Calculating the Cost-Effectiveness of Brilliance: A journey to understand DALYs and the assumptions we make (Part 1)
At D-Rev, we are fundamentally interested in designing and delivering world-class products that improve the lives or increase the incomes of people living on less than $4 a day. This means we invest in due diligence and market research and hire world-class designers and engineers, all to make sure that the right product is able to get to the user who needs it at an affordable price. But then what?
Once a product is in the field, at a hospital, on an amputee—how do we make sure that it is actually improving the lives or increasing the incomes of people living on less than $4 a day? How do we justify our investment, and the investments of our generous funders and donors? How do we know if we are achieving our mission?
The answer is—Impact Assessment. We are committed to following up with patients and products to determine the impact that a D-Rev product has on a user’s life and on a community. We assess the impacts of our products in different ways depending on the product itself, our resources, and the specific research question that we want that assessment to answer.
For Brilliance, our low-cost phototherapy device to treat neonatal jaundice, one method we’ve used to calculate impact is an in-depth cost-effectiveness analysis: an assessment of how much Brilliance costs for every disability-adjusted life year at stake, or “dollars per DALY” ($/DALY). In this two-part blog post, we’ll describe how we did this analysis and what our findings are.
The assessment of our products is an ongoing process that we are always learning from so please ask questions, dig into our numbers, and let us know what you think!
Part I: What is cost-effectiveness? What is Brilliance’s cost-effectiveness?
- What is a disability life-adjusted year (DALY)?
- What is a $/DALY?
- How do we calculate $/DALY for Brilliance?
a. Determining Total Cost
b. Determining DALYs
- What is Brilliance’s cost-effectiveness ($/DALY)?
- In Part II we’ll be asking so what—what does this $/DALY metric mean for D-Rev?
1. What is a Disability-adjusted Life Year (DALY)?
DALY stands for “disability-adjusted life year”—one DALY is essentially equal to one year of healthy life lost. DALYs were developed in 1990 by Harvard University for the World Bank. In 1996, The World Health Organization (WHO) adopted DALYs as their standard metric for quantifying the impact of a disease or health condition across a population in terms of the deaths (“mortality”) and disabilities (“morbidity”) caused.
Previous metrics looked at deaths (“morbidity”) alone, but a DALY combines mortality and morbidity into a single metric to “extend the concept of potential years of life lost due to premature death…to include equivalent years of ‘healthy’ life lost by virtue of being in states of poor health or disability.”1 Therefore, a DALYs analysis allows for the measurement and comparison of health outcomes not limited to just death. This is especially important for conditions like jaundice—deaths caused by severe neonatal jaundice does not fully reflect the full economic burden of living for an extended period of time with a severe disability.
2. What is $/DALY?
$/DALY is a cost-effectiveness ratio based on DALYs, and is used to determine the cost-effectiveness of a specific intervention in a specific location, typically a country or region. The goal of the $/DALY metric is to improve global health by giving key decision makers a universal metric with which they can compare the relative costs of investing in different health interventions in different locations.2 Since projects are often being proposed in multiple locations at once, $/DALY is usually presented as a range to account for the variability in costs. For example, in the table presented below which shows the cost per DALY saved on a variety of HIV prevention interventions in Andhra Pradesh state of India, workplace programs to reduce HIV/AIDS in Andhra Pradesh costs approximately $310 per DALY. That is, for every $310 spent on workplace programs the loss of one disability-adjusted life year is averted.3
The purpose of our study was to use the $/DALY metric to assess the cost-effectiveness of one of D-Rev’s “interventions”—the development, distribution, and use of our Brilliance phototherapy device, in India. We will expand the study to new countries and regions and for all D-Rev products.
3. How do we calculate $/DALY for Brilliance?
In the simplest terms:
In Brilliance’s case, we are most interested in the DALYs that each dollar truly creates—that is, the DALYs whose loss is averted due to the specific intervention of a hospital having a Brilliance unit. We define this by zeroing in on not just the babies that Brilliance units are treating, but the babies that Brilliance is treating who otherwise would not have access to effective treatment (internally we call these babies “babies otherwise”). These are specific DALYs created that we can attribute directly to Brilliance’s presence in the market (or intervention, in development lingo).
The first step in calculating the $/DALY is assessing the numerator—here, the total cost of treatment per baby that we will compare to the total DALYs lost in a specific location due to the illness or condition.
a. Determining Total Cost
In $/DALY calculations, “total cost” is calculated either from the perspective of the “health system” administering the intervention (in this case, a hospital administering jaundice treatment) or from the perspective of the patient consuming the health intervention (in this case, the cost to the baby and family to receive jaundice treatment). We have calculated total cost with respect to the patient. The indirect consumption cost includes the value of time needed for travel, waiting, payment for medical tests and procedures, and any income forgone during treatment.4
Total Cost of Intervention per Baby using Brilliance:
We estimate the total cost of a Brilliance intervention per baby treated to be based on two components: the price the family pays for the baby’s treatment (which is inclusive of the unit operating cost to the hospital, the purchase price, and the doctor’s time), and the cost of the parents’ time recognizing the possible opportunity cost of pulling them away from work and other activities.
