cost-effectiveness analysis: average and incremental ratios

1

Cost-Effectiveness Analysis

Henry A. Glick, Ph.D.

Pharmacoeconomics

April 19, 2012

www.uphs.upenn.edu/dgimhsr/fda2012.htm

Outline

• Introduction to cost-effectiveness analysis (CEA)• Choice criteria for CEA• The cost-effectiveness frontier• Net benefits (a transformation of CEA) and choice

criteria• Additional topics

Cost-Effectiveness Analysis (I)

• Estimates costs and outcomes of intervention• Costs and outcomes are expressed in different units

– If outcomes are aggregated using measures of preference (e.g., quality-adjusted life years saved), referred to as cost utility analysis

2

Cost-Effectiveness Analysis (II)

• Results meaningful if:– They are compared with other accepted and rejected

interventions (e.g., against league tables), or– There exists a predefined standard (i.e., a maximum

acceptable cost-effectiveness ratio or an acceptability criterion) against which they can be compared (e.g., $50,000 per year of life saved might be considered the maximum acceptable ratio), or

– We can define utility curves that trade off health and cost (not discussed further)

Cost-Effectiveness “History”

• $/Life saved• $/Year of life saved (YOL)• $/Quality adjusted life year saved (QALY)

Why CEA Rather Than CBA?

• Not precisely clear– Potential difficulties in measurement– Discomfort with placing a dollar value directly on a

particular person's life (rather than years of life in general)

– Potential ethical issues

3

Potential Ethical Issues

• QALYs / life years more equally distributed than wealth– Gini Coefficients for life expectancy and wealth

(measure of equality between 0 and .5, with larger values representing greater inequality)

• Birth cohort: 0.11• Current population: .31• Wealth: 0.41

• Health more a “right” than a commodity, thus 1 person 1 vote may be more appropriate than 1 dollar 1 vote– Cost-effectiveness analysis uses 1 QALY/year

1 vote

Cost-Effectiveness Ratios

• Cost-effectiveness ratio

• A ratio exists for every pair of options– 1 option (case series), no ratios calculated– 2 options, 1 ratio– 3 options, 3 ratios (option 1 versus option 2, option 1

versus option 3, and option 2 versus option 3)• In the “efficient” selection algorithm, we don’t necessarily

calculate all the possible ratios

1 2

1 2

Costs - CostsEffects - Effects

Average Vs. Incremental C-E Ratios

• Some dispute about definitions– e.g., Some use “average cost-effectiveness ratio” to

refer to the practice of dividing a therapy’s total cost by its total effect (including Treeage, a fairly ubuiqitious piece of decision analysis software)

4

Dividing a Therapy’s Costs by Its Effects is “Generally Uninformative”

Example 1

(1200 -500) / (.04-.025) = 46,667

30,000.041200Rx2

20,000.025500Rx1

Example 2

(780 -500) / (.026-.025) = 280,000

30,000.026780Rx2

20,000.025500Rx1

RatioEffectCost

Average Vs. Incremental C-E Ratios

• We don’t define the average CER by dividing a therapy’s total cost by its total effect– Treeage, a fairly ubuiqitious piece of decision analysis

software, does• We recommend against calculation of these ratios

– They provide little to no information• We instead define the average cost-effectiveness ratio

as the comparison of costs and effects of each intervention with a single option, often the "do nothing" or usual care option

* (Ci – C1) / (Ei – E1)16,480.0071942017.63614,279.0071941716.31511,783.0071938514.8148852.0071900413.0235495.0071442410.772

--.006594697.751

Avg Cost/ Case Detected *Cases DetectedCost

# GuaiacTests

Example: Average Ratios and the Sixth Stool Guaiac

• Neuhauser and Lewicki, NEJM, 1975;293:226-8.

5

Incremental Cost-Effectiveness Ratios

• Comparison of costs and effects among the alternative options (i.e., excluding the comparator used for the average cost-effectiveness ratios)

• When there are only 2 options being evaluated, the average and incremental cost-effectiveness ratios are the same

• Neuhauser and Lewicki, NEJM, 1975;293:226-8.

