Appendix Z โ€” ๐Ÿงฎ Complete ICER Calculation

Executive Summary

Bottom Line: The 1% Treaty + DIH + dFDA Infrastructure is a dominant health intervention that saves society $6.56 million per life saved (ICER = -$187,543 per QALY).

This means for every life saved, society becomes $6.56 million richer instead of paying the $3,500-$5,500 cost of top charitable interventions.

How is this possible? This initiative generates massive economic value ($164B annually) while also saving lives (875,000 QALYs annually), making it profitable for society to implement.

Complete Calculation Walkthrough

Step 1: Annual Economic Benefits

1a. Peace Dividend ($114B/year)

Source: Peace Dividend Analysis

From Cost of War Analysis:

  • Total annual cost of war: $11,355B
    • Direct costs: $7,655B (military spending, infrastructure damage, human casualties, trade disruption)
    • Indirect costs: $3,700B (lost growth, veteran care, refugees, environmental damage)

1% reduction in total war costs:

  • Societal dividend: $11,355B ร— 0.01 = $114B annually

What this represents:

  • Less infrastructure destruction
  • Reduced military spending
  • Fewer economic disruptions
  • Lower healthcare costs for war injuries
  • Reduced refugee support costs

1b. dFDA R&D Savings ($50B/year)

Source: dFDA Cost-Benefit Analysis

From dFDA analysis:

  • Global clinical trial market: ~$100B/year
  • Baseline cost reduction: 50% (conservative estimate)
  • Mechanism: Decentralized trials modeled on Oxford RECOVERY trial
    • Traditional Phase III: $40,000-$120,000 per patient
    • dFDA model: $500-$1,000 per patient (80-100ร— reduction)
  • Annual R&D savings: $100B ร— 0.50 = $50B annually

Sensitivity range: $25B (25% reduction) to $95B (95% reduction in optimal scenarios)

Total Annual Economic Benefits

$114B + $50B = $164 billion/year

Sensitivity range: $139B to $209B (conservative to optimistic scenarios)

Step 2: Annual Health Benefits (QALYs)

2a. Peace Dividend Health Benefits (35,000 QALYs/year)

Source: Cost of War Analysis

Annual conflict deaths: 100,000 people/year

1% reduction in conflict:

  • Lives saved: 100,000 ร— 0.01 = 1,000 lives/year

Converting to QALYs:

  • Standard assumption: 1 life saved = 35 QALYs (WHO life tables)
  • Rationale: Average age of conflict death ~30 years, life expectancy ~65 years = 35 years of life
  • QALYs from peace dividend: 1,000 ร— 35 = 35,000 QALYs/year

Sensitivity range: 500-1,500 lives saved = 17,500-52,500 QALYs

2b. dFDA Health Benefits (840,000 QALYs/year)

Source: dFDA Cost-Benefit Analysis

Baseline projection: 840,000 QALYs/year from:

  1. Faster drug access (50% of total): 420,000 QALYs
    • Average 2-3 year reduction in time to market
    • Applied to ~50 new drugs/year reaching market faster
  2. New therapies enabled (30% of total): 252,000 QALYs
    • Rare diseases now economically viable
    • Unpatentable treatments tested
    • Repurposed drugs
  3. Prevention via real-world data (20% of total): 168,000 QALYs
    • Early detection of drug interactions
    • Personalized medicine insights
    • Population health monitoring

Sensitivity range: 420,000 (conservative) to 2,100,000 (optimistic) QALYs

See Appendix: Detailed QALY Calculation Model for complete methodology.

Total Annual Health Benefits

35,000 + 840,000 = 875,000 QALYs/year

Sensitivity range: 437,500 (low) to 2,152,500 (high) QALYs

Step 3: Annual Costs

3a. Campaign Costs ($200M/year, amortized)

Source: Campaign Budget

Total campaign budget: $1B over 3-5 years

  • Viral referendum: $200M
  • AI-assisted lobbying: $250M
  • Technology platform: $250M
  • Legal & compliance: $100M
  • Partnerships: $100M
  • Operations: $50M
  • Reserve: $50M

Amortized annual cost:

  • Conservative (3 years): $1B รท 3 = $333M/year
  • Central (4 years): $1B รท 4 = $250M/year
  • Optimistic (5 years): $1B รท 5 = $200M/year

Using central estimate: $250M/year

Note: After initial 3-5 year campaign, these costs drop to near zero. We use amortized costs for a 10-year NPV analysis.

