-years:
QALYs = ?u? ? ?t
Incremental QALYs:
?QALY = QALY? ? QALY?
Related Mathematical Methods
- Health-State Valuation
- Time Trade-Off
- Standard Gamble
- Discrete Choice Experiment
- Regression Modelling
- Quality-Adjusted Life-Year Estimation
Example
A five-dimension health state has applicable tariff decrements of 0.08 for moderate mobility problems, 0.05 for moderate pain and 0.10 for severe anxiety.
U(s) = 1 ? (0.08 + 0.05 + 0.10)
U(s) = 0.77
If the patient remains in this state for two years:
QALYs = 0.77 ? 2 = 1.54
The tariff therefore converts the descriptive health profile into a utility value suitable for cost-utility analysis.
Excel Implementation
| Function | Example Formula | Health Economics Application |
|---|---|---|
| SUMPRODUCT | =1-SUMPRODUCT(IndicatorRange,CoefficientRange) | Applies tariff coefficients to a health-state profile. |
| XLOOKUP | =XLOOKUP(B2,StateCodeRange,UtilityRange) | Retrieves the tariff value for a complete health-state code. |
| SUMIFS | =SUMIFS(CoefficientRange,DimensionRange,B2,LevelRange,C2) | Retrieves and aggregates dimension-level tariff decrements. |
| LET | =LET(Decrement,SUM(D2:H2),1-Decrement) | Calculates the utility value from tariff decrements. |
| SUMPRODUCT | =SUMPRODUCT(UtilityRange,DurationRange) | Calculates QALYs from tariff-derived utilities and time spent in each state. |
VBA (Optional)
VBA can automate tariff application to large patient-level datasets and calculate utility profiles and quality-adjusted life-years.
Sources
- Dolan P. Modeling valuations for EuroQol health states. Medical Care.
- Oppe M, Devlin NJ, van Hout B, Krabbe PFM, de Charro F. A programme of methodological research to arrive at the new international EQ-5D-5L valuation protocol. Value in Health.
- Brazier J, Ratcliffe J, Salomon JA, Tsuchiya A. Measuring and Valuing Health Benefits for Economic Evaluation. Oxford University Press.
- NICE. Health Technology Evaluation Manual.
- Drummond MF, Sculpher MJ, Claxton K, Stoddart GL, Torrance GW. Methods for the Economic Evaluation of Health Care Programmes. Oxford University Press.
Related Concepts (2)
Library
Publications
1
NICE DSU Technical Support Document 8: An Introduction to the Measurement and Valuation of Health for NICE Submissions — Brazier, Rowen, TSD 8 ed., 2011 (NICE Decision Support Unit (University of Sheffield))
An introduction to the measurement and valuation of health for NICE submissions — the QALY, health-state utility values, generic preference-based measures, and the requirements of the NICE reference case.
Frequently Asked Questions (6)
What is a tariff?
The specific set of utility weights, derived from a population valuation study, used to convert health status instrument responses into a single score.
Source: Brazier et al. 2007
Why can one instrument have several tariffs?
A single descriptive instrument can carry more than one tariff because different valuation surveys, populations, or methods each produce their own set of weights. A country may develop its own tariff to reflect local preferences, and a new tariff may be issued when a better valuation method becomes available. Applying a different tariff to the same responses changes the resulting scores, which is why studies must state which they used. Brazier and colleagues (2007) note that instruments accumulate multiple tariffs over time.
Source: Brazier et al. 2007
How is a tariff derived?
A tariff is derived by eliciting valuations of a sample of the instrument's health states from a representative population, using methods such as the time trade-off, and modelling these valuations to produce weights for every state the instrument can describe. The modelling extends the sample valuations to all possible combinations of levels. The resulting weights, the tariff, embody the population's preferences and are applied to score any respondent's health state into a utility.
Source: Brazier et al. 2007
How is a tariff applied?
A tariff is applied by taking a respondent's reported levels on the instrument's dimensions, looking up or computing the corresponding weights, and combining them according to the tariff's scoring rule into a single utility on a scale from death to full health. Because the tariff covers every possible state, any respondent's described health can be scored. Applying the tariff is what converts a health description into the utility used in economic evaluation.
Source: Brazier et al. 2007
Why does the choice of tariff matter?
The choice of tariff matters because different tariffs, from different populations, countries, or valuation methods, assign different utilities to the same described health state, so the quality-adjusted life years estimated and the conclusions of an evaluation depend on which tariff is used. Decision-making bodies often specify a tariff for their population to ensure consistency. Because it directly determines the utilities, the tariff applied is reported, and its origin is recognised as consequential.
Source: Brazier et al. 2007
How does a tariff relate to a value set?
A tariff and a value set are essentially the same thing: the set of utility weights from a population valuation used to score an instrument's health states, with tariff the term more common in the United Kingdom and value set more common internationally. Both derive from the same kind of valuation study and are applied in the same way. The terms are used interchangeably, referring to the weights that convert a health description into a utility.
Source: Brazier et al. 2007
Trust Record
Verified by Dr Darrin Baines
British health economist
Professional identity: darrinbaines.org
Verification date: 2 Sep 2025
Content version: 1.0.0
Canonical Identity
- Persistent URI
- https://healtheconomics.wiki/concept/tariff
- Term code
- HE-EE-HU-076
Stable URI · Machine-readable · Resolvable · CC BY 4.0