Abstract
In this paper, we outline how to use cost-utility analysis from a societal perspective and the arguments that could be made for using such a model for economic evaluation of health care. We show that to include all the costs in the analysis, a price per quality-adjusted life years (QALY) gained rather than a given budget should be used as the decision rule. Using cost-utility analysis this way is based on a willingness to pay per QALY gained that is constant and the same for everyone. To use a fixed price per QALY gained is consistent with societal utility maximization if aggregated QALYs are a measure of societal utility and if the mix of financing sources is the same for all health care programmes. If, furthermore, the price per QALY gained is set at the optimal level, cost-utility analysis will lead to a maximization of societal utility. To get more information on the willingness to pay per QALY gained so as to provide cost-utility analysis with a useful decision rule should be a research priority.