Costeffectiveness analysis

Cost-effectiveness analysis (CEA) is one form of pharmacoeconomic analysis that incorporates both costs and outcome. The results of CEAs are

Table 11.1 Summary of the advantages and disadvantages of different types of pharmacoeconomic analyses

Type of pharmacoeconomic Advantages Disadvantages analysis

Table 11.1 Summary of the advantages and disadvantages of different types of pharmacoeconomic analyses

Type of pharmacoeconomic Advantages Disadvantages analysis

Cost analysis

Sources of rigorous cost

Does not account for outcomes

accounting

and side-effects

Basis of other

Does not measure the value

pharmacoeconomic studies

of the therapy

Cost-effectiveness

Accounts for outcomes and

Outcomes are not standardised

analysis (CEA)

side-effects

across disease processes

Measures value of the therapy

Results are not weighted

according to importance

Cost-utility analysis (CUA)*

Accounts for outcomes and

Need to invoke some external

measures value of therapy

criterion of value to interpret results

Results are standardised

Accounts for importance

Cost-benefit analysis (CBA)

Accounts for outcomes and

Assigning monetary value to health

measures value of therapy

may be offensive

Does not need external criterion

May be difficult to measure benefits

of value to interpret results

in monetary terms for expensive

and complex therapies

*Often called cost-effectiveness analysis by health services researchers

*Often called cost-effectiveness analysis by health services researchers presented as a cost-effectiveness ratio (CE ratio), with costs in the numerator and health outcomes in the denominator. The ratio is a measure of value; the smaller the ratio, the fewer the resources required for a given unit of health outcome. Costs are determined in the same manner as for cost analysis, as discussed above. The health outcomes are generally measured by some biological unit, such as intraocular pressure for glaucoma interventions, or by life-years saved for cancer chemotherapy.

CEAs generally compare at least two therapies -usually a new therapy is compared with a currently available therapy. A CEA that compares two therapies is called an incremental CEA; the additional costs that one therapy would entail are compared with the additional benefits that it provides. This is in contrast to an average CEA in which the therapy in question is not compared with anything. However, this approach does not provide useful information to the policymaker or the clinician unless the currently available therapy is to do nothing.

CEAs provide information about the value of the therapeutic intervention in question by accounting for the outcomes of the therapy. However, the outcome measure is not standardised and therefore cannot be used to make comparisons with other disease processes. For example, even if a reasonable outcome measure for a new therapy for seborrhoeic dermatitis may be dollars per clear scalp, this measure cannot be used when the policymaker wants to compare the CE ratio with analyses of new therapies for disparate diseases such as onychomycosis, venous ulcers or acne. Even if "clear skin" is used as the outcome measure, it cannot be used to make comparisons with non-dermatological problems. Another problem with CEA is that the outcomes are not weighted according to their importance. For instance, assume that new therapies for scalp psoriasis, onychomycosis and venous ulcers were cost-effective compared with their respective current therapies. Policymakers may not be able to incorporate all the therapies into their formulary because of budgetary constraints. They would need to decide which is the most important outcome: clear scalp, smooth nails or healed ulcer. A better situation would be to have the outcomes standardised and weighted according to value so that policymakers could compare CEAs results across disease processes.

Stern et al.3 published a CEA comparing topical versus systemic therapy for acne. Because of the lack of efficacy data, they had to rely on expert impressions. They calculated an incremental cost-effectiveness ratio, but used "side-effect averted" as their outcome measure. While this outcome may be useful for making comparisons with other acne therapies, the definition and magnitude of the side-effect episodes are hard to standardise across other diseases.

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