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Inconsistencies in the "Societal Perspective" on Costs of the Panel on Cost-Effectiveness in Health and Medicine

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  • David Meltzer
  • Magnus Johannesson

Abstract

A key recommendation of the recent Panel on Cost-Effectiveness in Health and Med icine was that cost-effectiveness analyses be carried out from a societal perspective. The authors show that two of the Panel's recommendations concerning costs are not consistent with a societal perspective, and how to correct those inconsistencies. In its recommendations concerning costs resulting from morbidity, the Panel advises ex cluding lost income from costs in the belief that individuals take income changes into account when they respond to the quality-of-life questions that are used to calculate quality-adjusted life years (QALYs). It is shown that even if individuals do consider income changes in responding to these quality-of-life questions, this recommendation would seriously underestimate production losses due to morbidity, since individuals do not bear a major part of lost production. In its recommendations concerning costs resulting from mortality, the Panel does not require that health care costs for "unre lated" illness and non-health care consumption and production during added life years be included in the Reference Case. It is shown that omitting these costs will seriously distort comparisons of programs at different ages and favor programs that extend life over those that improve quality of life. This can be corrected by including total con sumption minus production in added life-years among costs. Key words: cost-effec tiveness analysis; societal perspective; public policy; resource allocation; Panel on Cost-Effectiveness in Health and Medicine. (Med Decis Making 1999; 19:371-377)

Suggested Citation

  • David Meltzer & Magnus Johannesson, 1999. "Inconsistencies in the "Societal Perspective" on Costs of the Panel on Cost-Effectiveness in Health and Medicine," Medical Decision Making, , vol. 19(4), pages 371-377, October.
    • Handle: RePEc:sae:medema:v:19:y:1999:i:4:p:371-377
    DOI: 10.1177/0272989X9901900401
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    References listed on IDEAS

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    1. Werner B. F. Brouwer & Marc A. Koopmanschap & Frans F. H. Rutten, 1997. "Productivity Costs Measurement Through Quality of Life? A Response to the Recommendation of the Washington Panel," Health Economics, John Wiley & Sons, Ltd., vol. 6(3), pages 253-259, May.
    2. Garber, Alan M. & Phelps, Charles E., 1997. "Economic foundations of cost-effectiveness analysis," Journal of Health Economics, Elsevier, vol. 16(1), pages 1-31, February.
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    Cited by:

    1. Carmen Herrero Blanco & Juan D. Moreno Ternero, 2002. "Economic Evaluation Of Newborn Hearing Screening Procedures," Working Papers. Serie AD 2002-06, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    2. Pedram Sendi & Huldrych F Günthard & Mathew Simcock & Bruno Ledergerber & Jörg Schüpbach & Manuel Battegay & for the Swiss HIV Cohort Study, 2007. "Cost-Effectiveness of Genotypic Antiretroviral Resistance Testing in HIV-Infected Patients with Treatment Failure," PLOS ONE, Public Library of Science, vol. 2(1), pages 1-8, January.
    3. Milton C. Weinstein, 1999. "• Theoretically Correct Cost-Effectiveness Analysis," Medical Decision Making, , vol. 19(4), pages 381-382, October.
    4. Magnus Johannesson, 2001. "Should we aggregate relative or absolute changes in QALYs?," Health Economics, John Wiley & Sons, Ltd., vol. 10(7), pages 573-577, October.
    5. Icks, Andrea, 2021. "Self-care time and rating of health state in people with diabetes: Results from the population-based KORA survey in Germany," IBES Diskussionsbeiträge 234, University of Duisburg-Essen, Institute of Business and Economic Studie (IBES).
    6. Carmen Herrero & Juan D. Moreno-Ternero, 2005. "Hospital costs and social cost: A case study of newborn hearing screening," Investigaciones Economicas, Fundación SEPI, vol. 29(1), pages 203-216, January.
    7. Werner B.F. Brouwer & Frans F.H. Rutten, 2003. "The missing link: on the line between C and E," Health Economics, John Wiley & Sons, Ltd., vol. 12(8), pages 629-636, August.
    8. Pedram Sendi & Werner B. F. Brouwer, 2005. "Is silence golden? A test of the incorporation of the effects of ill‐health on income and leisure in health state valuations," Health Economics, John Wiley & Sons, Ltd., vol. 14(6), pages 643-647, June.
    9. Liqun Liu & Andrew J. Rettenmaier & Thomas R. Saving, 2008. "Longevity bias in cost‐effectiveness analysis," Health Economics, John Wiley & Sons, Ltd., vol. 17(4), pages 523-534, April.
    10. Bengt Liljas & Göran S. Karlsson & Nils‐Olov Stålhammar, 2008. "On future non‐medical costs in economic evaluations," Health Economics, John Wiley & Sons, Ltd., vol. 17(5), pages 579-591, May.

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