In 1997 experts were invited to nominate articles or books that they thought had been most influential in the field of health economics. The winner was a paper by Alan Williams, Professor of Economics at the University of York.
Early work at the Treasury and the Ministry of Health in the 1960s convinced him of the need for proper economic appraisals of public services, based on good measures of output. Working with the Merrison Royal Commission on the NHS in the late 1970s, Williams began to develop the idea of the Quality-Adjusted Life Year (QALY) - measuring the output of healthcare in terms of impact on life expectancy and quality of life.
QALYs are calculated by estimating the years of life remaining for a patient following a particular treatment or intervention, weighting each year with a quality of life score from zero to one, where 'one' represents a year in perfect health.
The National Institute for Health and Care Excellence (NICE) now uses QALYs to prioritise treatments for NHS patients, and the UK Treasury advocates the use of QALYs in public sector investment appraisal. The QALY model has also been adopted by several other countries.