Page 59 - DLIS104_MANAGEMENT OF LIBRARIES AND INFORMATION CENTRES

Management of Libraries and Information Centres

Notes CEA in pharmacoeconomics

In the context of pharmacoeconomics, the cost-effectiveness of a therapeutic or preventive
intervention is the ratio of the cost of the intervention to a relevant measure of its effect. Cost
refers to the resource expended for the intervention, usually measured in monetary terms such as
dollars or pounds. The measure of effects depends on the intervention being considered. Examples
include the number of people cured of a disease, the mm Hg reduction in diastolic blood pressure
and the number of symptom-free days experienced by a patient. The selection of the appropriate
effect measure should be based on clinical judgement in the context of the intervention being
considered. A special case of CEA is costutility analysis, where the effects are measured in terms of
years of full health lived, using a measure such as quality-adjusted life years or disability-adjusted
life years.
Cost-effectiveness is typically expressed as an incremental cost-effectiveness ratio (ICER), the
ratio of change in costs to the change in effects. A complete compilation of cost-utility analyses in
the peer reviewed medical literature is available from the Cost-Effectiveness Analysis Registry
website. A 1995 study of the cost-effectiveness of over 500 life-saving medical interventions found
that the median cost per intervention was $42,000 per life-year saved. A 2006 systematic review
found that industry-funded studies often concluded with cost effective ratios below $20,000 per
QALY and low quality studies and those conducted outside the US and EU were less likely to be
below this threshold. While the two conclusions indicates that industry-funded ICER measures are
lower methodological quality than those published by non-industry sources, there is also a
possibility that, due to the nature of retrospective or other non-public work, publication bias may
exist rather than methodology biases. There may be incentive for an organisation not to develop
or publish an analysis that does not demonstrate the value of their product.

Self Assessment

State whether the following statements are true or false:
4. Economic analysis that compares the relative costs and outcomes (effects) of two or more
courses of action.
5. CEA is expressed in terms of a ratio where the denominator is a gain in health from a
measure and the numerator is the cost associated with the health gain.

8.4 Cost Benefit Analysis

Cost-benefit analysis (CBA), sometimes called benefit-cost analysis (BCA), is an economic decision-
making approach, used particularly in government and business. CBA is used in the assessment of
whether a proposed project, programme or policy is worth doing, or to choose between several
alternative ones. It involves comparing the total expected costs of each option against the total
expected benefits, to see whether the benefits outweigh the costs, and by how much.

In CBA, benefits and costs are expressed in money terms, and are adjusted for the time value of money,
so that all flows of benefits and flows of project costs over time (which tend to occur at different points in
time) are expressed on a common basis in terms of their “present value”.

Notes Cost-benefit analysis is often used by governments and others, e.g. businesses, to evaluate
the desirability of a given intervention. It is an analysis of the cost effectiveness of different
alternatives in order to see whether the benefits outweigh the costs (i.e. whether it is worth
intervening at all), and by how much (i.e. which intervention to choose). The aim is to
gauge the efficiency of the interventions relative to each other and the status quo.

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