Cost Effectiveness

This method compares two known but not equally efficacious strategies and assigns a cost per additional year of life (LY) saved by the best ("dominant") strategy. Treatment A, which gains 1 month of survival at a cost of $2,000, has a cost-effectiveness ratio of $24,000/LY. This cost per unit of effectiveness fosters a reasonable basis of comparison and can be put into a "League Table" (like team standings) so that decision makers can compare alternative uses of the same money. The gold standard way to get this information is to append a concurrent economic analysis to the trial, but such trials can also be done retrospectively after the trial has closed, so long as the assumptions and conclusions are justifiable ("robust").

For this type of study to be clinically applicable, a limit must be set on the cost that society will pay for the additional year of life saved; otherwise, there is no reason to do the study or impetus for making the strategy more efficient. For example, a typical limit often used is in the range of $50,000 to $100,000 per additional year of life saved. By setting this limit, one can then reanalyze the intervention to determine how to improve the cost-effectiveness ratio. There are only two ways to improve the ratio: increase effectiveness or lower costs. Most studies use only the published cost of a drug or intervention. Health economists would argue that the cost of an intervention, including drug price, hospital cost, and physician fees, should always be on the bargaining table. A therapy that costs $4,000 to save a month of life looks a lot more attractive to payers if the drug cost is reduced to $1,000 to save that same month! Clinicians should note that the current gold standard for studies is that 1 month of added survival for 12 people is as important as 12 months for 1 person or a chance at cure for a small percentage of people.

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