Full Economic Evaluation

Full Economic Evaluation and the Drummond Test

Full economic evaluation is the study design that health economists require before a study can claim that one healthcare option offers better value than another. Drummond and colleagues set the test as two questions, whether the study compares alternatives and whether it examines costs and consequences together, and a study counts as full only when the answer to both is yes. The distinction matters because systematic reviews sort the economic literature by it and health technology assessment bodies build it into their methods, and a study placed on the wrong side of the line can point a decision maker the wrong way. The general method of economic evaluation, with its incremental calculations, has its own page, and studies that fall short of the test are covered under partial economic evaluation.

Two questions that sort economic studies

The classification is set out in the textbook by Drummond, Sculpher, Claxton, Stoddart and Torrance, now in its fourth edition of 2015. Malburg and colleagues reproduce an adapted version of it in a 2025 scoping review. In that version a full evaluation sets costs (inputs) against consequences (outputs) across at least two alternatives, where an alternative may be an intervention, treatment, service or policy.

The grid has six cells, and only the bottom right one is full. A trial that compares the effects and harms of two treatments sits in the effectiveness evaluation cell, and the Cochrane Handbook chapter on economic evidence (Aluko and colleagues, last updated August 2023) states that under this definition such a trial is a form of partial economic evaluation. A comparison of costs alone is a cost analysis. A single programme described in terms of both its costs and its outcomes is a cost-outcome description, which Turner and colleagues call a cost-outcome study and contrast directly with a full evaluation, because it ignores the comparator.

Why the comparator and the joint view are both needed

Value in health economics is relative because of opportunity cost, as adopting one option uses resources that could have produced health elsewhere. Turner and colleagues stress that a full evaluation formally assesses at least two courses of action even when the policy question concerns a single intervention. The comparator is usually current practice or standard of care in the setting, and when it is a do-nothing scenario it remains a formal part of the analysis, with its costs and consequences quantified.

The incremental ratio shows why each partial cell falls short. A full evaluation estimates all four terms in the expression below.

$$\text{ICER} = \frac{C_1 - C_0}{E_1 - E_0} = \frac{\Delta C}{\Delta E}$$

where $C_1$ and $E_1$ are the expected cost and health effect of the option under study, $C_0$ and $E_0$ are the expected cost and health effect of the comparator, $\Delta C$ is the incremental cost and $\Delta E$ is the incremental effect. A cost analysis supplies $\Delta C$ with no $\Delta E$, an effectiveness evaluation supplies $\Delta E$ with no $\Delta C$, and a cost-outcome description supplies $C_1$ and $E_1$ with nothing to subtract them from. Only the full design yields an ICER or a net benefit figure.

$$\text{INMB} = \lambda \, \Delta E - \Delta C$$

where INMB is the incremental net monetary benefit, $\lambda$ is the value placed on one unit of health effect (for example one QALY) and $\Delta C$ and $\Delta E$ are as above. The equivalent figure in health units is the net health benefit.

$$\text{NHB} = \Delta E - \frac{\Delta C}{\lambda}$$

where NHB is the net health benefit, measured in units of health effect, and the other symbols are as defined above. A positive INMB or NHB means the additional health is worth more than the additional cost at the stated value of $\lambda$.

Forms of full evaluation and where the boundary is disputed

Full evaluations differ mainly in how they measure consequences. Turner and colleagues list five main types. Cost-effectiveness analysis uses a single natural unit, cost-utility analysis a generic measure such as the QALY or DALY, and cost-benefit analysis money. Cost-minimisation analysis compares costs across alternatives assumed to have equivalent health effects, and cost-consequence analysis reports several outcomes without summarising them in a single measure.

The edges of the category are less settled than the grid suggests. Briggs and O'Brien argued in 2001 that cost-minimisation analysis is appropriate only in rare circumstances, because separate tests on cost and effect differences should not decide whether incremental cost-effectiveness is estimated. The CRD guidance on systematic reviews names three generic types of full evaluation and describes cost-consequence analysis, under cost-effectiveness analysis, as what may be reported when multiple clinical outcomes are used. Labels in published studies are not reliable either. Turner and colleagues report, citing Zarnke and colleagues, that some studies labelled as cost-benefit analyses were only partial evaluations. The CHEERS 2022 statement adds that some studies comparing costs are labelled as cost-benefit analyses, and recommends keeping that term for studies that place a monetary value on health outcomes.

