OBJECTIVES: The UK’s National Institute for Health and Clinical Excellence (NICE) has been accused of discriminating against patients with shorter life expectancy by embracing the use of quality-adjusted life years (QALYs) within cost-effectiveness analysis (CEA). The basis of this claim is that patients with shorter life expectancy have fewer QALYs to gain from treatment and so NICE’s guidance inherently discriminates against such patients. Such criticisms may also be directed at similar decision making agencies. Our objective was to formally identify the circumstances under which CEA-based decision-making discriminates on the basis of life expectancy. METHODS: We developed a simple model of a CEA-based decision making process in which a technology is considered cost-effective for a particular patient cohort only if the ICER for that cohort lies below a fixed cost-effectiveness threshold. For such decision making to discriminate on the basis of life expectancy, the ICERs for two hypothetical cohorts of patients – identical in all ways except life expectancy – must lie on either side of the threshold. RESULTS: We find that CEA does not inherently discriminate on the basis of life expectancy but that scope for discrimination arises in the case of specific technologies having identifiable characteristics. Such discrimination may in fact favour those patients with shorter life expectancy. In all cases the use of discounting is shown to reduce the likelihood of discrimination on the basis of life expectancy – this is particularly relevant in light of the recent discussion around NICE’s discounting practices. CONCLUSIONS: It is recommended that agencies such as NICE consider the possibility of discrimination arising from their use of CEA. Accusations of inherent discrimination, however, appear to be misplaced. It is argued that these claims are founded upon a fundamental misunderstanding of the role of QALYs in CEA, particularly within the decision rules adopted by policy makers.