Topic

Cost-effectiveness analysis

Cost-effectiveness analysis compares interventions by the extra cost of each extra unit of health gained. The concepts here cover the incremental cost-effectiveness ratio, the decision rules used to rule options out, net benefit, and the charts used to show results under uncertainty.

Concepts in this topic

• Active ComparatorAn active comparator is an existing treatment, rather than placebo, that a new health technology is compared with in HTA and economic evaluation.
• Average Cost-Effectiveness RatioThe average cost-effectiveness ratio (ACER) is an option's cost per unit of health effect, in total or against doing nothing, without comparing options.
• ComparatorA comparator is the alternative, such as current practice or another treatment, against which a new health intervention is compared in economic evaluation.
• Cost-EffectivenessCost-effectiveness means an intervention's health gain justifies any extra cost versus an alternative, usually judged by the ICER against a threshold.
• Cost-Effectiveness Acceptability Curve (CEAC)A cost-effectiveness acceptability curve (CEAC) plots, across cost-effectiveness thresholds, the probability that each option is the most cost-effective.
• Cost-Effectiveness Acceptability FrontierThe cost-effectiveness acceptability frontier (CEAF) plots the chance the option with the highest expected net benefit is cost-effective, by threshold.
• Cost-Effectiveness AnalysisCost-effectiveness analysis compares healthcare options by the extra cost of each extra unit of health gained, such as cost per life-year gained.
• Cost-Effectiveness FrontierThe cost-effectiveness frontier is the boundary of feasible strategies whose expected cost and effect combinations are not ruled out by strict or extended dominance under a specified decision framework.
• Cost-Effectiveness PlaneThe cost-effectiveness plane graphs incremental cost (y-axis) against incremental effect (x-axis); its four quadrants show dominance or a trade-off.
• Cost-Effectiveness ThresholdA cost-effectiveness threshold is the maximum cost per QALY gained that a health system treats as value for money when deciding which treatments to fund.
• Decision RuleA decision rule is an explicit criterion, such as an ICER threshold or net benefit, for choosing between healthcare interventions in economic evaluation.
• DominanceDominance in cost-effectiveness analysis excludes an option when another option, or a blend of two others, is no worse on cost or effect and better on one.
• Dominance AnalysisDominance analysis identifies interventions that are inferior to another feasible option or to the efficient combination of options on cost and health outcome, leaving a frontier for fully incremental comparison.
• Efficiency FrontierIn cost-effectiveness analysis, an efficiency frontier connects the available strategies that remain after excluding options subject to simple or extended dominance.
• Expected Net BenefitExpected net benefit is the mean net benefit of a healthcare option across parameter uncertainty at a set threshold; the option with the highest is chosen.
• Extended DominanceExtended dominance excludes an option in cost-effectiveness analysis when a blend of a less and a more effective option gives its health gain for less.
• Fully Incremental AnalysisFully incremental analysis compares all mutually exclusive strategies in an ordered sequence to identify the cost-effectiveness frontier.
• Generalized Cost-EffectivenessA form of cost-effectiveness analysis comparing a broad set of interventions against a common null counterfactual rather than against current practice.
• Incremental Cost-Effectiveness Ratio (ICER)The incremental cost-effectiveness ratio (ICER) is a treatment's extra cost divided by its extra health gain versus a comparator, such as cost per QALY.
• Incremental EffectivenessIncremental effectiveness is the difference in health outcomes between an intervention and its comparator, calculated in a consistent outcome unit and comparison direction.
• Incremental Net Monetary BenefitIncremental net monetary benefit (INMB) is the extra health of an option over its comparator, valued at a threshold, minus the extra cost, per patient.
• Marginal Cost-EffectivenessThe additional cost required to produce one more unit of health effect at the margin of an intervention's current scale, distinct from its average.
• Net Health BenefitNet health benefit (NHB) is the health an option gains, in QALYs, minus the QALYs its extra cost would buy elsewhere at the cost-effectiveness threshold.
• Net Monetary BenefitNet monetary benefit (NMB) is an option's health outcome valued in money at a cost-effectiveness threshold minus its cost, used to rank healthcare options.
• Pairwise ComparisonA comparison of exactly two interventions at a time, used as a building block within a fully incremental analysis of several options.
• Probability of Cost-EffectivenessThe probability of cost-effectiveness is the model-based probability that an intervention meets a stated net-benefit criterion against specified alternatives at a given willingness-to-pay threshold under the assumed uncertainty distribution.
• Strict DominanceStrict dominance in cost-effectiveness analysis is when one option both costs less and gives more health than another, so the other option is ruled out.
• Threshold ApproachA decision-making method that classifies an intervention as cost-effective or not based on whether its ICER falls below a predetermined threshold.
• Weak DominanceWeak dominance is when another option costs no more and is at least as effective, and is strictly better on one, so the dominated option is dropped.
• Willingness-to-Pay ThresholdA willingness-to-pay threshold is the cost per QALY below which a treatment counts as good value; strictly, the most society would pay for one extra QALY.