Cost-effectiveness analysis (CEA) is a form of economic analysis that compares the relative costs and outcomes (effects) of different courses of action. Cost-effectiveness analysis is distinct from cost–benefit analysis, which assigns a monetary value to the measure of effect. Cost-effectiveness analysis is often used in the field of health services, where it may be inappropriate to monetize health effect. Typically the 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. The most commonly used outcome measure is quality-adjusted life years (QALY).
The incremental cost-effectiveness ratio (ICER) is a statistic used in cost-effectiveness analysis to summarise the cost-effectiveness of a health care intervention. It is defined by the difference in cost between two possible interventions, divided by the difference in their effect. It represents the average incremental cost associated with 1 additional unit of the measure of effect. The ICER can be estimated as:
Health economics is a branch of economics concerned with issues related to efficiency, effectiveness, value and behavior in the production and consumption of health and healthcare. Health economics is important in determining how to improve health outcomes and lifestyle patterns through interactions between individuals, healthcare providers and clinical settings. In broad terms, health economists study the functioning of healthcare systems and health-affecting behaviors such as smoking, diabetes, and obesity.
Prescription drug list prices in the United States continually are among the highest in the world. The high cost of prescription drugs became a major topic of discussion in the 21st century, leading up to the American health care reform debate of 2009, and received renewed attention in 2015. One major reason for high prescription drug prices in the United States relative to other countries is the inability of government-granted monopolies in the American health care sector to use their bargaining power to negotiate lower prices, and the American payer ends up subsidizing the world's R&D spending on drugs.
An orphan drug is a pharmaceutical agent that is developed to treat certain rare medical conditions. An orphan drug would not be profitable to produce without government assistance, due to the small population of patients affected by the conditions. The conditions that orphan drugs are used to treat are referred to as orphan diseases. The assignment of orphan status to a disease and to drugs developed to treat it is a matter of public policy that depends on the legislation of the country.
The National Institute for Health and Care Excellence (NICE) is an executive non-departmental public body, in England, of the Department of Health and Social Care, that publishes guidelines in four areas:
Cost–utility analysis (CUA) is a form of economic analysis used to guide procurement decisions. The most common and well-known application of this analysis is in pharmacoeconomics, especially health technology assessment (HTA).
The quality-adjusted life year (QALY) is a generic measure of disease burden, including both the quality and the quantity of life lived. It is used in economic evaluation to assess the value of medical interventions. One QALY equates to one year in perfect health. QALY scores range from 1 to 0 (dead). QALYs can be used to inform health insurance coverage determinations, treatment decisions, to evaluate programs, and to set priorities for future programs.
Pharmacoeconomics refers to the scientific discipline that compares the value of one pharmaceutical drug or drug therapy to another. It is a sub-discipline of health economics. A pharmacoeconomic study evaluates the cost and effects of a pharmaceutical product. Pharmacoeconomic studies serve to guide optimal healthcare resource allocation, in a standardized and scientifically grounded manner.
In medicine, an indication is a valid reason to use a certain test, medication, procedure, or surgery. There can be multiple indications to use a procedure or medication. An indication can commonly be confused with the term diagnosis. A diagnosis is the assessment that a particular medical condition is present while an indication is a reason for use. The opposite of an indication is a contraindication, a reason to withhold a certain medical treatment because the risks of treatment clearly outweigh the benefits.
Medication costs, also known as drug costs are a common health care cost for many people and health care systems. Prescription costs are the costs to the end consumer. Medication costs are influenced by multiple factors such as patents, stakeholder influence, and marketing expenses. A number of countries including Canada, parts of Europe, and Brazil use external reference pricing as a means to compare drug prices and to determine a base price for a particular medication. Other countries use pharmacoeconomics, which looks at the cost/benefit of a product in terms of quality of life, alternative treatments, and cost reduction or avoidance in other parts of the health care system. Structures like the UK's National Institute for Health and Clinical Excellence and to a lesser extent Canada's Common Drug Review evaluate products in this way.