We calculate the total cost of a Brilliance intervention to be $54.56 per baby treated.
The next step is to calculate the denominator of our equation—starting with DALYs lost due to the disease or health condition at issue.
b. Determining DALYs
As mentioned, DALYs represent a single metric that combines mortality (Years of Life Lost or YLL) and morbidity (Years of Life Lived with a Disability or YLD).
DALYs is represented by the following equation:
DALYs = YLL + YLD
Years of Life Lost (YLL)
Years of Life Lost (YLL) is a mortality measurement. It is an alternative measurement to death rates that takes into account the age at which the loss of life occurred. Every year of life is equally weighted, but deaths are quantified by the amount of years that a person is missing by dying prematurely. For example, a person who dies prematurely at 20 is considered to have lost 43 years of life (based on the life expectancy in India of 66 years7).
DALYs calculations are region-specific—they can be calculated for a specific target region or for several regions and presented as a range. As such, because India is our launch and largest target market, all of the incidence and population rates we use in the following calculations are specific to India.
We calculate the years of life lost by multiplying the number of deaths caused by neonatal hyperbilirubinemia (jaundice) in India (N) by the average number of additional years a person who dies would have lived had he or she not died prematurely (L):
YLL = N x L
To determine the number of deaths caused by neonatal hyperbilirubinemia in India each year (N) we multiply the number of live births in India (25,642,200 in 20128) by the mortality rate from Kernicterus. Approximately 16.5% of babies require treatment for jaundice9 and of those babies who require treatment, 2% would develop kernicterus,10 meaning that the kernicterus incidence rate is 0.33%. This gives us the morbidity rate, so to dial into mortality we need to multiply the babies who would develop kernicterus by the average percentage of kernicterus cases that result in death, 10%.11
Of these deaths, we estimate that approximately 20% of babies arrive at the hospital with a late presentation of jaundice, meaning that even if the hospital has a Brilliance unit these 20% would not be able to be effectively treated. Therefore we subtract 20% from the annual mortality from KI in India to get a true number of the deaths that the existence of Brilliance could realistically prevent.
N = 8,462 * (1–0.20)
N = 6,770
We estimate that approximately 6,770 babies die each year in India due to a lack of access to effective phototherapy treatment.
L, the average number of years that a person would have lived had she not died prematurely is calculated by subtracting the average age at death from the life expectancy. The average age at death for those with untreated neonatal hyperbilirubinemia is mere days, so we assume an average age at death of zero. Therefore to calculate L for neonatal hyperbilirubinemia in India:
L = 66 – 0
L = 66
Plugging these calculations into the YLL formula:
YLL = N x L
YLL = 6,770 x 66
YLL = 446,790
In other words, 446,790 years of life are lost every year in India due to untreated neonatal hyperbilirubinemia.
Years of Life Lived with Disability (YLD)
Years of Life Lived with Disability (YLD) is a morbidity measurement that quantifies the effect of living with a disability by multiplying the number of incidence cases (I) for the cause of morbidity in a particular time period (in this case, one year) by a disability weight (DW), and by the average duration of the case until remission or death (L from above).
YLD = I x DW x L
To determine the YLD for neonatal hyperbilirubinemia in India we calculate the incidence rate of kernicterus (the condition that leads to disability when severe hyperbilirubinemia is not treated) in India by multiplying the total number of live births in India in 201212 of 25,642,200 by the incidence rate of kernicterus of 0.0033 per live birth.13 More than just the number of incidence cases of neonatal hyperbilirubinemia in India, we want to narrow in on those incidence cases which do not currently have an effective solution. Based on D-Rev fieldwork in India, we estimate that 45% of babies do not have access to effective phototherapy treatment.14 Therefore, the number of incidence cases of in India that do not currently have access to effective phototherapy treatment is:
The disability weight (DW) is a weight factor that reflects the severity of the disease under consideration on a scale from 0 (perfect health) to 1 (equivalent to death). The WHO releases a Global Burden of Diseases Report15 every ten years to institutionalize the disability weights used for each disease. The most recent Global Burden of Diseases Report (2004) does not contain a disability weight specifically for kernicterus so we use cerebral palsy as a proxy disease for kernicterus since the conditions are similar and related. Accordingly, we use 0.436 as the disability weight for kernicterus16:
DW = 0.436
The L in this formula refers to the average duration of the disability before remission or death, the number of years that an affected person lives with the disability over his or her lifetime. Continuing our use of cerebral palsy as a proxy for KI, children with severe cerebral palsy have a 50% probability of surviving to 13 years, and a 25% probability of surviving to 30 years.17 We calculate the average duration of the disability as:
L = (130.50) + (300.25) + (66*0.25)
L = 30.5
Plugging these data into the YLD formula:
YLD = I x DW x L
YLD = 38,079 x 0.436 x 30.5
YLD = 506,370
That is, 506,370 disability-adjusted life years are lost every year in India due to untreated neonatal hyperbilirubinemia—instead, those 506,370 life years are years spent living with a disability.
