Editing Cost-effectiveness analysis

{{Short description|Economic analysis that compares the relative costs and outcomes of different courses of action}}
{{Missing information|calculation|date=November 2022}}

'''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.<ref name=CEAvCBA>{{cite journal |vauthors=Bleichrodt H, Quiggin J |title=Life-cycle preferences over consumption and health: when is cost-effectiveness analysis equivalent to cost–benefit analysis? |journal=J Health Econ |volume=18 |issue=6 |pages=681–708 |date=December 1999 |pmid=10847930 |doi= 10.1016/S0167-6296(99)00014-4|url=http://espace.library.uq.edu.au/view/UQ:10955/Ceacba99.pdf}}</ref> 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 (years of life, premature births averted, sight-years gained) and the numerator is the cost associated with the health gain.<ref>{{cite book | author = Gold MR | title = Cost-effectiveness in health and medicine | page = xviii|display-authors=etal}}</ref> The most commonly used outcome measure is [[quality-adjusted life year]]s (QALY).<ref name=CEAvCBA/>

[[Cost–utility analysis]] is similar to cost-effectiveness analysis. Cost-effectiveness analyses are often visualized on a plane consisting of [[quadrant (plane geometry)|four quadrants]], the cost represented on one axis and the effectiveness on the other axis.<ref>{{cite journal|last=Black|first=William|title=A Graphical Representation of Cost-Effectiveness |journal=Med Decis Making|year=1990|volume=10|issue=3|pages=212–214|doi=10.1177/0272989x9001000308|pmid=2115096|s2cid=2056683}}</ref> Cost-effectiveness analysis focuses on maximising the average level of an outcome, [[distributional cost-effectiveness analysis]] extends the core methods of CEA to incorporate concerns for the distribution of outcomes as well as their average level and make trade-offs between equity and efficiency, these more sophisticated methods are of particular interest when analysing interventions to tackle [[health inequality]].<ref>{{cite journal|last1=Asaria|first1=M|last2=Griffin|first2=S|last3=Cookson|first3=R|title=Distributional Cost-Effectiveness Analysis: A Tutorial.|journal=Medical Decision Making |date=January 2016|volume=36|issue=1|pages=8–19|pmid=25908564|doi=10.1177/0272989x15583266|pmc=4853814}}</ref><ref>{{cite journal|last1=Asaria|first1=M|last2=Griffin|first2=S|last3=Cookson|first3=R|last4=Whyte|first4=S|last5=Tappenden|first5=P|title=Distributional cost-effectiveness analysis of health care programmes--a methodological case study of the UK Bowel Cancer Screening Programme.|journal=Health Economics|date=June 2015|volume=24|issue=6|pages=742–54|pmid=24798212|doi=10.1002/hec.3058|url=http://eprints.whiterose.ac.uk/107248/1/Asaria_et_al_2015_Health_Economics.pdf|doi-access=free}}</ref>

==Applications==
The concept of cost-effectiveness is applied to the planning and management of many types of organized activity. It is widely used in many aspects of life. 

===In military acquisitions===
In the acquisition of military [[tank]]s, for example, competing designs are compared not only for purchase price, but also for such factors as their operating [[radius]], top speed, [[rate of fire]], armor protection, and caliber and armor [[penetration (weapons)|penetration]] of their guns. If a tank's performance in these areas is equal or even slightly inferior to its competitor, but substantially less expensive and easier to produce, military planners may select it as more cost-effective than the competitor.

Conversely, if the difference in price is near zero, but the more costly competitor would convey an enormous battlefield advantage through special ammunition, [[radar]] [[fire-control system|fire control]] and [[laser]] [[range finding]], enabling it to destroy enemy tanks accurately at extreme ranges, military planners may choose it instead – based on the same cost-effectiveness principle.

===In pharmacoeconomics===
In the context of [[pharmacoeconomics]], the cost-effectiveness of a therapeutic or preventive intervention is the ratio of the cost of the intervention to a relevant measure of its effect. Cost refers to the resource expended for the intervention, usually measured in monetary terms such as [[dollar]]s or [[pound sterling|pounds]]. The measure of effects depends on the intervention being considered. Examples include the number of people cured of a disease, the mm Hg reduction in diastolic [[blood pressure]] and the number of symptom-free days experienced by a patient. The selection of the appropriate effect measure should be based on clinical judgment in the context of the intervention being considered.