3b. dFDA Operational Costs ($40M/year)

Source: dFDA Cost-Benefit Analysis

Annual operational costs: $40M/year

  • Platform maintenance: $15M
  • Staff (minimal, AI-assisted): $10M
  • Infrastructure (cloud, security): $8M
  • Regulatory coordination: $5M
  • Community support: $2M

Sensitivity range: $30M (efficient) to $60M (expanded operations)

Total Annual Costs

$250M + $40M = $290M/year

Sensitivity range: $230M to $393M

Step 3b: Alternative Cost Perspective - The Funding Mechanism

Important Note: The above calculation uses traditional health economics methodology, counting all upfront costs. However, the actual funding mechanism makes the true cost perspective more nuanced.

Understanding the Funding Flow

The DIH Treasury Mechanism:

  1. Countries redirect $27B/year from military budgets to the DIH treasury
  2. The DIH treasury allocates:
    • $2.7B/year โ†’ VICTORY bondholders (10% of redirected funds)
    • $24.3B/year โ†’ Medical research and operations
    • This $24.3B covers:
      • dFDA operations: $40M/year
      • Clinical trial subsidies: ~$10-20B/year
      • Other medical research: Remaining funds

VICTORY Bond Financing:

  • Investors provide: $1B upfront (funds the campaign)
  • Investors receive: $2.7B/year perpetually (270% annual return)
  • Payback period: 4.4 months
  • Result: Campaign is self-funding from investor perspective

Alternative Cost Framings

Framing 1: Zero Upfront Cost (Investor-Funded)

  • Campaign cost: $0 (funded by VICTORY bond investors who get repaid)
  • dFDA operations: $0 (funded by DIH treasury from redirected military spending)
  • Total cost to society: $0/year
  • ICER = -$168,114 per QALY (society pays nothing, gets everything)

Framing 2: Opportunity Cost of Redirected Spending

  • Cost: $27B/year (redirected military spending)
  • But this $27B is ALREADY COUNTED in the $114B peace dividend
  • Net cost: $27B - $27B = $0
  • ICER = -$187,543 per QALY

Framing 3: Military Waste Conversion

  • Military spending has negative ROI (destroys value)
  • Medical spending has positive ROI (creates value)
  • Weโ€™re converting waste into productive investment
  • True cost: Negative (weโ€™re avoiding wasteful spending)
  • ICER = Undefined (negative cost, positive QALYs)

Why We Use Conservative $290M/Year in Primary Analysis

For credibility and conservative estimation:

  1. Health economics convention requires counting all costs
  2. Someone must pay the $1B campaign cost initially (even if repaid)
  3. Conservative estimates are more defensible to skeptics
  4. This intervention is dominant even with costs included

Key insight: Even counting ALL costs conservatively, the ICER is -$167,771/QALY. Under more realistic framings where the campaign is self-funding, the true societal cost approaches $0, making the intervention infinitely cost-effective.

Step 4: ICER Calculation

ICER (Incremental Cost-Effectiveness Ratio) = (Costs - Benefits) / QALYs gained

4a. Net Economic Impact

Annual net benefit = Benefits - Costs

  • Benefits: $164B
  • Costs: $0.29B
  • Net benefit: $163.7 billion/year

Society saves $163.7 billion while gaining 875,000 QALYs

4b. ICER per QALY

ICER = ($290M - $164B) / 875,000 QALYs

ICER = -$163,710M / 875,000

ICER = -$187,097 per QALY

Interpretation: For every QALY gained, society saves $187,097. This is a dominant intervention (saves money AND improves health).

4c. Cost per Life Saved

Cost per life = ICER ร— QALYs per life

Cost per life = -$167,771 ร— 35 QALYs/life

Cost per life = -$5,871,985 per life saved

Interpretation: For every life saved, society saves $5.87 million.

Comparison to Other Interventions

Top Charitable Interventions (GiveWell 2024)

Intervention Cost per Life Saved ICER (approx)
Helen Keller International (Vitamin A) $3,500 $100/QALY
New Incentives (Vaccination incentives) $4,500 $129/QALY
Against Malaria Foundation (bed nets) $5,500 $157/QALY

Source: GiveWell 2024 Top Charities

These are excellent interventions - among the best uses of charitable dollars. They cost society money but save lives very cost-effectively.

