Cost-effectiveness analysis: and

Three evaluative modes are discussed here cost-benefit analysis, cost-effectiveness analysis (and its recently distinguished variant cost-consequences analysis) and cost-utility analysis. Books by Drummond et al (1997) and Gold et al (1996)—the two most respected and widely cited texts on health economics evaluations—give excellent accounts of these modes of economic evaluation, and interested readers are referred to them for more advanced discussions. 

The mandate/subsidy plan would apply only to populations/vaccines recommended for coverage by an independent body. The committee s second recommendation proposed changes to the composition and decisionmaking process of ACIP, the entity that recommends vaccines for use by the public. ACIP currently lacks expertise in cost-effectiveness analysis and hnance, is unable to consider price in its decisions, and makes... 

George, B., A. Harris, andA. Mitchell. 2001. Cost-Effectiveness Analysis and the Consistency of Decision-Making Evidence from Pharmaceutical Reimbursement in Australia (1991 to 1996). PharmacoEconomics 19(11) 1103-1109. 

Grabowski, Henry, and C. Daniel Mullins. 1997. Pharmacy Benefit Management Cost-Effectiveness Analysis and Drug Formulary Decisions. Social Science and Medicine 45(4) 535-544. 

Cost-benefit analysis is concerned with issues of whether (and to what extent) to pursue objectives and policies it is thus a broader activity than cost-effectiveness analysis and puts monetary values on the quality as well as on the quantity (duration) of life. 

Each article was assessed for the type of evaluation and categorized (Table 1). Two factors were considered in determining the type of evaluation the presence of two or more alternatives, and the consideration of both input (costs) and outcomes. Evaluations that included two or more alternatives (i.e., concurrent control group, historical control, preintervention and postintervention design) were considered true analyses, whereas those that did not include a comparison were labeled descriptions. A description of the type of analysis was assigned to the evaluation and included the options of cost or outcome description, cost or outcome analysis, cost and outcome description, and true clinical economic evaluation. Those articles considered true clinical economic evaluations were subcategorized by type, options including cost-minimization analysis, cost-benefit analysis, cost-effectiveness analysis, and cost-utility analysis. 

H.G. Grabowski and C.D. Mullins, Pharmacy benefit management, cost-effectiveness analysis and drug formulary decisions, Social Science Medicine 45 (1997), 535-544. 

The cost-effectiveness analysis is a well established discipline. There is, however, a gap between the theoretical cost-effectiveness analysis and the practical implementation of the tool as decisionmaking support. Ideally, the decision-maker should have a number of methods at hand. Some of these should be detailed and sophisticated and being used when a few safety measures are compared and the consequences of unfavourable decisions are severe. On the other hand we also need simplified methods to sort out some cost-effective measures from many alternatives in less complicated comparison studies or in pre-studies to more sophisticated comparisons. 

Many types of program evaluation exist. For example, Rossi, Freeman, and Lipsey (1999) distinguish between the following types of program evaluations needs assessment, process evaluation, impact evaluation, cost-benefit or cost-effectiveness analysis, and targeting accuracy evaluation. We focus on the three most common types of evaluations of safety net programs process (or implementation) evaluation, assessment of targeting accuracy, and impact evaluation. Evaluations of cost-benefit and cost-effectiveness are also helpful, but are rare so not treated in depth here (see box 6.4). 

A number of approaches exist for calculating and comparing the benefits and costs of a government policy. Cost-effectiveness analysis and cost-benefit analysis are among the most commonly used tools for this kind. Cost-benefit analysis compares a programme s benefits to a stakeholder with the costs to that stakeholder. This approach places benefits and costs in comparable terms, usually dollars. Cost-... 

Easterbrock P, Beck EJ, Fisher M et al (1998) The use and cost of HIV service provision in England in 1996 Pharmacoeconomics 14 639-652 Edejer TT et al (2003) WHO guide to cost-effectiveness analysis, WHO, Geneva Farnham PG, Gorsky RD (1994) Costs to business for an HIV-infected worker. Inquiry 31 76-88 Flori YA, le VaUlant M (2004) Use and cost of antiretrovirals in France 1995-2000 an analysis based on the medical dossier on human immunodeficiency (release 2) database, Pharmacoeconomics 22 1061-1070... 

An effective HE or cost-effectiveness analysis is designed to answer certain questions, such as Is the treatment effective What will it cost and How do the gains compare with the costs By combining answers to all of these questions, the technique helps decision makers weigh the factors, compare alternative treatments, and decide which treatments are most appropriate for specific situations. Typically, one chooses the option with the least cost per unit of measure gained the results are represented by the ratio of cost to effectiveness (C E). With this type of analysis, called a cost-effectiveness analysis (CEA), various disease end points that are affected by therapy (risk markers, disease severity, death) can be assessed by corresponding indexes of therapeutic outcome (mmHg blood pressure reduction, hospitalizations averted, life years saved, respectively). It is beyond the scope of this chapter to elaborate further on principles of cost-effectiveness analyses. A number of references are available for this purpose [11-13]. 

Weinstein MC, Stason WB. Foundations of cost-effectiveness analysis for health and medical practices. N Engl J Med 1977 296 716-21. 

Jubran A, Gross N, Ramsdell J, et al. Comparative cost-effectiveness analysis of theophylline and ipratropium bromide in chronic obstructive pulmonary disease. A three-center study. Chest 1993 103 678-84. 

There are four types of economic evaluation cost-minimization analysis, cost-effectiveness analysis, cost-utility analysis and cost-benefit analysis. The analytic framework chosen will depend upon the economic questions posed and the clinical evidence of effectiveness for the interventions (Gold et al, 1996 Dmmmondetal, 1997). 