Guaiac Average and Incremental Ratios

* (Ci – C1) / (Ei – E1)** (Ci – Ci-1) / (Ei – Ei-1)

44,000,00016,480.0071942017.6364,687,50014,279.0071941716.315469,81611,783.0071938514.814491278852.0071900413.02354955495.0071442410.772

----.006594697.751

IncremCER **

Average CER *

Cases DetectedCost

# Guaiactests

Cost-Effectiveness Plane

• Axes• Origin• Average

ratios• Incremental

ratios

Alternativetherapy dominates

Alternative therapy moreeffective but more costly

New therapy moreeffective but more costly

New therapydominates(-

) D

iffer

ence

in C

ost

(+)

(-) Difference in Effect (+)

oo

oo-oo

-oo

6

Choice Criteria For Cost-Effectiveness Ratios• Choose options with acceptable average and

incremental cost-effectiveness ratios (i.e., whose ratios with all other options are acceptable)

• Subject to:– Budget Constraint?– Acceptable Ratio?

• Not accounting for uncertainty around the ratios• Consider 3 mutually exclusive options

Choice Criteria, Example 1

Adopt?27,000--Option 2

26,00025,000Option 1

Option 3Option 2Ratios

302520Expected QALYs

270,000135,00010,000Expected Costs

Option 3Option 2Option 1



37,50025,000Option 1


262520Expected QALYs

235,000135,00010,000Expected Costs


7



146,667200,000Option 1


21.52120Expected QALYs

230,000210,00010,000Expected Costs


Multitherapy Example

• Suppose 6 screening strategies have the following discounted costs and life expectancies:

Frazier AL, et al. JAMA. 2000;284:1954-61.

17.4072034U+Sig, Q5 (S6)17.3962028C Q(10) (S5)17.4021810U+Sig, Q10 (S4)17.3871536Sig Q5 (S3)17.3781288Sig Q10 (S2)17.3481052No screening (S1)YOLSCostTreatment

Choice Among Screening Strategies

• Which therapy should be adopted if the acceptability criterion is $40,000 / YOL Saved? $50,000 / YOL Saved?

• In what follows, demonstrate 3 methods for selecting a single therapy from among these candidates– All 3 methods are based on selecting the therapy with

an acceptable ratio– All 3 methods are transformations of one another --

they use same information in slightly different ways --and all yield identical choices

8

Method 1: Efficient Algorithm (EA) forChoosing among Multiple Therapies (I)

• Suppose 6 therapies have the following discounted costs and life expectancies

17.4072034U+Sig, Q5 (S6)17.3962028C Q(10) (S5)17.4021810U+Sig, Q10 (S4)17.3871536Sig Q5 (S3)17.3781288Sig Q10 (S2)17.3481052No screening (S1)YOLSCostTreatment

Efficient Algorithm: Step 1

• Rank order therapies in ascending order of either outcomes or costs (the final ordering of the nondominated therapies will be the same which ever variable you choose)

17.4021810U+Sig, Q10 (S4)17.3962028C Q(10) (S5)

17.4072034U+Sig, Q5 (S6)

17.3871536Sig Q5 (S3)17.3781288Sig Q10 (S2)17.3481052No screening (S1)YOLSCostTreatment


• Eliminate therapies that are strongly dominated (i.e., that have increased costs and reduced effects compared with at least one other alternative

17.4021810U+Sig, Q10 (S4)17.3962028C Q(10) (S5)

17.4072034U+Sig, Q5 (S6)


9


• Compute incremental cost-effectiveness ratios for each adjacent pair of outcomes (e.g., between options 1 and 2; between options 2 and 3; etc.)

17.40717.40217.39617.38717.37817.348YOLS

44,80018,250Dom

27,5507850

--ICER

1810U+Sig, Q10 (S4)2028C Q(10) (S5)

2034U+Sig, Q5 (S6)

1536Sig Q5 (S3)1288Sig Q10 (S2)1052No screening (S1)CostTreatment

Efficient Algorithm: Step 4• Eliminate therapies that are less effective (cost) but have

a higher cost-effectiveness ratio (weakly dominated) than the next highest ranked therapy

• Rationale: Rather buy more health for a lower cost per unit than less health for a higher cost per unit– e.g., eliminate S3 (sig,Q5), because:

• S3 is less effective than the next higher ordered S4 (U+sig,Q10) [17.387 YOLS vs. 17.402] AND

• The incremental ratio for moving from S2 to S3 (27,550) is greater than the incremental ratio for moving from S3 to S4 (18,250)

– Implies that moving from S2 to S4 is more cost-effective than is moving from S2 to S3


