Cost Effectiveness in Health Economics

Abstract

Abstract Cost‐effectiveness analysis is a method for comparing the costs and consequences of competing courses of action. In the context of evaluating health technologies, these might include the delivery of pharmaceutical products, psychological interventions, or particular ways of organizing health services. It is similar to cost benefit analysis except that benefit is measured in monetary terms and therefore can be set directly against cost, whereas the consequences in a cost‐effectiveness analysis are measured in nonmonetary terms, such as years of life saved, quality of life, quality‐adjusted years of life ( QALYs ), or symptom reduction. Issues in cost effectiveness that arise in clinical trials are as follows: (i) the economic perspective to be adopted, for example, that of the patient, health provider, or society as a whole; (ii) the design of the trial so as to include all the appropriate costs and economically relevant outcomes and to provide adequate statistical power for the economic evaluation; (iii) the choice of summary statistics to measure cost effectiveness, for example, the incremental cost effectiveness ratio or, as now recognised to be analytically more convenient, the net monetary benefit; (iv) presentational methods, for example, the cost‐effectiveness plane and the cost‐effectiveness acceptability curve; (v) the inclusion of uncertainty, both stochastic and deterministic, directly in the main analyses and also through subsidiary sensitivity analyses; and (vi) the generalization of results to time frames or geographical areas other than that of the trial and to different patient groups, using modeling techniques such as Markov modeling and regression analysis.