Cost-utility analysis is similar to cost-efFectiveness analysis in approach, but uses utility as the outcome measure. The utility value is a measure that combines preferences for and values of the overall effect of an intervention on survival, physical and mental health, and social function. Utility is combined with estimates of length of life to provide an assessment of quality-adjusted life years (QALYs). As in cost-efFectiveness analysis, incremental cost-utility ratios are calculated to estimate the cost of producing one extra QALY. 

Table 10.32 is a shortlist of the characteristics of the ideal polymer/additive analysis technique. It is hoped that the ideal method of the future will be a reliable, cost-effective, qualitative and quantitative, in-polymer additive analysis technique. It may be useful to briefly compare the two general approaches to additive analysis, namely conventional and in-polymer methods. The classical methods range from inexpensive to expensive in terms of equipment they are well established and subject to continuous evolution and their strengths and deficiencies are well documented. We stressed the hyphenated methods for qualitative analysis and the dissolution methods for quantitative analysis. Lattimer and Harris [130] concluded in 1989 that there was no clear advantage for direct analysis (of rubbers) over extract analysis. Despite many instrumental advances in the last decade, this conclusion still largely holds true today. Direct analysis is experimentally somewhat faster and easier, but tends to require greater interpretative difficulties. Direct analysis avoids such common extraction difficulties as ... 

U.S. EPA, Cost Effectiveness Analysis of Effluent Guidelines and Standards for the Aluminum Forming Category, report W-83-13, U.S. EPA, Washington, DC, 1983. 

In order to associate a number to represent the utility of these four outcomes we have to choose between several types of economic evaluations, basically between cost-effectiveness analysis, cost-utility analysis and cost-benefit analysis. The first of these is ruled out because it measures the health outcome in natural units. Given that the side effects of drags are of a varied nature, we need to be able to aggregate the different seriousness of these side effects in order to obtain a single utility, at least for the NSEA event. Furthermore, this utility must be comparable with that of, for example, the SER event. This is not possible with cost-effectivity. If we chose cost-utility, the utility associated with each event would be measured in QALYs gained or lost in each option. As QALYs are a universal measure of health benefit, cost-utility analysis could be appropriate for this type of decision. Lastly, cost-benefit analysis would also be appropriate, as it measures the utilities associated with each outcome in monetary terms, which reflect the willingness to pay for one of the outcomes in terms of safety and effectiveness. 

Karlsson, G. and M. Johannesson (1996), The decision rules of cost-effectiveness analysis , PharmacoEconomics, 9,113-20. 

In a cost-benefit analysis, both costs and consequences are valued in dollars and the ratio of cost to benefit (or more commonly benefit to cost) is computed. Cost-benefit analysis has been used for many years to assess the value of investing in a number of different opportunities, including investments (or expenditure) for health care services. Cost-effectiveness analysis attempts to overcome (or avoid) the difficulties in cost-benefit analysis of valuing health outcomes in dollars by using nonmonetary outcomes such as life-years saved or percentage change in biomarkers like serum cholesterol levels. Cost-minimization analysis is a special case of cost-effectiveness analysis in which the outcomes are considered to be identical or clinically equivalent. In this case, the analysis defaults to selecting the lowest-cost treatment alternative. Cost-utility analysis is another special case of cost-effectiveness analysis in which the value of the outcome is adjusted for differences in patients preferences (utilities) for the outcomes. Cost-utility analyses are most appropriate when quality of life is a very important consideration in the therapeutic decision. 

Further studies are needed to give better dose-response information and to provide a frequency distribution of the population response to oxidants alone and in combination with other pollutants at various concentrations. Such studies should include the effects of mixed pollutants over ranges corresponding to the ambient atmosphere. With combinations of ozone and sulfur dioxide, the mixture should be carefully characterized to be sure of the effects of trace pollutants on sulfate aerosol formation. The design of such studies should consider the need to use the information for cost-benefit analysis and for extrapolation from animals to humans and from small groups of humans to populations. Recent research has indicated the possibility of human a ptation to chronic exposure to oxidants. Further study is desirable. 

The CUA is a form of cost-effectiveness analysis in which the health outcomes are measured in terms of quality-adjusted life-years (QALYs) gained. The QALY is a measure that associates quantity of life (e.g. survival data and life... 

In Chapter 4 Aidan Hollis examines three proposals in considerable detail. The first is an Advanced Purchase Commitment by sponsors, who offer an explicit subsidy in advance for innovative products. The subsidy offer includes a fixed-dollar amount per unit as well as a commitment to purchase a specific number of units at that price. The second proposal is that sponsors pay annual rewards based on the therapeutic effectiveness of innovative drugs. The third approach is to offer a patent extension on patented products to pharmaceutical companies if they successfully developed a vaccine for a disease such as HIV/AIDS that is highly prevalent, particularly in some low-income countries. Hollis concludes that the third approach is an extremely inefficient way to reward innovation. By contrast, the second approach could correct the market failure directly by rewarding innovative drugs according to their therapeutic effectiveness, which is measurable by cost-effectiveness analysis, a topic discussed later in greater detail in Chapters 10 and 11. 

Measures of Costs and Benefits for Drugs in Cost-Effectiveness Analysis... 

To decide on the allocation of public and private resources, some form of cost-effectiveness analysis is used in many countries, large and small (Drummond, Chapter 11). The single most common type of medical care to which this method is applied is the use of pharmaceutical products. Sometimes the decision involves new uses for existing products developed and produced in the country making the decision, and sometimes it involves products imported from abroad. Sometimes as well the decision involves the potential allocation of resources to a new product if brought to market, and often public funds play a role in such innovation. 

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