DALYs for Severe Neonatal Jaundice in India:
We now calculate the DALYs , that is the total number of disability-adjusted life years at stake due to severe neonatal jaundice (hyperbilirubinemia) in India and combines the years of life lost (YLL) and years of life spent living with a disability (YLD) figures.
DALYs = YLL + YLD
DALYs = 446,790 + 506,370
DALYs = 953,160
This number (953,160 DALYs) provides a picture of the total DALYs at stake annually in India due to the unmet need for neonatal hyperbilirubinemia treatment. In order to compare effectively with the total cost that we calculated on an individual baby basis we now need to determine how many DALYs are at stake for each baby. We do this by dividing the total DALYs calculated above by the number of babies in India who require treatment and would have developed kernicterus if effective treatment was not available (the kernicterus incidence rate).
Brilliance (as an intervention) results in 1.86 disability-adjusted life years averted per baby with an unmet need for hyperbilirubinemia treatment in India.
4. What is Brilliance’s Cost-Effectiveness ($/DALY)?
Let’s return to our original formula and plug in the numbers we’ve just calculated:
Based on our calculations, therefore, it costs approximately $29 to avert the loss of one disability-adjusted life year through the Brilliance intervention.
In Part II you will read about what this all means: What does the $/DALY metric tell us? How does Brilliance’s $/DALY compare to other interventions?
1 “Death and DALY estimates for 2004 by cause for WHO Member States: Persons, all ages” (xls). World Health Organization. 2002. Retrieved 2009-11-12
2 Ramanan Laxminarayan, Jeffrey Chow, and Sonbol A. Shahid-Salles, Disease Control Priorities in Developing Countries (Washington DC, USA: World Bank, 2006), 35.
3 Lalit Dandona et al., “Cost-effectiveness of HIV prevention interventions in Andhra Pradesh state of India,” BMC Health Services Research 10 (May 10, 2010): 5.
4 MR Gold, Siegel JE, Russell LB, et al., editors. Cost-effectiveness in health and medicine. New York: Oxford University Press; 1996.
5 Based on fieldwork conducted in India by D-Rev staff in February 2014, the cost of phototherapy treatment ranges from 700 to 1500 rupees per day for an average of 2 days of treatment.
6 Based on India per capita income of $3,285. “Human Development Reports: India,” UN Human Development Report, last modified 2013, accessed March 24, 2014, https://hdr.undp.org/en/countries/profiles/IND.
7 “India,” The World Bank, last modified 2011, accessed March 24, 2014, https://data.worldbank.org/country/india.
8 UNICEF India Statistics 2012 https://www.unicef.org/infobycountry/india_statistics.html
9 Bhutani, Vinod K, and Lois H. Johnson. “Newborn Jaundice and Kernicterus—Health and Societal Perspectives.” Indian Journal of Pediatrics. 70. (2003): 407-16. Print.
10 Bhutani et al, “Newborn Jaundice and Kernicterus,”
11 Stanley Ip, MD and Et. al., “An Evidence-Based Review of Important Issues Concerning Neonatal Hyperbilirubinemia,” Pediatrics 114, no. 1 (July 1, 2004).
12 “UNICEF India Statistics,” https://www.unicef.org/infobycountry/india_statistics.html
13 Bhutani et al, “Newborn Jaundice and Kernicterus,”
14 B.K. Cline et al., “Global Burden and Unmet Need for Hyperbilirubinemia Treatment,” 2009, accessed March 24, 2014
15 World Health Organization 2004. The global burden of disease: 2004 update. Geneva: WHO.
16 Access Economics PTY Limited for Cerebral Palsy Australia, “The Economic Impact of Cerebral Palsy in Australia in 2007,” Access Economics Pty Limited, April 2008.
17 Hutton, J L, and P O D Pharoah. “Life expectancy in severe cerebral palsy.” Archives of Disease in Childhood 91 (2006): 254-58. Print.