• Recalculate the ICERs (e.g., between options 2 and 4)– Repeat steps 4 and 5 if necessary)

17.40717.40217.39617.38717.37817.348YOLS

44,80021,750Dom

27,5507850

--ICER

1810U+Sig, Q10 (S4)2028C Q(10) (S5)

2034U+Sig, Q5 (S6)

1536Sig Q5 (S3)1288Sig Q10 (S2)1052No screening (S1)CostTreatment

10


• Identify the acceptable therapy

S6S4S2S1

Therapy

21750 to 44,79944,800+

7850 to 21,749<7850Maximum WTP

Full Cost-Effectiveness Table

44,8000.00517.4072242034S6 U+Sig, Q5SD = strong dominance; WD = weak dominance

17.40217.39617.38717.37817.348YOLS

18102028153612881052Cost

0.024----

0.030--Δ Y

21,750SDWD

7850--

ICER

522S4 U+Sig, Q10--S5 C Q(10)--S3 Sig Q5

236S2 Sig Q10--S1 No screeningΔCTreatment

Reduced Cost-Effectiveness Table

44,8000.00517.4072242034S6 U+Sig, Q517.40217.37817.348YOLS

181012881052Cost

0.0240.030

--Δ Y

21,7507850

--ICER

522S4 U+Sig, Q10236S2 Sig Q10--S1 No screeningΔCTreatment

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Introduction to Method 2: Frontier Analysis (Geometry of Choice)

• We can also identify the optimal strategy using the cost-effectiveness plane. In many cases, we focus on the upper right quadrant, where new therapies increase both costs and outcomes

0 5 10 15 200

250000

500000

750000

1000000

Dis

coun

ted

Cos

ts ($

)

Discounted Years of Life Saved

CER = Slope

CHOOSING AMONG FRONTIER OPTIONS (1)

• Options 2 and 3 both have acceptable average cost-effectiveness ratios (i.e., below $50,000/YOLS)

0 2 4 6 8

Discounted QALYs

0

100000

200000

300000

400000

Dis

coun

ted

Cos

ts ($

)

O2

O3

Example 2 $50,000

Choosing Among Frontier Options (2)

• To evaluate the incremental ratios, shift the origin to the option with the lowest acceptable average cost-effectiveness ratio, and reimpose the $50,000 acceptability criterion

0 2 4 6 80

100000

200000

300000

400000

Dis

coun

ted

Cos

ts ($

)

Discounted Years of Life Saved

O2

O3

Example 2

$50,000

12

Colorectal Cancer Screening Example

• The convex hull represents the therapies that for a given level of effect have the lowest cost (or for a given level of cost have the highest effect

0.000 0.010 0.020 0.030 0.040 0.050 0.060

Years of Life Gained

0

250

500

750

1000

Cos

ts ($

)

COL, Q10 years

$40,

000

per Y

OLS SIG2, Q5 years

U & SIG 2, Q10 years

U & SIG 2, Q5 years

SIG2, Q10 years

$7,850

$21,750

$44,800

Strong Dominance

0.000 0.010 0.020 0.030 0.040 0.050


0

250

500

750

1000

Cos

ts ($

)

S5: COL, Q10 years

S3: SIG2, Q5 years

S4: U & SIG2, Q10 years

S2: SIG2, Q10 years

StrongDominance

S6

••

Weak Dominance

0.000 0.010 0.020 0.030 0.040 0.050


0

250

500

750

1000

Cos

ts ($

)

S5: COL, Q10 years

S3: SIG2, Q5 years

S4: U & SIG2, Q10 years

S2: SIG2, Q10 years

WeakDominance

S6

•

•

13

Sig2,q5 and the Frontier

• Weakly dominated, but– Uncertainty (i.e., confidence region) might be such

that we may not be able to exclude it from the frontier– Weakly dominated therapies that lie close to the

frontier, "might be considered [a] reasonable alternative...if there were noneconomic reasons to prefer them, such as patient or physician acceptability, availability, or other factors." Mark D. JAMA. 287;202:2428-9.

