The (near) equivalence of cost-effectiveness and cost-benefit analyses. Fact or fallacy?

Economics of public health programs for underserved populations: a review of economic analysis of the National Breast and Cervical Cancer Early Detection Program

PURPOSE

The purpose of this paper is to provide a brief overview of economic analysis methods used in estimating the costs and benefits of public health programs and systematically review the application of these methods to the National Breast and Cervical Cancer Early Detection Program (NBCCEDP).

METHODS

Published literature on economic analyses of the NBCCEDP was systematically reviewed. The Consensus on Health Economic Criteria checklist was used to assess methodological quality of the included studies.

RESULTS

Methods available for economic analysis of public health programs include program cost, cost-effectiveness, cost-utility, cost-benefit analysis, and budget impact analysis. Of these, program cost analysis, cost-effectiveness analysis, and cost-utility analysis have been applied to the NBCCEDP in previously published literature.

CONCLUSION

While there have been multiple program cost analyses, there are relatively fewer cost-effectiveness and cost-utility studies and no cost-benefit and budget impact analysis studies to evaluate the NBCCEDP. Addressing these gaps will inform implementation of effective public health programs with equitable resource allocation to all population subgroups.

Economic Evaluation for Health Investments En Route to Universal Health Coverage: Cost-Benefit Analysis or Cost-Effectiveness Analysis?

BACKGROUND

It is an unresolved issue as to whether cost-benefit analysis (CBA) or cost-effectiveness analysis (CEA) is the preferable analytical toolkit for use in health technology assessment (HTA). The distinction between the two and an expressed preference for CEA go back at least to 1980 in the USA and, most recently, a Harvard-based group has been reappraising the case for CBA.

OBJECTIVES

This article seeks to answer the question: would the use of cost-benefit analysis rather than the more usual cost-effectiveness analysis be an improvement, specifically in appraising health and health-related investments in low and middle-income countries (LMICs) as they transition to Universal Health Coverage?.

METHODS/RESULTS

A selective literature review charts the welfare economics (welfarism and extra-welfarism) roots of both approaches. The principal distinguishing feature of the two is the monetary valuation of health outcomes under CBA compared with the use of health constructs such as the Quality-Adjusted Life-Year (QALY) or Disability-Adjusted Life-Year (DALY) under CEA. The former enables direct comparison of the outcomes of health investments with the monetized outcomes of other investments, while the CEA approach facilitates direct comparisons with other health investments. Seven challenges in using CBA in developing countries arise, including ethical issues in outcome valuation, practical challenges in the acquisition of data, intrinsic bias in data on values, and some of the practical issues of implementation for either CBA or CEA.

CONCLUSIONS

We conclude with a list of nine issues that both CBA and CEA need to settle if they are to be useful in LMICs. For the immediate future we judge CBA to be the less practicable.

Welfarism versus extra-welfarism: can the choice of economic evaluation approach impact on the adoption decisions recommended by economic evaluation studies?

A long-running debate surrounds the equivalence of the welfarist and extra-welfarist approaches to economic evaluation. There is a growing belief that the extra-welfarist approach may not necessarily provide all the information that decisionmakers require in certain contexts, e.g. evaluation of complex interventions. As the number of these interventions being evaluated increases, it is crucial that the most appropriate economic evaluation approach is used to enable decisionmakers to be confident in their adoption decisions. We conducted a literature review to evaluate the potential for the choice of economic evaluation approach to impact on the adoption decisions recommended by economic evaluation studies. We found that for every five studies applying both approaches, one shows limited or no concordance in economic evaluation results: the different approaches suggest conflicting adoption decisions, and there is no pattern to which approach provides the most convincing adoption evidence. Only one study in ten indicates which results will best inform adoption decisions. We conclude that the choice of approach can significantly impact on the adoption decisions recommended by economic evaluation studies, with conflicting results creating confusion over whether or not interventions provide good value for money. Health economists rarely provide sufficient guidance to decisionmakers to alleviate this confusion.

Cost-effective smoke-free multiunit housing media campaigns: connecting with local communities

Presented are cost-effective paid media strategies to educate Californians to advocate for stronger smoke-free multiunit housing (SF-MUH) policies between 2006 and 2008. Included is a summary of general market and specific ethnic market costs that correspond to SF-MUH attitudes and home smoking bans. Statewide questionnaires indicated that half of the intended general market saw an antitobacco TV ad and half of the intended ethnic markets heard radio ads. Analyses indicated that it cost $0.67 and $0.78 per person to see Caution Tape and Apartment TV ads, respectively. Slightly higher per capita costs corresponded with positive attitudes toward SF-MUH: $0.87 for Caution Tape and $1.00 for Apartment. Lessons learned from this campaign included effectiveness of specific ads in ethnic markets, impact on SF-MUH work plan policy objectives, and the need for collaborations among state and local partners throughout the message development process.

