Health Economics
RPA possesses extensive expertise in applying market-based and nonmarket-based approaches to assess the economic value of health benefits and costs associated with policy interventions. Our focus lies in evaluating the direct and indirect impacts of policies on human health using various valuation methods. From market-based approaches, such as cost-of-illness and lost productivity assessments, to nonmarket-based methods like Contingent Valuation, we employ diverse strategies to capture the full spectrum of policy impacts.
Among the non-monetary methods, we frequently utilize quality-adjusted life years (QALYs) and disability-adjusted life years (DALYs) to assess the health impacts of policies. QALYs are employed by institutions like the National Institute for Health and Care Excellence (NICE) to inform cost-effectiveness and justify medical interventions. DALYs, on the other hand, are employed by the World Health Organization (WHO) to measure the burden of disease in terms of years lost due to ill-health, disability, or premature death.
At RPA, we boast an interdisciplinary team of experts who possess profound knowledge of health and safety risks associated with consumer goods and services, as well as the interplay between human health, risk assessment, and regulatory practice. We combine expertise in chemical risk assessment and management with human health economics. This is exemplified by our extensive work on the development and implementation of the Registration, Evaluation, Authorization, and Restriction of Chemicals (REACH) regulation since 2001, including numerous impact assessments and contributions to key guidance documents.
Our work in human health economics is closely tied to our involvement with the Water Framework Directive, the REACH Regulation, and the assessment of impacts related to lowering occupational exposure limits for EU workers regarding various substances. Human health economics plays a vital role in socio-economic analysis (SEA), providing essential insights to inform decisions regarding chemical authorizations and restrictions. In fact, we have developed frameworks for assessing the human health and environmental benefits of REACH and provided guidance on SEA for chemical risk management to the Organisation for Economic Co-operation and Development (OECD).
Combining risk assessment outputs with health valuation presents challenges due to differing metrics used by practitioners. However, both disciplines are increasingly converging to ensure compatibility. One notable approach is the Population Attributable Fraction (PAF), which measures the proportional reduction in population disease or mortality that would occur with reduced exposure to a risk factor. PAFs can be linked to cost-of-illness approaches to estimate the monetary benefits of interventions through cost-aversion.
Contingent Valuation approaches have also been employed to assess the value of policy benefits. Measures such as the value of a statistical life and the value of a life year capture individuals’ willingness to pay for a reduction in the risk of specific outcomes, without assigning a value to an individual’s life directly.
In healthcare interventions, economic evaluations often take the form of cost-effectiveness analyses, with effectiveness measured in QALYs or DALYs. QALYs and DALYs combine both the quantity and quality of life, with QALYs measuring time spent in different health states. A year of perfect health is valued at 1, while a year of decreased health or death is assigned a value of zero. Increasingly, DALYs and QALYs are recognized as valuable metrics in policy contexts beyond healthcare interventions.
Our work in developing guidance on socio-economic analyses has explored the applicability of different methods in various policy contexts and based on available information. We excel at using these methods to provide accurate estimates of human health impacts, supporting both industry