A special case of CEA is [[cost–utility analysis]], where the effects are measured in terms of years of full health lived, using a measure such as [[quality-adjusted life year]]s (QALY) or [[disability-adjusted life year]]s. Cost-effectiveness is typically expressed as an [[incremental cost-effectiveness ratio]] (ICER), the ratio of change in costs to the change in effects. A complete compilation of cost-utility analyses in the peer-reviewed medical and public health literature is available from the Cost-Effectiveness Analysis Registry website.<ref>{{Cite web|last=Center for the Evaluation of Value and Risk in Health|title=The Cost-Effectiveness Analysis Registry|url=http://healtheconomicsdev.tuftsmedicalcenter.org/cear2/search/search.aspx|access-date=2020-09-04}}</ref>

A 1995 study of the cost-effectiveness of reviewed over 500 life-saving interventions found that the median cost-effectiveness was $42,000 per life-year saved.<ref>{{cite journal |vauthors=Tengs TO, Adams ME, Pliskin JS |title=Five-hundred life-saving interventions and their cost-effectiveness |journal=Risk Anal. |volume=15 |issue=3 |pages=369–90 |date=June 1995 |pmid=7604170 |doi= 10.1111/j.1539-6924.1995.tb00330.x|bibcode=1995RiskA..15..369T |display-authors=etal}}</ref> A 2006 systematic review found that industry-funded studies often concluded with cost-effective ratios below $20,000 per QALY and low quality studies and those conducted outside the US and EU were less likely to be below this threshold. While the two conclusions of this article may indicate that industry-funded ICER measures are lower methodological quality than those published by non-industry sources, there is also a possibility that, due to the nature of retrospective or other non-public work, publication bias may exist rather than methodology biases. There may be incentive for an organization not to develop or publish an analysis that does not demonstrate the value of their product. Additionally, peer reviewed journal articles should have a strong and defendable methodology, as that is the expectation of the peer-review process.<ref>{{cite journal |vauthors=Bell CM, Urbach DR, Ray JG |title=Bias in published cost effectiveness studies: systematic review.|journal=BMJ |volume=332 |issue=7543 |pages=699–703 |date=March 2006 |pmid=16495332 |pmc=1410902 |doi=10.1136/bmj.38737.607558.80 |display-authors=etal}}</ref>

===In energy efficiency investments===
CEA has been applied to [[efficient energy use|energy efficiency]] investments in buildings to calculate the value of energy saved in $/kWh. The energy in such a calculation is virtual in the sense that it was never consumed but rather saved due to some energy efficiency investment being made. Such savings are sometimes called ''[[negawatt]]s''. The benefit of the CEA approach in energy systems is that it avoids the need to guess future energy prices for the purposes of the calculation, thus removing the major source of uncertainty in the appraisal of energy efficiency investments.<ref>{{Cite journal |doi = 10.1016/S2212-5671(15)00195-1|title = Economic Appraisal of Energy Efficiency in Buildings Using Cost-effectiveness Assessment|journal = Procedia Economics and Finance|volume = 21|pages = 422–430|year = 2015|last1 = Tuominen|first1 = Pekka|last2 = Reda|first2 = Francesco|last3 = Dawoud|first3 = Waled|last4 = Elboshy|first4 = Bahaa|last5 = Elshafei|first5 = Ghada|last6 = Negm|first6 = Abdelazim|doi-access = free}}</ref>

==See also==
*{{annotated link|Cost–benefit analysis}}
*{{annotated link|Cost overrun}}
*{{annotated link|Efficiency}}
*{{annotated link|National Institute for Health and Care Excellence}}
*{{annotated link|Distributional cost-effectiveness analysis}}

== References ==
{{Reflist}}

==External links==
* [https://cevr.tuftsmedicalcenter.org/databases/cea-registry Tufts CEA Registry]
* [http://ghcearegistry.org/ghcearegistry/ Global Health Cost-Effectiveness Analysis Registry]
* [http://news.bbc.co.uk/1/hi/health/4420584.stm Why some drugs are not worth it] BBC report
* [https://www.who.int/choice/en/ World Health Organization – CHOICE (Choosing Interventions that are Cost Effective)]
* [https://sites.google.com/site/isporco/ ISPOR-CO, The Colombian Chapter of The International Society for Pharmacoeconomics and Outcomes Research]
* [https://www.iceaaonline.com/ International Cost Estimating and Analysis Association]

{{Health care quality}}
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[[Category:Costs]]
[[Category:Health economics]]
[[Category:Health informatics]]
[[Category:Health care quality]]
[[Category:Decision analysis]]