Cost-utility* analysis

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 most recently developed mode of economic evaluation is cost-utility analysis (CUA). It is similar to CFA with the important exception that it gauges the impact of an intervention, not in terms of a single... 

Cost-benefit analysis Cost-effectiveness analysis Cost-consequences analysis Cost-utility analysis Cost-offset analysis Comprehensive Comprehensive Comprehensive Comprehensive Comprehensive Monetary valuation of outcomes One outcome only Multiple outcomes measured Summary utility score of outcomes No outcomes measured... 

With few exceptions, models find in favour of newer compounds Qonsson and Bebbington, 1994 Le Pen et al, 1994 McFarland, 1994 Stewart, 1994 Einarson et al, 1995 Lapierre et al, 1995 Nuitjen et al, 1995 Montgomeiy et al, 1996). One study (CCOHTA, 1997) did make allowances for variations in practice and patient behaviour. The results indicated that in the short term treatment was likely to be more successful with an SSRI than with a TCA, but at a higher cost. However, when treatment dropout rates found in naturalistic studies were substituted for drop-out rates found in controlled trials, the cost differences became smaller. When cost-utility analysis was applied, this increased cost was offset by improvements in quality of life for the patients. 

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. 

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. 

Cost-utility analysis Dollars Quality-adjusted life-years (QALYs)... 

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. 

Konski A, Scott C, Movsas B, et al. Cost-utility analysis of various treatments for non-small cell carcinoma of the lung (Abstract). Eur J Cancer 2000 36 S19. 

When several outcomes result from a medical intervention (e.g., the prevention of both death and disability), cost-effectiveness analysis may consider the outcomes together only if a common measure of outcome can be developed. Frequently, analysts combine different categories of clinical outcomes according to their desirability, assigning a weighted utility, or value, to the overall treatment outcome. A utility weight is a measure of the patient s preferences for his or her health state or for the outcome of an intervention. The comparison of costs and utilities sometimes is referred to as cost-utility analysis,... 

Figure 9.1 Visual analog scale for cost-utility analysis...

Establishing the value of a new pharmaceutical can be done through a cost-effectiveness ratio, where the costs are compared with currently accepted therapy and the effect is expressed in natural units such as life-years gained or disability-free days. A cost-utility analysis uses QALYs as the expression of the drug s effect, which is a measure that incorporates all the outcomes as well as all the costs of the drug treatment. Such a broad-based measure captures how much improved the patient s life becomes as a result of the treatment and at what cost. Quality-adjusted life-years can be viewed as life-years gained,... 

Dijkgraaf M, van der Zanden B, de Borgie C, Blanken P, Van Ree J Van den Brink W (2005). Cost utility analysis of co-prescribed heroin compared with methadone maintenance treatment in heroin addicts in two randomized trials. British Medical Journal, 330, 1297... 

Cost-utility analysis is used when quality of fife is the most important outcome being examined. This is common in disease states in which how one feels or what one can do is more important than a clinical laboratory value or economic outcome (e.g., chronic diseases such as heart disease, diabetes, arthritis, cancer, or HIV/AIDS). Cost-utility analyses compare the direct and indirect costs of an intervention with some measurable level of humanistic outcome, such quality of life or level of satisfaction. The direct and indirect costs of treatment alternatives again are expressed in monetary terms. The humanistic outcomes associated with each intervention can be expressed as an SF-12 or SF-36 health survey score for quality of life (Ware, 1997), as a satisfaction survey score (Mac-Keigan and Larson, 1989), or as quality-adjusted life-years (QALYs). QALYs represent the number of full years at full health that are valued equivalently with... 

When determining which method of economic analysis she should use, she eliminated cost-minimization analysis because the treatment alternatives (service versus no service) will not result in equivalent outcomes. A cost-effectiveness analysis would not be appropriate because she is only interested in one particular program. A cost-utility analysis is also not appropriate because quality of life, while included in the project, is not the focus of her project. A cost-benefit analysis could be appropriate. A cost-benefit analysis requires that both the interventions and outcomes be valued in monetary units. She can determine the direct medical and/or nonmedical costs for each patient from data captured by her HMO. The HMO is very interested in costs, both those to implement the service and those it may save as a result. Cynthia decides that the most understandable analysis to present to the HMO is a cost-benefit analysis. 

Cost-utility analysis is concerned with comparisons between programmes, e.g. an antenatal drug treatment which saves a young life or a hip replacement operation which improves mobility in a man of 60 years. Such differing outcomes can be placed on the same basis for comparison by computing quality-adjusted life years (see below). 

Health economics is concerned with the cost and consequences of decisions made about the care of patients. It therefore involves the identification, measurement, and valuation of both the costs and the consequences. The process is complex and is an inexact science, The approaches to economic evaluation include (1) cost minimization, (2) cost benefit, (3) cost effectiveness, and (4) cost utility analysis (Table 13-2). 

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. 

The underlying premise of pharmacoeconomic analyses is that fiscal resources are scarce and that there is a need to make decisions based on the relative value of different interventions in creating better health and/or longer life. There are five main analytical techniques used to evaluate the incremental value of products. These are cost-consequence analysis (CCA) cost-effectiveness analysis (CEA) cost-benefit analysis (CBA) cost-minimisation analysis (CMA) and cost-utility analysis (CUA). Although the identification and valuation of the cost component (numerator) of these analyses are similar, it is the identification and valuation of the consequences (denominator) that truly differentiate these analytic techniques. A brief description of each of these techniques follows. 

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