Quality adjusted life year (QALY) is a statistical parameter that helps economists compare the costs of medical interventions. It hepls them make cost-benefit analysis of different treatment options and take decisions on how to ration scarce resources. One QALY means the same thing as one year of perfect health, two years of half-perfect health, or four years of one-quarter perfect health. To ration care, a government or insurer determines how much a QALY is worth, and cuts health services with costs above where that line is drawn.
Darshak Sanghavi, a Pediatric Cardiologist, makes a well reasoned case against the use of QALY logic saying that it creates a very powerful bias against any form of expensive life saving treatment, and in favor of preventive measures. With multi-lateral institutions and aid agencies increasingly relying on QALYs, poor people suffering from fatal diseases like AIDS or requiring expensive life-saving medical interventions are most likely to be denied any external assistance and left to die.
Citing the example of India and Brazil which started manufacturing generic versions of expensive drugs, he argues that health care costs, especially for life saving drugs, are entirely elastic and negotiable. It was also found that collective bargaining reduced costs considerably, so much so that Brazil is today able to treat all its AIDS patients with antiviral drugs, virtually free of cost.