Comparative effectiveness research (CER) is the direct comparison of existing health care interventions to determine which work best for which patients and which pose the greatest benefits and harms. The core question of comparative effectiveness research is which treatment works best, for whom, and under what circumstances. Engaging various stakeholders in this process, while difficult, makes research more applicable through providing information that improves patient decision making.
Healthcare rationing in the United States exists in various forms. Access to private health insurance is rationed on price and ability to pay. Those unable to afford a health insurance policy are unable to acquire a private plan except by employer-provided and other job-attached coverage, and insurance companies sometimes pre-screen applicants for pre-existing medical conditions. Applicants with such conditions may be declined cover or pay higher premiums and/or have extra conditions imposed such as a waiting period.
The National Quality Cancer Care Demonstration Project Act of 2009 is an initiative intended to enhance the quality of cancer care in the United States, focused on seniors covered by Medicare, while also controlling costs. House bill H.R. 3675 was introduced by Congressman Artur Davis (D-AL) and cosponsored by Representatives Mary Jo Kilroy (D-OH), Steve Israel (D-NY), Joe Courtney (D-CT) and Adam Schiff (D-CA).
The Health Impact Fund is a proposed pay-for-performance mechanism that would provide a market-based solution to problems concerning the development and distribution of medicines globally. It would incentivize the research and development of new pharmaceutical products that make substantial reductions in the global burden of disease. The Health Impact Fund is the creation of a team of researchers led by the Yale philosopher Thomas Pogge and the University of Calgary economist Aidan Hollis, and is promoted by the non-profit organization Incentives for Global Health (IGH).
The Cancer Drugs Fund (CDF) was introduced in England in 2011. It was established in order to provide a means by which National Health Service (NHS) patients in England could receive cancer drugs that had been rejected by National Institute for Health and Care Excellence because they were not cost effective. Its establishment was confirmed by the UK government's coalition agreement in 2010, and by the White Paper, Equity and excellence – Liberating the NHS.
The Effect Model law states that a natural relationship exists for each individual between the frequency (observation) or the probability (prediction) of a morbid event without any treatment and the frequency or probability of the same event with a treatment . This relationship applies to a single individual, individuals within a population, or groups. This law enables the prediction of the (absolute) benefit of a treatment for a given patient. It has wide-reaching implications in R&D for new pharmaceutical products as well as personalized medicine. The law was serendipitously discovered in the 1990s by Jean-Pierre Boissel. While studying the effectiveness of class-I antiarrhythmic drugs in the prevention of death after myocardial infarction, he stumbled upon a situation which contradicts one of the basic premises of meta-analysis theory, i.e. that the heterogeneity test was significant at the same time for the assumption “the relative risk is a constant” and “ is a constant”.
ISPOR—The Professional Society for Health Economics and Outcomes Research, also known as ISPOR is a global, nonprofit 501(c)(3) public organization for educational and scientific purposes, as defined by the United States Internal Revenue Service.
Real-world evidence (RWE) in medicine is the clinical evidence regarding the usage and potential benefits or risks of a medical product derived from analysis of real-world data (RWD). RWE can be generated by different study designs or analyses, including but not limited to, randomized trials, including large simple trials, pragmatic trials, and retrospective or prospective observational studies. In the USA the 21st Century Cures Act required the FDA to expand the role of real world evidence.
The Equal Value of Life Years Gained or evLYG is a generic measure used to determine how much a medical treatment can extend the life of the patient. Unlike other healthcare metrics, the evLYG does not consider the quality of life for the patient; it exclusively considers the length of life. It is used in economic evaluation to determine the added time a treatment may give a patient. Critics argue the evLYG measurement is flawed because it values a medication based solely on the added years of life. A higher priced drug that both extends life and adds two years of life receives the same evLYG score as a lower priced drug that adds two years but does not improve life.
