Cost-effectiveness threshold estimation

Economic evaluation studies (e.g. cost-effectiveness analysis (CEA)) seek to identify which drugs, healthcare technologies, programmes or other interventions offer greater health benefits when funded than health benefits forgone as resources are not then available to fund other priorities. 
 
Increasingly, studies are also used to inform a wider range of decisions such as investments in research to strengthen healthcare systems. The aim is to identify those investments that offer health benefits greater than their opportunity costs.
 
Applied CEA studies need to identify:
  • the health benefits offered by any intervention being evaluated
  • the additional costs imposed on a limited healthcare budget
  • the opportunity costs (i.e. health benefits forgone) due to a commitment of resources to an intervention’s provision. 
An intervention can only reasonably be deemed 'cost-effective' if its benefits outweigh the opportunity costs of health benefits forgone.  
 
The opportunity costs in terms of forgone health benefits are reflected in most CEAs by using a cost-effectiveness threshold (CET). The CET is a measure of the ‘cost per unit of health benefit (e.g. cost per QALY gained/DALY-averted) forgone’.
 
In most health care systems the appropriate CET is not readily apparent but depends upon the particular funding arrangements in the system and the health benefits of other interventions with claims on the limited resources available (i.e. a supply-side concept of a CET is required).
 
Research undertaken by CHE seeks to bring conceptual clarity as to how CETs can guide resource allocation and empirically estimate CETs for use in a wide range of countries. The estimates represent central benchmarks of value for resource allocation decisions in healthcare systems.
Research staff involved: Marc Suhrcke, Andrew Mirelman (Global Health team); Karl Claxton, James Lomas, Jessica Ochalek (TEEHTA team). 
 
Example publications:
  • Nakamura R, Lomas J, Claxton K, Bokhari F, Moreno Serra R, Suhrcke M, 2016, 'Assessing the impact of health care expenditures on mortality using cross-country data.' CHE Research Paper 128 (PDF  , 2,039kb)Centre for Health Economics, University of York, UK, pp. 1-57.
  • Ochalek, JM, Lomas, J & Claxton, KP, 2015, 'Cost per DALY averted thresholds for low- and middle-income countries: evidence from cross country data.' CHE Research Paper 122 (PDF , 2,322kb), Centre for Health Economics, University of York, York, UK, pp. 1-50.
  • Woods, B, Revill, P, Sculpher, M & Claxton, KP, 2015, 'Country-level cost-effectiveness thresholds: initial estimates and the need for further research.' CHE Research Paper 109 (PDF , 2,894kb), Centre for Health Economics, University of York, York, UK, pp. 1-24.