They are based on the number of years of life that would be added by the intervention. Each year in perfect health is assigned the value of 1.0 down to a value of 0 for death. If the extra years would not be lived in full health, for example if the patient would lose a limb, or be blind or be confined to a wheelchair, then the extra life-years are given a value between 0 and 1 to account for this.
The meaning and usefulness of QALY is debated. Perfect health is hard, if not impossible, to define. Some argue that there are health states worse than death, and that therefore there should be negative values possible on the health spectrum (indeed, some health economists have incorporated negative values into calculations). Determining the level of health depends on measures that some argue place disproportionate importance on physical pain or disability over mental health. The effects of a patient's health on the quality of life of others - caregivers, family etc. also does not figure into these calculations.
The "weight" values between 0 and 1 are usually determined by methods such as:
Another way of determining the weight associated with a particular health state is to use standard descriptive systems such as the EuroQol EQ-5D questionnaire, which categorise health states according to the following dimensions: mobility, self-care, usual activities (e.g. work, study, homework or leisure activities), pain/discomfort and anxiety/depression.
However, the weight assigned to a particular condition can vary greatly, depending on the population being surveyed. Those who do not suffer from the affliction in question will, on average, overestimate the detrimental effect on quality of life, compared to those who are afflicted.
QALYs are used in cost-utility analyses to calculate the ratio of cost to QALYs saved for a particular health care intervention. This is then used to allocate healthcare resources, with an intervention with a lower cost to QALY saved ratio being preferred over an intervention with a higher ratio. This method is controversial because it means that some people will not receive treatment as it is calculated that cost of the intervention is not warranted by the benefit to their quality of life. However, its supporters argue that since health care resources are inevitably limited, this method enables them to be allocated in the way that is most beneficial to society.