The central concern of economics is how to best allocate scarce resources among competing uses. The same concern applies to the scope of health care. As a result, pharmacoeconomics, which compares the value of one drug or drug therapy to another, became an important issue in the mid-1980s. There are several types of pharmacoeconomic evaluations, one of which is cost-utility analysis (CUA). CUA focuses on the quality of a health outcome produced or rejected by different health programs or treatments. CUA is a form of cost-effectiveness analysis (CEA) that attempts to capture the timing and duration of illness and disability by comparing the utility (person preference) associated with different health outcomes. (see Figure 1) It was originally called “Generalized Cost-Effectiveness Analysis” because it is used to narrow the restriction of traditional cost-effectiveness analysis. In 1972 it was renamed “Utility Maximization” and then “Healthy Status Index Model” in 1976. Since 1982, in many countries it has been called CUA, although the United States still called it CEA. Even though these two terms are used interchangeably, there are still several distinguishing characteristics between the two. Such differences include integrating multiple outcomes, quantifying outcomes based on desirability, and measuring the relative desirability of outcomes with von Neumann-Morgenstern utility theory. A cost-utility analysis describes the additional cost of the new intervention per unit of health gain and evaluates health in terms of length and quality of life using the quality-adjusted life year (QALY). QALYs were invented in 1956 by two health economists, Christopher Cundell and Carlos McCartney. The concept of QALY was f...... half of the document ......room/characteristics/measurementeffectivenessandcosteffectivenesstheqaly.jspNeumann, P., Weinstein M. (2010, October 14). Legislate against the use of cost-effectiveness information. The New England Journal of Medicine, vol 363, 1495-1497. doi:10.1056/NEJMp1007168.Office of Health Economics (2002). What is a QALY? Retrieved from http://oheschools.org/ohech5pg4.htmlWilkerson J. (2011, September 28). PCORI chief promises not to conduct cost-effectiveness studies, but notes gray areas. InsideHealthPolicy.com. Retrieved from http://insidehealthpolicy.com/Inside-Health-General/Public-Content/pcori-head-vows-not-to-do-cost-effective-studies-but-notes-gray-areas/menu-id- 869 .htmlYes, GC (1997, December 1). Cost-utility analysis of taxane therapy. American Journal of Health-System Pharmacy, Vol 54, Supplement 2, S11-15. Retrieved from http://ajhp.org/content/54/suppl_2/S11.short