Method 2. Choice Using a PredefinedMaximum Acceptable C-E Ratio

• Choose the therapy with a tangency between frontier and the lowest line with a slope defined by the maximum willingness to pay for the health outcome

0.000 0.010 0.020 0.030 0.040 0.050 0.060


0

250

500

750

1000

Cos

ts ($

)

COL, Q10 years

$40,

000

per Y

OLS SIG2, Q5 years

U & SIG2, Q10 years

U & SIG2, Q5 years

SIG2, Q10 years

$7,850

$21,750

$44,800

Method 2 Recommendations

• Choose the therapy with a tangency between frontier and the lowest line with a slope defined by our maximum willingness to pay

S6S4S2S1

Therapy

21750 to 44,79944,800+

7850 to 21,749<7850Maximum WTP

14

Introduction to Method 3: Net Benefits

• A composite measure (part cost-effectiveness, part cost benefit analysis), usually expressed in dollar terms, that is derived by rearranging the cost-effectiveness decision rule:

W > ΔC /ΔQ

where W = willingness to pay (e.g., 50 or 100K)

Net Benefits (II)

• Two forms of the net benefit expression exist depending on the rearrangement of this expression– Perhaps most naturally for economists, net monetary

benefits can be expressed on the cost scale (NMB)(W * ΔQ) - ΔC

– Alternatively, net health benefits (NHB) can be expressed on the health outcome scale:

ΔQ - (ΔC / W)• A potential disadvantage of the latter

transformation is that NHB is undefined when the CR equals 0

NMB Rationale

• Overcomes problems associated with parametric tests of the ratio– Study result is a difference in means, not a ratio of

means, and is always defined and continuous• Substitutes a “poor-person’s” willingness to pay measure

(the acceptability criterion) for the more theoretically correct individually-measured willingness to pay– Differs from cost-benefit analysis in that it does not

aggregate individuals' willingnesses to pay• All else equal, we should adopt programs with net

monetary (health) benefits that are greater than 0 (i.e., programs with incremental cost-effectiveness ratios that are less than WTP

15

Net Benefits and the CE Plane (I)

• On the CE plane, NMB is represented by a family of lines all with a slope equal to W

-0.40 -0.30 -0.20 -0.10 0.00 0.10 0.20 0.30 0.40

Difference in QALYS

-27500

-17500

-7500

2500

12500

22500

32500

Diff

eren

ce in

Cos

ts

Acceptable upper limit, $50,000

Net monetary benefit, $0

Net monetary benefit, - $12,500

Net monetary benefit, - $25,000

Net monetary benefit, $12,500

Net Benefits and the CE Plane (II)

• Each line represents a single value of net benefits– For NMB, -intercept (because at the origin, W ΔQ = 0

and the formula reduces to -ΔC– For NHB, point where the line intersects the

horizontal axis• For the line passing through the origin, both NMB and

NHB = 0– Lines below and to the right of the net benefit=0 line

have positive net benefits (i.e., acceptable cost-effectiveness ratios)

– Lines above and to the left have negative net benefits*** Method 2, above, is equivalent to selecting the

therapy with the largest valued NMB ***

NMB and the Multitherapy Example

• Returning to the previous multitherapy example: suppose 6 therapies have the following discounted costs and life expectancies

• Which therapy should be adopted if the acceptability criterion is $40,000 / YOL Saved? $50,000?

17.4021810U+Sig, Q10 (S4)17.3962028C Q(10) (S5)

17.4072034U+Sig, Q5 (S6)


16

Numeric Net Monetary Benefit Methods

• Can follow a modified version of method 1 to calculate incremental NMB

• Modifications for calculation of Incremental NMB:– In step 3, calculate NMB rather than cost-

effectiveness ratios– In step 4, eliminate therapies that are less effective

(cost) but have a smaller NMB than the next highest ranked therapy (weakly dominated)

– In step 5, recalculate the NMBsSelect the therapy that has BOTH the greatesteffectiveness AND a positive incremental NMB

Comparing 6 Strategies' Monetary Benefits

• Alternatively, can calculate the monetary benefit (MB) for each therapy based on its own costs and effects rather than incremental costs and effects

• Step 1. Calculate each therapy’s MB by multiplying the therapy’s average (NOT incremental) effect times WTP and subtracting the therapy’s average cost

• Select the therapy with the greatest MB• Yields the same conclusions as the other 2 methods for

selecting a therapy

i i iMB = WQ - C

Method 3

868,316694,24617.4072034U+Sig,Q5 (S6)

867,772693,81217.3962028C,Q10 (S5)

868,290694,27017.4021810U+Sig, Q10 (S4)

867,814693,94417.3871536Sig, Q5 (S3)

867,612693,83217.3781288Sig, Q10 (S2)

866,348692,868 *17.3481052No Scr (S1)

NMB,$50K

NMB,$40KYOLSCost

* (40,000 * 17.348) = 693,920, subtracting 1052 = 692,868

17

Exercise: Selecting a Therapy• Suppose you evaluated 5 therapies and observed the

following costs and effects• Using method 1, which strategy would you recommend if

WTP = 50,000? If WTP = 75,000?

