World Library  
Flag as Inappropriate
Email this Article

Cost-effectiveness analysis

Article Id: WHEBN0000265128
Reproduction Date:

Title: Cost-effectiveness analysis  
Author: World Heritage Encyclopedia
Language: English
Subject: Health economics, Asset Management Plan, Constructability, Effective altruism, Formulary (pharmacy)
Collection: Costs, Health Economics, Health Informatics, Healthcare Quality
Publisher: World Heritage Encyclopedia
Publication
Date:
 

Cost-effectiveness analysis

Cost-effectiveness analysis (CEA) is a form of economic analysis that compares the relative costs and outcomes (effects) of two or more courses of action. Cost-effectiveness analysis is distinct from cost–benefit analysis, which assigns a monetary value to the measure of effect.[1] Cost-effectiveness analysis is often used in the field of health services, where it may be inappropriate to monetize health effect. Typically the CEA is expressed in terms of a ratio where the denominator is a gain in health from a measure (years of life, premature births averted, sight-years gained) and the numerator is the cost associated with the health gain.[2] The most commonly used outcome measure is quality-adjusted life years (QALY).[1] Cost-utility analysis is similar to cost-effectiveness analysis. Cost-effectiveness analyses are often visualized on a cost-effectiveness plane consisting of four-quadrants. Outcomes plotted in Quadrant I are more effective and more expensive, those in Quadrant II are more effective and less expensive, those in Quadrant III are less effective and less expensive, and those in Quadrant IV are less effective and more expensive.[3]

Contents

  • General application 1
  • CEA in pharmacoeconomics 2
  • See also 3
  • References 4
  • External links 5

General application

The concept of cost effectiveness is applied to the planning and management of many types of organized activity. It is widely used in many aspects of life. In the acquisition of military tanks, for example, competing designs are compared not only for purchase price, but also for such factors as their operating radius, top speed, rate of fire, armor protection, and caliber and armor penetration of their guns. If a tank's performance in these areas is equal or even slightly inferior to its competitor, but substantially less expensive and easier to produce, military planners may select it as more cost effective than the competitor. Conversely, if the difference in price is near zero, but the more costly competitor would convey an enormous battlefield advantage through special ammunition, radar fire control and laser range finding, enabling it to destroy enemy tanks accurately at extreme ranges, military planners may choose it instead—based on the same cost effectiveness principle.

Cost effectiveness analysis is also applied to many other areas of human activity, including the economics of automobile usage.

CEA in pharmacoeconomics

In the context of pharmacoeconomics, the cost-effectiveness of a therapeutic or preventive intervention is the ratio of the cost of the intervention to a relevant measure of its effect. Cost refers to the resource expended for the intervention, usually measured in monetary terms such as dollars or pounds. The measure of effects depends on the intervention being considered. Examples include the number of people cured of a disease, the mm Hg reduction in diastolic blood pressure and the number of symptom-free days experienced by a patient. The selection of the appropriate effect measure should be based on clinical judgment in the context of the intervention being considered.

A special case of CEA is cost–utility analysis, where the effects are measured in terms of years of full health lived, using a measure such as quality-adjusted life years or disability-adjusted life years. Cost-effectiveness is typically expressed as an incremental cost-effectiveness ratio (ICER), the ratio of change in costs to the change in effects. A complete compilation of cost-utility analyses in the peer reviewed medical literature is available from the Cost-Effectiveness Analysis Registry website.

A 1995 study of the cost-effectiveness of over 500 life-saving medical interventions found that the median cost per intervention was $42,000 per life-year saved.[4] A 2006 systematic review found that industry-funded studies often concluded with cost effective ratios below $20,000 per QALY and low quality studies and those conducted outside the US and EU were less likely to be below this threshold. While the two conclusions of this article may indicate that industry-funded ICER measures are lower methodological quality than those published by non-industry sources, there is also a possibility that, due to the nature of retrospective or other non-public work, publication bias may exist rather than methodology biases. There may be incentive for an organization not to develop or publish an analysis that does not demonstrate the value of their product. Additionally, peer reviewed journal articles should have a strong and defendable methodology, as that is the expectation of the peer-review process.[5]

See also

References

  1. ^ a b Bleichrodt H, Quiggin J (December 1999). "Life-cycle preferences over consumption and health: when is cost-effectiveness analysis equivalent to cost-benefit analysis?". J Health Econ 18 (6): 681–708.  
  2. ^ Gold MR; et al. Cost-effectiveness in health and medicine. p. xviii. 
  3. ^ Black, William (1990). "A Graphical Representation of Cost-Effectiveness.". Med Decis Making 10 (3): 212–214.  
  4. ^ Tengs TO, Adams ME, Pliskin JS; et al. (June 1995). "Five-hundred life-saving interventions and their cost-effectiveness". Risk Anal. 15 (3): 369–90.  
  5. ^ Bell CM, Urbach DR, Ray JG; et al. (March 2006). "Bias in published cost effectiveness studies: systematic review.". BMJ 332 (7543): 699–703.  

External links

  • Why some drugs are not worth it BBC report
  • World Health Organization - CHOICE Choosing Interventions that are Cost Effective
  • ISPOR-CO, The Colombian Chapter of The International Society for Pharmacoeconomics and Outcomes Research
  • International Cost Estimating and Analysis Association
This article was sourced from Creative Commons Attribution-ShareAlike License; additional terms may apply. World Heritage Encyclopedia content is assembled from numerous content providers, Open Access Publishing, and in compliance with The Fair Access to Science and Technology Research Act (FASTR), Wikimedia Foundation, Inc., Public Library of Science, The Encyclopedia of Life, Open Book Publishers (OBP), PubMed, U.S. National Library of Medicine, National Center for Biotechnology Information, U.S. National Library of Medicine, National Institutes of Health (NIH), U.S. Department of Health & Human Services, and USA.gov, which sources content from all federal, state, local, tribal, and territorial government publication portals (.gov, .mil, .edu). Funding for USA.gov and content contributors is made possible from the U.S. Congress, E-Government Act of 2002.
 
Crowd sourced content that is contributed to World Heritage Encyclopedia is peer reviewed and edited by our editorial staff to ensure quality scholarly research articles.
 
By using this site, you agree to the Terms of Use and Privacy Policy. World Heritage Encyclopedia™ is a registered trademark of the World Public Library Association, a non-profit organization.
 


Copyright © World Library Foundation. All rights reserved. eBooks from Project Gutenberg are sponsored by the World Library Foundation,
a 501c(4) Member's Support Non-Profit Organization, and is NOT affiliated with any governmental agency or department.