1% Treaty + DIH + dFDA

Intervention Cost per Life Saved ICER
1% Treaty + DIH + dFDA -$5,871,985 -$167,771/QALY

This is a dominant intervention - it makes society richer while saving lives.

The Difference

Traditional charity model: Society pays to save lives

  • Excellent value ($3,500-$5,500 per life)
  • Requires ongoing donations
  • Costs money to implement

1% Treaty model: Society profits from saving lives

  • Exceptional value (-$5.87M per life = society saves money)
  • Self-funding from economic gains
  • Generates wealth while improving health

The multiplier: The 1% Treaty is ~1,700ร— more cost-effective than the best charities in the world.

Sensitivity Analysis

Key Parameters and Ranges

Parameter Conservative Central Optimistic
Peace dividend $50B $114B $200B
dFDA R&D savings $25B $50B $95B
Total benefits $75B $164B $295B
Campaign costs/yr $333M $250M $200M
dFDA ops costs/yr $60M $40M $30M
Total costs/yr $393M $290M $230M
Peace QALYs 17,500 35,000 52,500
dFDA QALYs 420,000 840,000 2,100,000
Total QALYs 437,500 875,000 2,152,500

ICER Across Scenarios

Scenario Net Benefit QALYs ICER/QALY Cost/Life
Conservative $74.6B 437,500 -$170,514 -$5.97M
Central $163.7B 875,000 -$187,097 -$6.55M
Optimistic $294.8B 2,152,500 -$136,945 -$4.79M

Key finding: In ALL scenarios, the intervention is dominant (saves money while saving lives).

Alternative ICER Calculations Based on Funding Perspective

Perspective Annual Cost Annual Benefit QALYs ICER/QALY Cost/Life Notes
Conservative (All Costs) $290M $164B 875k -$187,097 -$6.55M Counts all upfront costs
Investor-Funded $0 $164B 875k -$187,429 -$6.56M Campaign funded by VICTORY bonds
Opportunity Cost $27B $164B 875k -$156,571 -$5.48M Counts redirected military spending
Waste Conversion -$27B* $164B 875k Undefined Undefined Military spending creates negative value

*Military spending has negative ROI (destroys value), so redirecting it is a benefit, not a cost.

Interpretation:

  • Under traditional health economics (Conservative), the ICER is -$167,771/QALY
  • Under realistic funding (Investor-Funded), society pays $0, ICER approaches -โˆž
  • Considering opportunity cost of military spending, ICER is -$137,257/QALY
  • Recognizing military spending as waste, the intervention has undefined (infinite) cost-effectiveness

Worst case (conservative): Society still saves $5.97M per life saved

Best case (optimistic): Society saves $4.79M per life saved (lower because weโ€™re saving many more lives, so the economic benefit is spread across more QALYs)

Visual Comparisons

Cost-Effectiveness: How Much Does Society Pay to Save a Life?

This chart demonstrates the fundamental difference between traditional philanthropy and the 1% Treaty approach:

  • GiveWell Top Charities (Helen Keller International, New Incentives, Against Malaria Foundation): Society pays $3,500-$5,500 per life saved. These are excellent interventionsโ€”among the most cost-effective charitable uses of money in the world.

  • 1% Treaty + DIH + dFDA: Society SAVES $5.87 million per life saved. This is a dominant intervention that generates wealth while saving lives. The stacked bar shows contributions from both the peace dividend (1% less conflict) and dFDA R&D savings.

The dramatic scale difference illustrates why this intervention is ~1,700ร— more cost-effective than even the best traditional charities.

Scale of Impact: Annual Economic Benefits

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This chart compares the gross annual economic benefits across major public health interventions:

  • Traditional interventions (Water Fluoridation, Smoking Cessation, Childhood Vaccinations): Generate $0.8B to $15B in annual economic benefits. These are highly successful programs that have transformed public health.

  • 1% Treaty + DIH + dFDA: Generates $164B in annual economic benefits ($114B peace dividend + $50B dFDA R&D savings). This is nearly 11ร— larger than childhood vaccinations, one of the most successful interventions in history.

Key distinction: Only the 1% Treaty is self-fundingโ€”it generates the wealth needed to sustain itself while traditional interventions require ongoing funding.

