Cost, context and decisions in Health Economics and cost-effectiveness analysis

Posted on 20 June 2018

CHE's latest Research Paper 154 written by Anthony Culyer

CHE Research Paper 119

Cost in health economics is necessarily associated with a decision. It varies according to the context of that decision: whether about inputs or outputs, the alternatives, its timing, the nature of the commitment to following a decision, who the decision maker is, and the constraints and discretion limiting or liberating the decision maker. Distinctions between short/long runs and between fixed/variable inputs are matters of choice, not technology, and are similarly context-dependent. Costs are not harms or negative consequences. Whether ‘clinically unrelated’ future costs and benefits should be counted in current decisions also depends on context. The costs of entire health programmes are context-dependent, relating to planned rates of activity, volumes and timings. The implications for the methods of CEA and HTA are different in the contexts of low- and middleincome countries compared with high-income countries, and further differ contextually according to budget constraints (fixed or variable).

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