How systematic reviews and databases use the distinction

The grid is a screening tool as much as a teaching device. The CRD guidance for undertaking reviews in health care (2009) describes a full evaluation as one that considers both effectiveness and cost data for two or more interventions, and treats the choice of whether to include only full evaluations as a basic inclusion decision. It allows partial studies for particular questions, for example cost analyses when the review question concerns incremental costs.

The NHS Economic Evaluation Database held critical abstracts of full economic evaluations alongside bibliographic details of partial evaluations, according to the same guidance. The Cochrane Handbook notes that NHS EED stopped being updated at the end of 2014, so reviews of full evaluations published since then need specialist searches. The Handbook's example eligibility wording for a brief economic commentary names full economic evaluations, and the chapter states that including partial evaluations that consider costs only is not currently recommended. The CHEERS 2022 statement takes a wider view for reporting purposes. It applies to any form of health economic evaluation, including cost analyses, so meeting CHEERS does not establish that a study is full.

Full evaluation in NICE technology appraisal

NICE builds the distinction into its methods. The NICE manual (PMG36, "NICE technology appraisal and highly specialised technologies guidance: the manual", last updated 13 October 2026) sets out two forms of economic evaluation for technology appraisals and highly specialised technologies evaluation. Section 4.2.12 says a cost-utility analysis is used when a full analysis of costs and health benefits is needed, and the reference case pairs it with fully incremental analysis.

The second form, cost-comparison analysis, is for technologies likely to provide similar or greater health benefits at similar or lower cost than the comparators (section 4.2.13). Section 4.2.20 states that the health effects of intervention and comparator are captured in the clinical-effectiveness evidence and are not included in the cost-comparison analysis. On its own the cost comparison would sit in the cost analysis cell, so NICE relies on the clinical evidence to supply the consequence side. Section 4.2.16 asks for net health benefits to be presented using values of GBP 25,000 and GBP 35,000 per QALY gained, the two values used in the example below.

Worked example with a nurse-led heart failure clinic

All numbers in this example are illustrative. A health board considers a nurse-led clinic for people with heart failure, compared with usual care, over a two-year horizon with no discounting for simplicity.

1. Cost-outcome description. A single-arm study of the clinic reports a mean cost of GBP 3,000 and a mean of 1.40 QALYs per patient. Dividing gives 3,000 / 1.40 = GBP 2,143 per QALY, which looks highly attractive. This average ratio implicitly compares the clinic with an option that costs nothing and produces no health, which is not a real choice for these patients.

2. Cost analysis. Usual care costs GBP 2,200 per patient, and 3,000 − 2,200 = 800, an incremental cost of GBP 800. The study shows the clinic costs more but says nothing about what the extra spending buys.

3. Effectiveness evaluation. Usual care produces 1.38 QALYs per patient, and 1.40 − 1.38 = 0.02, an incremental effect of 0.02 QALYs. The clinic is slightly more effective, with no information on cost.

4. Full economic evaluation. Joining the two comparisons gives 800 / 0.02 = 40,000, an ICER of GBP 40,000 per QALY gained.

5. Net benefit at the two NICE values. At GBP 25,000 per QALY the extra health is worth 25,000 × 0.02 = 500, and 500 − 800 gives an INMB of minus GBP 300. In health units 800 / 25,000 = 0.032, and 0.02 − 0.032 gives an NHB of minus 0.012 QALYs. At GBP 35,000 per QALY the extra health is worth 35,000 × 0.02 = 700, and 700 − 800 gives an INMB of minus GBP 100, while 800 / 35,000 = 0.0229 and 0.02 − 0.0229 gives an NHB of minus 0.0029 QALYs.

