NOTE: This article is the ninth in a series of 10 articles and is part of our Economic Evaluation in Healthcare 101 course. You can find a course overview and links to all 10 course modules here:

Ethical and Equity Considerations in Economic Evaluation

Economic evaluation plays a critical role in informing resource allocation in healthcare by identifying interventions that deliver the greatest health benefit for a given cost. However, while this approach emphasizes efficiency, it may overlook crucial issues of ethics and equity. Standard cost-effectiveness analysis (CEA) methods, particularly those relying on QALYs (Quality-Adjusted Life Years) and DALYs (Disability-Adjusted Life Years), often focus on maximizing aggregate health outcomes rather than considering who benefits. As health systems increasingly strive toward fair and inclusive decision-making, economic evaluations must grapple with the ethical tensions between efficiency and equity, integrate frameworks such as Distributional Cost-Effectiveness Analysis (DCEA), and reflect on the implications of the tools they use.

1. Equity vs. Efficiency Trade-Offs

The traditional objective of economic evaluation is to maximize health gain per unit of cost, aligning with utilitarian principles. This focus on efficiency—achieving the greatest overall benefit—can lead to decisions that prioritize interventions for populations with the best potential outcomes, often excluding disadvantaged groups who may require more costly care or have lower baseline health.

Equity, by contrast, concerns the fair distribution of health and healthcare, recognizing that some individuals or groups face structural disadvantages due to socioeconomic status, geography, disability, ethnicity, or other factors. In healthcare policy, equity considerations may prioritize:

  1. Reducing health disparities
  2. Supporting vulnerable or marginalized groups
  3. Addressing historical or systemic inequities

The trade-off arises when the most efficient choice (e.g., investing in a high-yield intervention for a healthier group) is not the most equitable (e.g., neglecting a costly but needed intervention for a disadvantaged population).

Policy examples:

  1. Vaccination programs may yield high QALYs at low cost, but mental health services—though less “efficient” by cost-effectiveness thresholds—may serve underrepresented or stigmatized groups.
  2. Treatments for rare diseases may have high ICERs but receive funding on grounds of equity, compassion, and unmet need.

Reference: Cookson R, Mirelman AJ, Griffin S, et al. (2017). Using cost-effectiveness analysis to address health equity concerns. Value in Health, 20(2), 206–212.

2. Distributional Cost-Effectiveness Analysis (DCEA)

Distributional Cost-Effectiveness Analysis (DCEA) is an extension of traditional economic evaluation that incorporates both efficiency and equity considerations into a unified framework. It enables decision-makers to evaluate not only how much health is gained, but also who gains it, and how it affects health inequality across population subgroups.

Key components of DCEA:

  • Stratifies population into relevant subgroups (e.g., income, ethnicity, geography).
  • Estimates costs and outcomes for each group.
  • Measures inequality impacts using indices such as the Atkinson Index or Gini coefficient.
  • Quantifies equity-efficiency trade-offs using metrics like the equity impact plane or equally distributed equivalent (EDE) health.

Advantages:

  • Promotes transparent, evidence-informed equity consideration in decision-making.
  • Helps justify interventions that are less cost-effective overall but reduce health inequality.

Example: A smoking cessation intervention may yield modest QALY gains overall, but if it disproportionately benefits low-income populations, a DCEA could reveal its positive equity impact, supporting its adoption despite a borderline ICER.

DCEA is gaining traction among HTA agencies, particularly in countries with strong public health equity mandates (e.g., the UK’s NHS and NICE). However, implementation remains methodologically complex and data-intensive.

Reference: Asaria M, Griffin S, Cookson R. (2016). Distributional cost-effectiveness analysis: A tutorial. Medical Decision Making, 36(1), 8–19.

3. Ethical Implications of QALYs and DALYs

QALYs and DALYs are widely used summary metrics in economic evaluation. While they facilitate comparison across diseases and interventions, they raise several ethical concerns related to age, disability, and subjective valuation of life.

Ageism and “fair innings”

QALYs inherently favor interventions that benefit younger individuals with more life-years to gain. This can conflict with ethical views that prioritize fair opportunity over sheer life expectancy.

Disability bias

Since QALY and DALY calculations adjust life-years by health state utility weights, individuals with chronic illnesses or disabilities may be assigned lower values even when interventions significantly improve their well-being. Critics argue this may devalue the lives of people with disabilities, inadvertently reinforcing social exclusion.

Cultural and contextual sensitivity

Utility weights are often derived from general population preferences, which may not reflect the lived experience or values of specific patient groups or cultural contexts. This raises questions about whose values count in economic decision-making.

Equal worth vs. health maximization

Ethically, all individuals may be viewed as having equal moral worth, regardless of their ability to benefit in QALY terms. Strict reliance on cost per QALY thresholds can conflict with principles of dignity, justice, and solidarity.

These critiques have led to calls for:

  • Supplementing QALYs with equity weights or multi-criteria decision analysis (MCDA).
  • Involving patients and marginalized communities in utility elicitation and priority setting.
  • Using alternative or complementary measures, such as capability indices or patient-reported outcome measures (PROMs).

Reference: Nord E, Pinto JL, Richardson J, Menzel P, Ubel P. (1999). Incorporating societal concerns for fairness in numerical valuations of health programmes. Health Economics, 8(1), 25–39.

Conclusion

Economic evaluation offers powerful tools for prioritizing healthcare interventions, but its conventional focus on efficiency must be balanced with ethical and equity considerations. The efficiency-equity trade-off is not easily resolved, but frameworks like Distributional Cost-Effectiveness Analysis offer promising methods to make these trade-offs explicit and actionable. At the same time, the widespread use of QALYs and DALYs demands ethical scrutiny to ensure that vulnerable populations are not systematically disadvantaged. As health systems aim for both value-based and people-centered care, integrating fairness into economic evaluation is not just desirable—it is essential.

References

  • Cookson R, Mirelman AJ, Griffin S, et al. (2017). Using cost-effectiveness analysis to address health equity concerns. Value in Health, 20(2), 206–212.
  • Asaria M, Griffin S, Cookson R. (2016). Distributional cost-effectiveness analysis: A tutorial. Medical Decision Making, 36(1), 8–19.
  • Nord E, Pinto JL, Richardson J, Menzel P, Ubel P. (1999). Incorporating societal concerns for fairness in numerical valuations of health programmes. Health Economics, 8(1), 25–39.
  • Drummond MF, Sculpher MJ, Claxton K, et al. (2015). Methods for the Economic Evaluation of Health Care Programmes, 4th ed. Oxford University Press.
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