Cost Benefit Analysis In Health Care

There are several basic approaches that can be utilized when conducting economic evaluations for any new health care intervention; which can include medications that are designed for the treatment and prevention of disease and how to relate the effectiveness with the overall monetary value of the new treatment. The economic tools that can be employed to perform such an analysis can be broken down into four basic parts that consist of cost-minimization analysis (CMA), cost-effectiveness analysis (CEA), cost-benefit analysis (CBA) and cost-utility analysis (CUA). These four categories will contain the major financial analytical techniques employed when evaluating medical treatments and interventions along with other types termed cost-consequence

analysis (CCA) and cost-of-illness (COI) that can also be seen when evaluating costs related to medical interventions or medications.
The first of these analyses and the simplest is termed cost-minimization analysis (CMA). The purpose of the CMA technique is to determine the cost of a specific medication against another medication that is assumed to be equivalent in the hopes of determining which of the medications is the least costly drug or therapy. This technique can be of particular importance when distinguishing between generic and therapeutic equivalents or what can be termed, “me too” drugs6. The relevance of this analysis lies within the comparability between the chemical or biological dose and its physical properties, which will make evaluating the cost of particular interest in the fact that the comparison should essentially have the same therapeutic benefit for both, which will leave only the cost of each to be evaluated. This method reports results as cost per course of treatment and cost per cure.
The second analysis that can be employed when performing pharmacoeconomic studies is the cost-effectiveness analysis (CEA). This type of analysis measures outcomes in natural units such as mm Hg, cholesterol levels, symptom-free days and years of life saved . CEA is an important tool to use because it can directly relate the financial and scientific implications of different interventions . CEA can be described as the ratio of the cost of intervention to a relevant measure of its effect. This type of analysis can be expressed as an incremental cost-effectiveness ratio (ICER). There are several illustrations associated with this analysis that helps one get a clearer picture of the cost-effectiveness by comparing similar treatments and outcomes using a grid or a plane to graphically see the positives and negatives associated in the comparison. Results generated using this analysis can be reported as cost in dollars per health outcome such as cost per life saved or cost of case prevented.
A third pharmacoeconomic technique that can be used is termed cost-utility analysis (CUA). In this specific type of analysis, one can determine costs associated with various treatments in terms of utilities, which can be looked at as quantity and quality of life. This type of analysis can be employed to compare different medications or procedures in which the perceived benefits can be different in nature. This analysis can be used to measure the incremental cost to gain an extra quality-adjusted life-year (QALY) . The QALY used by the CUA technique can be defined as the outcome measured as life years gained adjusted (weighted) by patient preferences for various health states .
The fourth major technique that can be used when performing a pharmacoeconomic analysis is the cost-benefit analysis (CBA), which is considered the broadest form of all the economic evaluation types. The importance of this technique lies within the ability to analyze the costs associated with particular medical intervention as well as the benefit. CBA can be used to evaluate both incremental costs and outcomes in monetary terms, which will allow for a direct calculation of the net monetary cost of achieving a health outcome .

The first technique described above is termed cost-minimization analysis (CMA). CMA has the advantage of being the simplest of the of all the pharmacoeconomic techniques in that the comparisons performed are considered to be equivalent, which allows one, the ease of only evaluating the cost of the medication or intervention to be looked at. This technique can be highly effective when comparing equivalent treatments, but will be inappropriate when there is no equivalence between two products or if therapeutic equivalence cannot be demonstrated . CMA will be applied more often in the health sector and we can evaluate this type of analysis as it relates to a diuretic-based antihypertensive therapy reducing cardiovascular events in older adults with isolated systolic hypertension. The CMA analysis used in this trial was able to present cost as the number-needed-to treat (NNT) of patients for 5 years to prevent one adverse event associated with cardiovascular disease (CVD) . The result of this study found the cost of 5 year NNT to prevent one adverse CVD event ranged widely from $6,843 to $37,408 in older patients with isolated systolic hypertension (ISH)7. Based on the CMA, researchers were able to conclude that diuretic-based therapy was the most cost-effective in patients that were at high risk for developing CVD, therefore confirming that the use of CMA was effective in evaluating input costs pertaining to equivalent outcomes7. The CMA technique can prove to be advantageous when comparing interventions with identical outcomes, but will be of no practical use if the outcomes of the interventions are different. Thus, the disadvantages of the CMA technique will lead to a limited number of meaningful applications.
The second type of analysis listed above is the cost-effectiveness analysis (CEA).

This type of analysis is advantageous when used in conjunction with clinical trials, where it exhibits its most common application and is more familiar to clinical practitioners. The outcomes that are generated during this analysis may or may not be converted into monetary values . CEA will help to identify neglected opportunities by highlighting interventions that are relatively inexpensive, yet have the potential to reduce the disease burden substantially2. The examples that demonstrate the effectiveness of CEA can be evaluated using an example set forth using oral rehydration therapy (ORT) in young children. This example contests that ORT does not diminish the incidence of diarrhea, but dramatically reduces its severity and the associated mortality rate2. The data presented demonstrated that it could cost only US$2 to US$4 per life year saved helped make the case that this was something that public policy should promote, and many countries responded by promoting ORT, saving millions of lives2. The analysis set forth above demonstrates that CEA can in fact be utilized effectively when analyzing subjects having the same clinical units. The limitations of this analysis can be seen when performing such an analysis and the alternatives used in the comparison have different clinical units, thus making this analysis

inappropriate8.
The third type of analysis listed above is termed the cost-utility analysis (CUA).

CUA is a type of cost-effectiveness analysis (CEA), which both aim to dissect the incremental expenses and incremental consequences between the options, although CUA will include societal or patient preferences to adjust the outcomes including additional years of life saved. The CUA analysis is appropriately utilized to compare two different drugs or procedures in which the benefits may be different3. When utilizing the CUA technique, the numerator that is used is a cost measure consisting of the incremental cost-effectiveness ratio (ICER) while the denominator used is the quality adjusted life year (QALY). The QALYs as defined above are expressed in terms of life years saved and are weighted to account for quality (QALYs) or disability (DALYs). The QALY represents both survival and quality of life (QoL) benefits connected with the utilization of a healthcare

technology.
The CUA technique was created to address problems seen in CEA, which did not allow decision-makers to compare the value of interventions for different health problems . It is advantageous to use the CUA technique in the fact that different health outcomes and diseases with multiple outcomes can be compared with each other, unlike other the CEA . CUA also exhibits advantages over other techniques in that it can incorporate morbidity and mortality into a common unit without providing any estimation to the monetary value of these health outcomes . CUA can also provide important decision-making stakeholders the transparency to evaluate the accuracy and robustness of the utilities, which will progressively encourage clarity in the asset allocation process9. Disadvantages associated with the CUA lie in the inability to accurately define the utilities or preference weight value, which could lead decision makers and health care providers to utilize other techniques11.
The fourth type of analysis listed above is termed the cost-benefit analysis (CBA). This analysis type will be able to effectively measure, in monetary terms, the costs and a benefit associated with health outcomes and evaluates net gain. CBA will also be useful in comparing different interventions with differing objectives. As an example, we can take a look at a CBA performed to determine if alcohol interventions for trauma patients treated in emergency departments and hospitals could in fact present a monetary benefit in the form of reduced health care costs .