6. Interpretation. The single-arm figure of about GBP 2,143 per QALY and the incremental figure of GBP 40,000 per QALY answer different questions, and only the second bears on the adoption decision. Net benefit is negative at both values, so on these numbers the clinic would not be good value against usual care, even though the single-arm figure looked highly favourable. Turner and colleagues give a hypothetical case in which ignoring the comparator reverses the policy recommendation in the same way.

What the label does and does not guarantee

Calling a study full describes its design, and it says nothing about whether the design was executed well. The CRD checklist for assessing economic evaluations asks, among other things, whether a rationale was reported for the choice of the alternatives compared. A full evaluation against a weak or irrelevant comparator gives a precise answer to the wrong question. CHEERS 2022 is reporting guidance and, in its own words, is not intended to guide the conduct of economic evaluation.

A full evaluation also leaves affordability open. Turner and colleagues describe budget impact analysis as a separate tool that examines the financial impact of adopting an intervention in a setting, and CHEERS 2022 places budget impact analyses outside its scope.

Partial studies are not worthless. LeFevre and colleagues note that they can identify likely costs and the main cost drivers and prepare the ground for fuller evaluations, and a cost-of-illness study describes the economic burden of a disease without comparing interventions. Both trial-based and model-based studies can be full, since the CRD guidance notes that a primary evaluation may run alongside a single trial or draw on several evidence sources, and either approach may use modelling.

Two misreadings recur. The first is that a study of one new intervention cannot be full, when the test asks only that a comparator, possibly do-nothing, is formally costed and assessed. The second is that a positive single-arm cost-outcome result shows value for money, which, as the example shows, it cannot.

Sources

• Aluko P, Graybill E, Craig D, Henderson C, Drummond M, Wilson ECF, Robalino S, Vale L. Chapter 20: Economic evidence (last updated August 2023). In: Higgins JPT, Thomas J, Chandler J, et al, editors. Cochrane Handbook for Systematic Reviews of Interventions version 6.5. Cochrane; 2024. https://www.cochrane.org/authors/handbooks-and-manuals/handbook/current/chapter-20
• Briggs AH, O'Brien BJ. The death of cost-minimization analysis? Health Economics. 2001;10(2):179-184. https://doi.org/10.1002/hec.584
• Centre for Reviews and Dissemination. Systematic Reviews: CRD's guidance for undertaking reviews in health care. University of York; 2009. Chapter 5. https://www.york.ac.uk/media/crd/Systematic_Reviews.pdf
• Drummond MF, Sculpher MJ, Claxton K, Stoddart GL, Torrance GW. Methods for the Economic Evaluation of Health Care Programmes. 4th ed. Oxford University Press; 2015.
• Husereau D, Drummond M, Augustovski F, de Bekker-Grob E, Briggs AH, Carswell C, et al. Consolidated Health Economic Evaluation Reporting Standards 2022 (CHEERS 2022) statement: updated reporting guidance for health economic evaluations. BMJ. 2022;376:e067975. https://doi.org/10.1136/bmj-2021-067975
• LeFevre AE, Shillcutt SD, Broomhead S, Labrique AB, Jones T. Defining a staged-based process for economic and financial evaluations of mHealth programs. Cost Effectiveness and Resource Allocation. 2017;15:5. https://doi.org/10.1186/s12962-017-0067-6
• Malburg C, Willcox M, Sach T, Kinney M, Akweongo P, Biswas A, Serbanescu F. Cost of implementation and maintenance of maternal and perinatal death surveillance and response: a scoping review. BMC Pregnancy and Childbirth. 2025;25(Suppl 1):1016. https://doi.org/10.1186/s12884-025-08181-z
• National Institute for Health and Care Excellence. NICE technology appraisal and highly specialised technologies guidance: the manual (PMG36). Published 31 January 2022, last updated 13 October 2026. Sections 4.2.11 to 4.2.13, 4.2.16 and 4.2.20. https://www.nice.org.uk/process/pmg36
• Turner HC, Archer RA, Downey LE, Isaranuwatchai W, Chalkidou K, Jit M, Teerawattananon Y. An introduction to the main types of economic evaluations used for informing priority setting and resource allocation in healthcare: key features, uses, and limitations. Frontiers in Public Health. 2021;9:722927. https://doi.org/10.3389/fpubh.2021.722927