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).