683

644

655

635

678

Total Cost

35.66575

35.66534

35.66553

35.66502

35.66561

QALYsStrategy

Step 1• Step 1. ???

683

644

655

635

678

Total Cost

35.66575

35.66534

35.66553

35.66502

35.66561

QALYsStrategy

Rank Order• Step 1. Rank order the therapies by increasing cost or

effect

35.6657

35.6656

35.6655

35.6653

35.6650

QALYs

683

678

655

644

635

Total Cost

5

1

3

4

2

Strategy

18


35.6657

35.6656

35.6655

35.6653

35.6650

QALYs

683

678

655

644

635

Total Cost

5

1

3

4

2

Strategy

Dominated Therapies• Step 2. Eliminate any strongly dominated therapies

• There are no strongly dominated therapies

35.6657

35.6656

35.6655

35.6653

35.6650

QALYs

683

678

655

644

635

Total Cost

5

1

3

4

2

Strategy


35.6657

35.6656

35.6655

35.6653

35.6650

QALYs

683

678

655

644

635

Total Cost

5

1

3

4

2

Strategy

19

Calculate ICERS• Step 3. Calculate incremental cost-effectiveness ratios

35.6657

35.6656

35.6655

35.6653

35.6650

QALYs

50,000

230,000

55,000

30,000

--

ICER

683

678

655

644

635

Total Cost

5

1

3

4

2

Strategy


35.6657

35.6656

35.6655

35.6653

35.6650

QALYs

50,000

230,000

55,000

30,000

--

ICER

683

678

655

644

635

Total Cost

5

1

3

4

2

Strategy

Weakly Dominated Therapies• Step 4. Eliminate any weakly dominated therapies

• Eliminate strategy 1 with an ICER of 230k because strategy 5 is more effective and has a lower ICER

35.6657

35.6656

35.6655

35.6653

35.6650

QALYs

50,000

230,000

55,000

30,000

--

ICER

683

678

655

644

635

Total Cost

5

1

3

4

2

Strategy

20


35.6657

35.6656

35.6655

35.6653

35.6650

QALYs

50,000

230,000

55,000

30,000

--

ICER

683

678

655

644

635

Total Cost

5

1

3

4

2

Strategy

Recalculate the ICERS• Step 5. Recalculate the ICERS

35.6657

35.6656

35.6655

35.6653

35.6650

QALYs

140,000

230,000

55,000

30,000

--

ICER

683

678

655

644

635

Total Cost

5

1

3

4

2

Strategy


35.6657

35.6656

35.6655

35.6653

35.6650

QALYs

140,000

230,000

55,000

30,000

--

ICER

683

678

655

644

635

Total Cost

5

1

3

4

2

Strategy

21

Therapy Selection• Step 6. Select the option with the largest ICER that is

lower than the maximum WTP

• #4 if WTP=50,000; #3 if WTP=75,000

35.6657

35.6656

35.6655

35.6653

35.6650

QALYs

140,000

230,000

55,000

30,000

--

ICER

683

678

655

644

635

Total Cost

5

1

3

4

2

Strategy

Recommendation?

S5S3S4S2

Therapy

55,000 to <140,000140,000+

30,000 to <55,000<30,000Maximum WTP

Simultaneous Comparison

• Description of the selection algorithm may suggest that we take a path through different options, which assumes we will adopt lower cost/effect pairs before we will adopt higher cost/effect pairs

• Instead, all 4 algorithms are simply step-by-step procedures that simultaneously compare all of the options– As done by identifying the tangency between the

NMB lines and the "health production" frontier, or– By comparing MBs

22

Goal of Selection Process

• The goal of the selection process is to choose options with acceptable average and incremental cost-effectiveness ratios– Choose options whose ratios with all other options

are acceptable• Implication: We cannot ignore the economic value of U

and Sig2 every 10 years and U and Sig2 every 5 years when evaluating Sig2 every 5 years or colonoscopy every 10 years

What Is the Maximum Acceptable Ratio?