Sources and References

Economic Benefits

  1. Peace Dividend: Peace Dividend Analysis
  2. dFDA R&D Savings: dFDA Cost-Benefit Analysis
    • Clinical trial market: ~$100B/year
    • 50% cost reduction (baseline)
    • Range: 25%-95%

Health Benefits

  1. Conflict Deaths: Cost of War Analysis
    • 100,000 deaths/year
    • Sources: ACLED, GTD, Uppsala
  2. dFDA QALYs: dFDA QALY Model
    • Baseline: 840,000 QALYs/year
    • Range: 420,000-2,100,000
  3. QALY Conversion: WHO life tables
    • 1 life saved โ‰ˆ 35 QALYs (standard assumption)

Costs

  1. Campaign Budget: Campaign Budget
    • Total: $1B over 3-5 years
    • Amortized: $200-333M/year
  2. dFDA Operations: dFDA Cost Analysis
    • Annual: $40M/year
    • Range: $30-60M

Comparisons

  1. GiveWell Top Charities: GiveWell 2024
    • Cost per life: $3,000-$5,500
    • Data as of February 2024

Frequently Asked Questions

Q: How can this save money while saving lives?

A: The 1% Treaty generates $164B in annual economic benefits:

  • $114B from reduced conflict costs (peace dividend)
  • $50B from more efficient medical R&D (dFDA)

These benefits far exceed the $290M annual costs, creating a net profit of $163.7B/year for society.

Meanwhile, the same initiative saves lives:

  • 1,000 lives from 1% less conflict
  • 840,000 QALYs from faster/better medical treatments

You get both the economic benefit and the health benefit.

Q: Why isnโ€™t everyone doing this already?

A: Market failure and collective action problem:

  • Individual countries canโ€™t capture the global benefits
  • Defense contractors profit from the status quo
  • No mechanism exists to coordinate global action
  • Medical research funding is fragmented across countries

The 1% Treaty solves this by creating aligned incentives.

Q: Whatโ€™s the catch?

A: The main challenges are political, not economic:

  • Getting countries to sign the treaty (hence the $1B campaign)
  • Overcoming defense industry opposition (hence VICTORY bonds to co-opt them)
  • Building the dFDA infrastructure (hence the $250M technology budget)

The math works. The challenge is execution.

Q: How confident are you in these numbers?

A: Central estimates are conservative:

  • Peace dividend uses 1% (could be 2-5% over time)
  • dFDA uses 50% R&D savings (Oxford RECOVERY showed 80-100ร—)
  • Excludes many hard-to-quantify benefits (innovation, rare diseases, etc.)

Even in worst-case scenarios (conservative column), the ICER is still -$170,514/QALY.

The intervention is robustly dominant across all reasonable parameter ranges.

Q: Is it misleading to say society pays $0 when the campaign is investor-funded?

A: This depends on perspective:

From societyโ€™s aggregate perspective: The $1B campaign cost is real money that someone must provide initially. However, since investors get repaid with 270% returns from redirected military spending, the net cost to society approaches $0 after payback.

From taxpayersโ€™ perspective: They give up $27B in military spending but receive $164B in economic benefits (peace dividend + R&D savings). Net gain: $137B.

From investorsโ€™ perspective: They invest $1B and receive $2.7B/year perpetually. This is the best investment in history.

The key insight: Traditional ICER assumes spending societyโ€™s resources on health interventions. Here, weโ€™re redirecting resources from destructive uses (war) to productive uses (medical research). The โ€œcostโ€ is really just stopping waste.

Q: Isnโ€™t redirecting military spending politically impossible?

A: Thatโ€™s what the $1B campaign budget is for - making the politically impossible become inevitable through:

  • Viral referendum showing overwhelming public support (80%+ want less war, more cures)
  • VICTORY bonds that make supporting the treaty more profitable than opposing it
  • AI-assisted lobbying thatโ€™s 60-80% more cost-effective than traditional campaigns
  • Creating unstoppable momentum in pilot countries first

The math shows itโ€™s worth trying. Even a 10% chance of success has positive expected value given the enormous returns.

Next Steps

  1. Validate assumptions: External review of cost estimates
  2. Monte Carlo analysis: Full probabilistic sensitivity analysis
  3. Peer review: Submit to health economics journals
  4. Policy brief: One-page summary for decision-makers
  5. Interactive calculator: Let users adjust assumptions