Liver failure significantly reduces the quality of life for
sufferers. Government surveys indicate that patients with
liver failure are equally happy living five years completely
healthy or ten years with the disease. After a transplant,
patients recover to 80% of full health. With a successful
liver transplant, patients will live 4 years. Without the
transplant, the patient will live two years. The cost of the
transplant is $100,000 immediately. Each year the patient
must take auto-immune suppressants that cost $10,000 to stop the
body from rejecting the transplant. Regardless, 15% of
patients do not have a successful surgery and die during the
transplant. Use a discount rate of 5% throughout.
a) What are the implied quality weights for years 1, 2, 3, and 4
without surgery? With surgery? What are the
probabilities of being alive in years 1, 2, 3, and 4 without
surgery? With surgery?
b) How many QALY’s will the patient have if they choose to not
have the surgery? If they have the surgery?
c) What is the present value of the cost of the surgery and
follow-up treatment?