QALY, ICER & Net Monetary Benefit Calculator
Compare two health interventions: quality-adjusted life years from life expectancy and utility weights, incremental cost-effectiveness ratio (cost per QALY gained), net monetary benefit at a willingness-to-pay threshold ($50k, $100k, £20–30k), dominance, and the cost-effectiveness plane quadrant.
How it works
QALY = life years × utility; ICER = (C_new − C_old) ÷ (Q_new − Q_old); NMB = ΔQ × WTP − ΔC; NHB = ΔQ − ΔC ÷ WTP; threshold price = C_old + ΔQ × WTP
Health economists compare treatments by what they add in quality-adjusted life years — years of life weighted by a utility between 0 (dead) and 1 (full health), measured with instruments such as the EQ-5D — against what they add in cost. The incremental cost-effectiveness ratio is the price of each extra QALY, judged against a willingness-to-pay threshold: NICE uses £20,000–30,000, US analyses commonly $50,000–150,000, the WHO once suggested one to three times GDP per head. Net monetary benefit rearranges the same test into a number that can be added across options and avoids the ambiguity of ratios when one option is cheaper and worse. Cost-effective is not the same as affordable, so budget-impact analysis sits alongside, and thresholds are ultimately a social judgment about the value of health.
Worked example
A new therapy giving 8.2 years at utility 0.78 (6.40 QALYs) for $68,000, against standard care giving 7.1 years at 0.71 (5.04 QALYs) for $31,000, adds 1.36 QALYs for $37,000 — an ICER of about $27,300 per QALY, cost-effective at a $100,000 threshold with a net monetary benefit of about $99,000 per patient. It could cost up to $167,000 before failing the threshold; treating 500 patients adds $18.5M a year to the budget.
Frequently asked questions
Where do utility values come from?
Preference surveys of the general public valuing health states described by EQ-5D, SF-6D or HUI, or time-trade-off/standard-gamble studies with patients. Published catalogues give typical values (e.g. 0.6–0.7 for moderate heart failure).
Why discount future QALYs and costs?
Both are valued less the further away they are; guidelines use 3–3.5% a year. Discounting reduces the apparent benefit of preventive interventions whose gains come decades later — a known controversy.
Related calculators
Illustrative deterministic analysis. Real health-technology assessments use decision models with probabilistic sensitivity analysis, discounting, and jurisdiction-specific thresholds and perspectives.