• Traditionally, cost-effectiveness ratios less than $40,000 to $50,000 per quality-adjusted life-year saved (or net monetary benefit cost lines defined using these ratios) have been considered acceptable

• Little analytic attention has been given to identifying an appropriate acceptability criterion

• There has been a growing debate about whether the acceptability criterion in the U.S. has increased (e.g., at a minimum to $100,000 per QALY)

• Not clear that acceptable levels derived for the point estimate of the cost-effectiveness ratio should be used to determine the acceptable levels for the upper limit of the confidence interval for the cost-effectiveness ratio

What Is the Maximum Acceptable Ratio?

• US Gov’t– EPA: 9.1 M / life (~222K / undiscounted YOLS)– FDA: 7.9 M / life (~176K / undiscounted YOLS)– DOT: 6 M / life (~133K / undiscounted YOLS)

• Australia: $AU 42K - 76K /YOLS• Italy: €60,000/QALY• Netherlands: €80 000/QALY• Sweden: SEK 500,000 (€54,000) / QALY• UK: £20 - 30K / QALY• WHO report: 3 times GDP per DALY

23

Are All Ratios of Equal Value?

• Mortal, relatively incurable diseases vs. diseases that principally affect quality of life– Are acceptable ratios for the former higher than for

the latter?• NICE, appraisal committees can consider ‘giving

greater weight to QALYs achieved in the later stages of terminal diseases’” (Nature, 09/2009)

– As more treatments become available and the disease appears less incurable, does the acceptable incremental ratio for new therapies begin to approach the "standard" acceptable ratio?

• Small budgetary impact

Are All Ratios of Equal Value? (II)

• Identifiable individuals• Do individuals have a set of “social preferences” that

differ from their “individual preferences”– $1,000,000 to cure 100 blind invalids– $1,000,000 to cure 100 blind healthy individuals

• Compensation for risks imposed by society

Acceptability and the Lower Left Quadrant?

• Economists usually treat ratios in the upper right and lower left quadrants symmetrically– If we would not spend more than $50,000 per QALY

saved for a more costly and more effective new therapy in the northeast quadrant I, then we would not spend more than $50,000 per death averted for a more costly and more effective alternative therapy in the southwest quadrant

– i.e., we would adopt a less costly and less effective new therapy if its ratios of savings per QALY lost were greater than $50,000 compared with the alternative

24

Acceptability and the Lower Left Quadrant? (II)

• Some have suggested that preferences for gains and losses of health are asymmetric– Common assumption is that people need to be paid

more to give up health than they are willing to pay to gain health (possibly an income effect)

• Such asymmetries can be incorporated into decision making for individual therapies, but complicates NMB calculation, construction of acceptability curves, and league-table decision making

Negative Cost-Effectiveness Ratios

• If the point estimates for the differences in costs and effects are of opposite signs (either increase costs and decrease effectiveness or decrease costs and increase effectiveness), the resulting cost- effectiveness ratio will be negative

• The magnitude of negative point estimates for ratios in the same quadrant does not provide information about the relative preferability of these different therapies

Negative Ratios (II)

• When reporting on the cost-effectiveness of a therapy (e.g., if you are comparing only two options), and the resulting cost-effectiveness ratio (or the CI of the ratio) is negative, do not report the negative value (because the magnitude conveys little if any information)– Instead simply report that the ratio represents that the

therapy is dominant/dominated• If the lower and upper limits of the confidence interval

(CI) for the CER are both negative, the relative magnitude of the two limits provides information about whether or not the CI includes the Y axis of the CE plane (return to this idea when we discuss sampling uncertainty for CERs)

25

Take Home Messages (I)

• Decision making using cost-effectiveness ratios requires attention to average and incremental cost-effectiveness ratios

• To make decisions using these ratios, they must be compared to:– (Most common:) Other accepted and rejected

interventions (e.g., against league tables), or– (Growing in use:) A predefined standard (i.e., an

acceptability criterion) against which they can be compared (e.g., $50,000 per year of life saved might be considered the largest acceptable ratio), or

– (Rarely or never:) Utility curves trading off health and cost

Take Home Messages (II)

• Use of a predefined standard (e.g., $50,000 per year of life saved) equates decision making using cost-effectiveness ratios and decision making using net monetary benefits

• Do not report the magnitude of negative point estimates of cost-effectiveness ratios

cost-effectiveness analysis: average and incremental ratios

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