2. Comparing relevant alternatives - Types of economic evaluation

Cost-Effectiveness Analysis (CEA)

CEA assesses whether a new health technology provides value relative to existing health technologies. It estimates:

• The costs incurred by the current treatment vs. the new one
• The health outcomes associated with each technology in question

The difference in costs is described as either a cost-saving or a cost-increase.

Effects of the different technologies are usually measured using:

• Unidimensional final outcomes (e.g. life-years gained) or
• Surrogate outcomes (e.g. progression-free survival)

These measurements inform whether a technology provides:

• The greatest effect for a given cost, or
• A given effect at minimum cost

However, because different therapeutic areas use different units (or metrics) to measure outcomes, CEA results cannot easily be compared across disease areas. This is a key limitation compared to cost-utility analysis (CUA).

Cost–Utility Analysis (CUA)

Cost–utility[1] analysis (CUA) is an expansion of the cost-effectiveness analysis by using health-related outcomes that allow the measurement and comparison of different outcomes with the same metric e.g., when health technologies affecting a wide range of medical conditions are being compared. A widely used approach is to take the composite measures referred to as quality-adjusted life years (QALYs).

QALYs are a type of outcome measure that takes into account both:

• Quantity of life (longevity/mortality), and
• Quality of life (HRQoL), including factors like morbidity, psychological well-being, functionality, and social health (See Lesson 6)

For this reason, CUA is often referred to as cost-per-QALY analysis.

Cost–utility analyses commonly result in a relative measure of costs per QALY gained: the incremental cost-effectiveness ratio (ICER)[2]. The ICER is then compared to a threshold value below which a technology is judged to offer a cost-effective use of resources, or, more straightforward, value for money.

 

Note of caution:

There is still ongoing debate about the use of QALYs in economic evaluation within HTA on methodological and societal grounds.

Critics argue that the QALY oversimplifies how actual patients would assess risks and outcomes, and that its use may restrict patients with disabilities ore rare and ultra-rare diseases from accessing treatment.

Proponents of the measure acknowledge that the QALY has some shortcomings, but that its ability to quantify tradeoffs and opportunity costs from the patient and societal perspective make it a critical tool for equitably allocating resources.[3], [4], [5]

Cost–Benefit Analysis (CBA)

Cost–benefit analysis (CBA) evaluates both costs and consequences in monetary terms (e.g., in Euros). For this, it is necessary to assign a monetary value to any consequences (outcomes) associated with the health technologies assessed. Notably the allocation of a monetary value to benefits of a health technology, for which precise estimates are difficult to obtain, poses methodological challenges and limits the use of this form of economic evaluation.

Cost–Minimisation Analysis (CMA)

Cost-minimisation analysis (CMA) (also called cost analysis) looks at the costs associated with the health technologies to be compared, to identify the one associated with the lowest costs.

In some cases, analysts  may be tempted to assume the health technologies under consideration to have the same desired effects (benefits) and undesired effects (risks/harms), and simply focus on costs.

While this may seem to be an efficient way to examine the value of a new medicine, in reality, new medicines are seldom ‘equivalent’ to other medicines; and therefore, if differences between the technologies in outcomes cannot be adequately distinguished, then other approaches may be more useful.

Budget Impact Analysis (BIA)

Budget impact analysis (BIA) assesses the financial and organisational impact of adopting a new health technology without directly taking health consequences into account (or comparing alternatives). It is therefore at best a ‘partial’ economic evaluation and different from economic evaluations which attempt to provide information about the most economically efficient ways to utilise or allocate available health-care resources.

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