2. Comparing relevant alternatives
1. Comparing relevant alternatives
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Economic evaluation is a comparison of the costs and consequences of at least two choices. With new medicines, this is typically a new medicine versus the current standard-of-care treatment.
Of course, the most desirable solution is to lower costs and improve health outcomes important to patients. However, when evaluating how health costs will change with the introduction of the new medicine, it is also important that the right comparison is made. If a new medicine is compared with a very expensive alternative that is not often used, the new medicine will look more attractive, but this comparison is flawed. In order to link health effects and costs, one must have good information on both. Decision-makers need to understand how the new medicine compares with the existing standard of care treatment, and the economic implications of adopting a new health technology over another in the healthcare system, often under the pressure of having to manage limited healthcare funds. The underlying concept is known as ‘opportunity cost’, which describes the value of the achievable benefits forgone by funding one technology, which comes at the expense of another. Within HTA, economic evaluation can help decide which health technologies best to fund.