Abstract
This paper applied cost-effectiveness analysis to the use of drug therapy in the treatment of AIDS. The empirical approach adopted overcame the facts that the samples of patients had varying clinical prognoses, had variable entry dates into the samples and, because AIDS is a terminal disease, had variable exit dates. Holding these variables constant, administration of the drug AZT proved to be a less costly alternative than other existing palliatives for AIDS. The sub-sample of patients treated with AZT had lower hospitalization costs, lower caring costs and sufferers had an increased ability to continue to participate for longer as economically active members of society.
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