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Economic evaluations

Economic evaluations. Basic principles. Important concepts. Types of economic evaluation Perspective Incremental cost Discounting Sensitivity analysis. Types of analyses. Same : e.g. Two drugs both reduce BP by 10 mmHg Cost minimisation

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Economic evaluations

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  1. Economic evaluations Basic principles

  2. Important concepts • Types of economic evaluation • Perspective • Incremental cost • Discounting • Sensitivity analysis

  3. Types of analyses • Same: e.g. Two drugs both reduce BP by 10 mmHg • Cost minimisation • Different amounts of same outcome: e.g. One drug reduces BP on average by 20 mmHg whilst another reduces it by 10mmHg • Cost-effectiveness analysis • Different health outcomes: Drug X reduces BP by 20 mmHg and drug Y by 10mmHg; but X may cause impotence • Cost-utility analysis (e.g. QALYs) • Completely different outcomes: e.g. Drug X for HT vsstreet lighting • Cost-benefit analysis (utility given monetary value)

  4. Perspective • Most commonly stated perspectives: • Society • Health care system • Patient • Implications of Perspective choice • Scope of resource use to be included in the costing • Definition of benefits • Method of measuring benefits • Method of costing resources (e.g. social opportunity costs or charges)

  5. Incremental Costs • Has the incremental cost and the incremental benefit over the comparator treatment/s been calculated? Cost-effectiveness plane

  6. Discounting • In general there is a time preference for costs and outcomes: benefits now; costs later! • A definition of discounting “A systematic method to calculate the present value of money that will be spent or the health benefit that will accrue in the future” • Conventionally between ~1– 6%

  7. Sensitivity Analysis • Data in economic evaluations will contain uncertainties: • Costs • Clinical effectiveness • Utilities • Probabilities • Discounting • Extrapolation beyond existing data • These can lead to different conclusions and should be tested in a sensitivity analysis

  8. Sensitivity Analysis • Repeated calculation of the cost effectiveness using different values for probabilities, costs, utilities, discounting, etc. • Univariate analysis (changing one variable at a time) • Multivariate analysis (for important parameters identified in univariate analysis)

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