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210608L - COST EFFECTIVENESS ANALYSIS (CEA) / EVALUATION

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Lecture to the Health Economics module of the Diploma of Clinical Research Coordinators by Omar Hasan Kasule Sr Professor of Epidemiology and Bioethics June 8, 2021


DEFINITION OF CEA

  • Cost-effectiveness analysis measures the technical efficiency of an intervention.
  • Costs are computed in monetary terms
  • Benefits are expressed in their natural units.
  • CEA is used instead of CBA because it does not involve monetary evaluation of benefits which is very difficult.

 

COMPUTATION OF CEA

  • Cost-effectiveness is computed as nett costs/benefits.
  • The nett costs are the intervention costs + costs of side effects – direct medical costs saved.
  • A ratio of cost to health effects is computed for each intervention.
  • Cost-effectiveness analysis enables a comparison of the costs of alternative disease control strategies with the benefits of each alternative measured in the same units.


EXAMPLE OF CEA

  • For example, for HBV we may compare the costs of three alternative approaches
  • Alternative #1: no vaccination,
  • Alternative #2: universal vaccination,
  • Alternative #3: vaccination preceded by screening. 
  • The cost of each alternative is computed and the cheapest is adopted.


CEA EVALUATES BENEFITS AGAINST AN ACCEPTABLE COST.
  • The benefit used is saving a life-year is estimated.
  • The life year may be adjusted for quality of life
  • Example what do you prefer after cancer diagnosis:
  • Alternative #1: Do nothing, save your money, and enjoy 1 year of normal life?
  • Alternative #2: Pay for surgery, chemotherapy, and radiotherapy and spend 3 years of hospitalization and disability?

PROBLEMS OF CEA
  • Cost data is difficult to obtain. Often charge data is used but it is not a good substitute because what is charged is either below or above the actual cost depending on market factors.
  • The health effects of an intervention are not easy to measure accurately because unquantifiable value judgments are involved. 
  •  Life expectancy and QUALY are sometimes used as benefits but they are not considered perfect.