The potential to forgo social welfare gains through overrelianceon cost effectiveness/cost utility analyses in the evidence base for public health

Economic evaluations of clinical treatments most commonly take the form of cost effectiveness or cost utility analyses. This is appropriate since the main—sometimes the only—benefit of such interventions is increased health. The majority of economic evaluations in public health, however, have also been assessed using these techniques when arguably cost benefit analyses would in many cases have been more appropriate, given its ability to take account of nonhealth benefits as well. An examination of the nonhealth benefits from a sample of studies featured in a recent review of economic evaluations in public health illustrates how overfocusing on cost effectiveness/cost utility analyses may lead to forgoing potential social welfare gains from programmes in public health. Prior to evaluation, programmes should be considered in terms of the potential importance of nonhealth benefits and where these are considerable would be better evaluated by more inclusive economic evaluation techniques.

A cost-effectiveness analysis of a health education programme for elderly persons with age-related macular degeneration: A longitudinal study

PURPOSE

To analyse the cost-effectiveness of the activity-based Health Education Programme 'Discovering New Ways' versus a standard Individual Programme.

METHOD

Two-hundred and twenty-nine persons were randomized to either the Health Education Programme or an Individual Programme. The present study is based on 131 persons who participated in the 28-month follow-up. Costs for the low vision clinic were documented prospectively along with external costs. A cost-effectiveness analysis was done using cases with an improved level of perceived security in daily activities as the effectiveness measure.

RESULTS

The Health Education Programme led to significantly more cases with an improved level of perceived security (45 vs. 10%, CI 95%: 21-49, p value < 0.001) and the total social cost per treatment was lower (28,004 vs. 36,341 SEK). Taken separately the low vision clinic costs were slightly higher due to a higher prescription of assistive devices, but external costs were lower for the Health Education Programme compared to the Individual Programme, though neither of these differences was statistically significant.

CONCLUSION

The results suggest that replacing the standard Individual Programme with the Health Education Programme 'Discovering New Ways' is cost-effective as more persons experience increased security to a lesser total cost.

Assessing efficiency and costs of scaling up HIV treatment

INTRODUCTION

Whereas cost-effectiveness/utility analyses theoretically assess efficiency in HIV treatment, in practice they are of limited use to policy makers who are also concerned with the total costs of scaling up. This paper proposes an approach to simultaneously assessing both factors when setting priorities for HIV treatment.

METHODS

Three interventions were assessed: a no antiretroviral therapy (ART) status quo, ART including first-line only, and ART including first and second-line regimens. Data were from a cohort receiving healthcare in a poor South African setting. Markov modelling was used to calculate patient-level lifetime costs and quality-adjusted life-years (QALY) as well as population-level total costs and QALY in each intervention. Linear programming was used to assess efficiency at the population level.

RESULTS

First-line ART costs US$795 per QALY gained compared to no ART, while first and second-line costs US$1625 compared to first-line alone. The efficiency of either ART strategy depends on the HIV treatment budget. If this is less than US$10 billion during the planning period, first-line ART is most efficient. A combination of first-line with first and second-line treatment is most efficient if the budget is US$10-12 billion. Using both first and second-line treatment for everyone becomes efficient as the main strategy only at budgets greater than US$13 billion.

CONCLUSION

An approach has been developed to HIV treatment priority setting that simultaneously considers efficiency and the costs of scaling up. This can help to establish explicit and evidence-based priorities and budgets to meet scaling up challenges.

Decision makers’ views on health care objectives and budget constraints: results from a pilot study

Economic evaluations aim to inform policy makers about the costs and effects of medical interventions to support their decisions on the allocation of health care resources. Decision makers combine information on cost-effectiveness with their preferences and with possible constraints for the allocation of health care resources. That is, decision makers need to specify an optimality criterion and all possible (budget) constraints. Usually this is a more or less implicit process. The aim of our pilot study was to find out whether decision makers consider the objectives and budget constraints we selected for a theoretical model of resource allocation relevant, and to set priorities for these objectives.

Estimating the marginal value of 'better' research output: 'designed' versus 'routine' data in randomised controlled trials

We recently completed a study which demonstrated that the costs of health technology assessment (HTA) by randomised controlled trial (RCT) can be reduced by substituting routine datasets for data designed and collected specifically for a trial. This cost reduction, however, had the effect of reducing the quality of the research output. In the present study we attempted to tease out the values attached to the 'better' information provided by designed data RCTs using a mock grants committee. Two valuation techniques, implied values and willingness to pay, were used. Ex ante valuations were determined by comparing alternative research proposals - a more costly version using designed data and a cheaper version using routine data. Ex post valuations were determined by comparing results of both versions. The exercise was performed on four exemplar studies. Overall, the committee expressed a general lack of trust towards routine data both ex ante and ex post and placed high values on the better information from the designed data studies - particularly information on preferences. This suggests that currently available routine datasets are not perceived to be able to provide efficient alternatives to designed data for RCTs.

The need for evolution in healthcare decision modeling

STATEMENT OF PROBLEM

Many healthcare decisions are difficult because they are complex and have important consequences such as the impact on survival or quality-of-life of individuals and on allocation of limited resources. The present state-of-the-art in healthcare decision modeling is often inadequate to properly assess these decisions.

