<P> The first drug to go through the new process was Lenalidomide, whose ICER was £ 43,800 . </P> <P> The following example from NICE explains the QALY principle and the application of the cost per QALY calculation . </P> <P> A patient has a life - threatening condition and is expected to live on average for 1 year receiving the current best treatment which costs the NHS £ 3,000 . A new drug becomes available that will extend the life of the patient by three months and improve his or her quality of life, but the new treatment will cost the NHS more than three times as much at £ 10,000 . Patients score their perceived quality of life on a scale from 0 to 1 with 0 being worst possible health and 1 being best possible health . On the standard treatment, quality of life is rated with a score of 0.4 but it improves to 0.6 with the new treatment . Patients on the new treatment on average live an extra 3 months, so 1.25 years in total . The quality of life gained is the product of life span and quality rating with the new treatment less the same calculation for the old treatment, i.e. (1.25 x 0.6) less (1.0 x 0.4) = 0.35 QALY . The marginal cost of the new treatment to deliver this extra gain is £ 7,000 so the cost per quality life year gained is £ 7000 / 0.35 or £ 20,000 . This is within the £ 20,000 - £ 30,000 that is suggested by NICE to be the limit for drugs to be cost - effective . </P> <P> If the patient was expected to live only one month extra and instead of three then NICE would issue a recommendation not to fund . The patient's Primary Care Trust could still decide to fund the new treatment, but if not, the patient would then have two choices . He or she could opt to take the free NHS standard treatment, or he or she may decide to pay out of pocket to obtain the benefit of the new treatment from a different health care provider . If the person has a private health insurance policy the person could check to see whether the private insurance provider will fund the new treatment . About 8% of the population has some private health insurance from an employer or trade association and 2% pay from their own resources . </P>

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