Methods of Economic Evaluation

Question 1

What are the four main methods of economic evaluation?

Answer 1

• Cost minimisation
• Cost effectiveness
• Cost utility
• Cost benefit

Question 2

What is economic evaluation?

Answer 2

A study that compares the costs (input) and benefits (output) of two or more alternative interventions.

Question 3

Why is economic evaluation necessary?

Answer 3

• Limited resources leads to need to make choices
• Increase the benefit obtained from resources
• Help decision-making
• Aid the decision-making process; not replace it
• Use results to make policies, not to treat individual patients

Question 4

What are the components of economic evaluation with regards to inputs (cost)?

Answer 4

Resources:
- Buildings
- Staff
- Drugs 
etc

Question 5

What are the components of economic evaluation with regards to the Process of health care (middle bit)?

Answer 5

• Surgery
• Drug therapy
• Physiotherapy
• Counselling
  etc.

Question 6

What are the components of economic evaluation with regards to outputs (benefit)?

Answer 6

• Effectiveness
• Health-related
• Quality of life
• Utility
• Monetary valuation

Question 7

Give an economic evaluation involved in the process of a hospital operation.

Answer 7

Inputs:

• Anaesthetis
• Other drugs
• Equipment
• Disposables
• Staffing
• Hospital costs
• Post-discharge

Process:

• Induction
• Maintenance
• Operation
• Post-operative management
• Post-discharge management

Outputs:
- Post-operative pain
- Nausea
- Vomiting
- Dizziness
- Bleeding
- Infection
etc

Question 8

How do the three basic methods of economic evaluation (CEA/CUA/CBA) differ and how does CMA relate?

Answer 8

• They differ in the type of outcome measure used (Effectiveness/Utility/Benefit)
• CMA (Minimisation) is a special case in each of the above

Question 9

What does Cost Minimisation Analysis entail? Give an example.

Answer 9

• Outcome of the treatments being compared is the same
• Choose the least cost alternative
  E.g. Gentamicin and Ceftazidime are both effective in the treatment of Pseudomonas pneumonia; equally effective according to literature, choose least costly.

Question 10

What does Cost Effectiveness Analysis (CEA) entail and how does it differ to CMA?

Answer 10

• Outcome reported in a single unit of measurement measured in natural years e.g. life years gained by transplantation, HbA1c for diabetes plasma glucose control
• Outcome measure is common to both options but may be achieved to different degrees; difference in effectiveness

Question 11

What is an incremental cost/outcome ratio?

Answer 11

• ‘ICER’; reflects the additional cost required to achieve each extra unit of outcome
• Calculating by dividing the difference in cost between using two drugs by the difference in outcome of said drugs

Question 12

What is ICER (incremental cost/outcome ratio)’s relation to the cost-effectiveness plane?

Answer 12

• ICER forms a slope (line) of ICERλ (lamda)
• ICER does not vary with patient numbers
• Relation between increased cost and increased effect