METHODS

Based on a literature search and the experience of the authors, typical methodologies used in healthcare decision analysis modeling are explored and compared with methods used in other practices. An example of hormonal therapy decisions is used.

RESULTS

Useful methods that have been developed in other fields are presented. These include methods targeted toward appropriate assessment and representation of the complexity of decisions, assessment of uncertainty, use of nonexpected value decision analysis, and use of multi-attribute decision criteria.

CONCLUSION

The state-of-the-art in healthcare decision modeling can be improved through learning from other practices.

Conditions for the near equivalence of cost-effectiveness and cost-benefit analyses

The equivalence of cost-effectiveness analysis (CEA) and cost-benefit analysis (CBA) has been vigorously debated in the health economic literature. In this paper we review and refine the conditions for the equivalence of CEA and CBA. The previously stated conditions require that 1) each individual's willingness to pay (WTP) per quality-adjusted life year (QALY) is constant and does not vary with the magnitude of QALY gains, and 2) the WTP per QALY is identical for every individual in society. Based on mathematical programming formulations of CEA and CBA, we note that condition 2 can be replaced with two other conditions, which together are less restrictive than the requirement that every individual have the same WTP per QALY. Even with this less restrictive set of conditions, CEA and CBA are unlikely to be equivalent under real world conditions. When CEA and CBA do lead to different resource allocation decisions, the most appropriate framework for health economic analysis depends on the perspective regarding distribution issues. We also examine the equivalence of two different definitions of CEA provided in the literature and discuss the problems that could arise when there are multiple optima.

Health economic evaluation

A glossary is presented on terms of health economic evaluation. Definitions are suggested for the more common concepts and terms.

Effect of clinical risk stratification on cost-effectiveness of the implantable cardioverter-defibrillator: the Canadian implantable defibrillator study

BACKGROUND

Three randomized clinical trials showed that implantable cardioverter-defibrillators (ICDs) reduce the risk of death in survivors of ventricular tachyarrhythmias, but the cost per year of life gained is high. A substudy of the Canadian Implantable Defibrillator Study (CIDS) showed that 3 clinical factors, age >/=70 years, left ventricular ejection fraction </=35%, and New York Heart Association class III, predicted the risk of death and benefit from the ICD. We estimated the extent to which selecting patients for ICD therapy based on these risk factors makes ICD therapy more economically attractive.

METHODS AND RESULTS

Patients in CIDS were grouped according to whether they had >/=2 of 3 risk factors. Incremental cost-effectiveness of ICD therapy was computed as the ratio of the difference in mean cost to the difference in life expectancy between the 2 groups. Over 6.3 years, the mean cost per patient in the ICD group was Canadian (C) $87 715 versus $38 600 in the amiodarone group (C$1 approximately US$0.67). Life expectancy for the ICD group was 4.58 years versus 4.35 years for amiodarone, for an incremental cost-effectiveness of ICD therapy of C$213 543 per life-year gained. The cost per life-year gained in patients with >/=2 factors was C$65 195, compared with C$916 659 with <2 risk factors.

CONCLUSIONS

The cost-effectiveness of ICD therapy varies by patient risk factor status. The use of ICD therapy in patients who have >/=2 risk factors of age >/=70 years, left ventricular ejection fraction </=35%, and NYHA class III is C$65 195 to gain a year of life.

Discounting for health effects in cost-benefit and cost-effectiveness analysis

When health effects can be valued in monetary terms, as in cost-benefit analysis, they should be discounted at the same rate as costs. If health effects are measured in quantities (e.g. quality adjusted life years) as in cost-effectiveness analysis (CEA) and the value of health effects is increasing over time, discounting the volume of health effects at a lower rate than costs is a valid method of taking account of the increase in the future value of health effects. We show that the Keeler-Cretin paradox, often used as an argument against discounting health effects at a lower rate than costs, has no relevance for the choice of discount rate in CEA. We present individualistic and welfare models to argue that the rate of growth of the value of health effects is positive. The welfare model suggests that the value of health grows at a rate dependent on the rate of growth of the value of the direct effect of health on utility, the growth rate of income, the elasticity of the marginal utility of income and the extent to which individuals are insured against the income risks of ill health.

Life-cycle preferences over consumption and health: when is cost-effectiveness analysis equivalent to cost-benefit analysis?

This paper studies life-cycle preferences over consumption and health status. We show that cost-effectiveness analysis is consistent with cost-benefit analysis if the lifetime utility function is additive over time, multiplicative in the utility of consumption and the utility of health status, and if the utility of consumption is constant over time. We derive the conditions under which the lifetime utility function takes this form, both under expected utility theory and under rank-dependent utility theory, which is currently the most important nonexpected utility theory. If cost-effectiveness analysis is consistent with cost-benefit analysis, it is possible to derive tractable expressions for the willingness to pay for quality-adjusted life-years (QALYs). The willingness to pay for QALYs depends on wealth, remaining life expectancy, health status, and the possibilities for intertemporal substitution of consumption.