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Discounting in economic evaluations: stepping forward towards optimal decision rules

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Author Info

  • Hugh Gravelle

    (National Primary Care Research and Development Centre (NPCRDC), Centre for Health Economics, University of York, UK)

  • Werner Brouwer

    (Department of Health Policy & Management and Institute for Medical Technology Assessment, Erasmus Medical Centre | Erasmus University Rotterdam, The Netherlands)

  • Louis Niessen

    (Department of Health Policy & Management and Institute for Medical Technology Assessment, Erasmus Medical Centre | Erasmus University Rotterdam, The Netherlands)

  • Maarten Postma

    (Groningen University Institute for Drug Exploration | University of Groningen Research Institute of Pharmacy (GUIDE|GRIP), The Netherlands)

  • Frans Rutten

    (Department of Health Policy & Management and Institute for Medical Technology Assessment, Erasmus Medical Centre | Erasmus University Rotterdam, The Netherlands)

Abstract

The National Institute for Clinical Excellence has recently changed its guidelines on discounting costs and effects in economic evaluations. In common with most other regulatory bodies it now requires that health effects should be discounted at the same rate as costs. We show that the guideline leads to sub-optimal decisions because it fails to account for the changing value of health. NICE (and other regulatory bodies) should either use differential discounting or stipulate how the changing value of health should otherwise be dealt with. We also show how binding health service budget constraints should be incorporated in evaluations. Copyright © 2006 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/hec.1168
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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

Volume (Year): 16 (2007)
Issue (Month): 3 ()
Pages: 307-317

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Handle: RePEc:wly:hlthec:v:16:y:2007:i:3:p:307-317

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Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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References

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  1. Karl Claxton & Mark Sculpher & Anthony Culyer & Chris McCabe & Andrew Briggs & Ron Akehurst & Martin Buxton & John Brazier, 2006. "Discounting and cost-effectiveness in NICE - stepping back to sort out a confusion," Health Economics, John Wiley & Sons, Ltd., vol. 15(1), pages 1-4.
  2. Ben A. Van Hout, 1998. "Discounting costs and effects: a reconsideration," Health Economics, John Wiley & Sons, Ltd., vol. 7(7), pages 581-594.
  3. Hugh Gravelle & Dave Smith, 2001. "Discounting for health effects in cost-benefit and cost-effectiveness analysis," Health Economics, John Wiley & Sons, Ltd., vol. 10(7), pages 587-599.
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Citations

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Cited by:
  1. Karl Claxton & Mark Sculpher & Tony Culyer, 2007. "Mark versus Luke? Appropriate Methods for the Evaluation of Public Health Interventions," Working Papers 031cherp, Centre for Health Economics, University of York.
  2. Attema, Arthur E. & Brouwer, Werner B.F., 2009. "The correction of TTO-scores for utility curvature using a risk-free utility elicitation method," Journal of Health Economics, Elsevier, vol. 28(1), pages 234-243, January.
  3. Mike Paulden & Karl Claxton, 2009. "Budget allocation and the revealed social rate of time preference for health," Working Papers 053cherp, Centre for Health Economics, University of York.
  4. M. Parouty & H. Le & D. Krooshof & M. Postma, 2014. "Differential Time Preferences for Money and Quality of Life," PharmacoEconomics, Springer, vol. 32(4), pages 411-419, April.
  5. Ana Bobinac & Job Exel & Frans Rutten & Werner Brouwer, 2014. "The Value of a QALY: Individual Willingness to Pay for Health Gains Under Risk," PharmacoEconomics, Springer, vol. 32(1), pages 75-86, January.
  6. Michael Spackman, 2011. "Government discounting controversies: changing prices, opportunity costs and systematic risk," Grantham Research Institute on Climate Change and the Environment Working Papers 67, Grantham Research Institute on Climate Change and the Environment.
  7. Attema, Arthur & Brouwer, Werner, 2012. "Deriving time discounting correction factors for TTO tariffs," MPRA Paper 37002, University Library of Munich, Germany.
  8. E. Wetering & E. Stolk & N. Exel & W. Brouwer, 2013. "Balancing equity and efficiency in the Dutch basic benefits package using the principle of proportional shortfall," The European Journal of Health Economics, Springer, vol. 14(1), pages 107-115, February.
  9. Mike Paulden & Anthony J. Culyer, 2010. "Does Cost-Effectiveness Analysis Discriminate against Patients with Short Life Expectancy?," Working Paper Series 41_10, The Rimini Centre for Economic Analysis.
  10. Weatherly, Helen & Drummond, Michael & Claxton, Karl & Cookson, Richard & Ferguson, Brian & Godfrey, Christine & Rice, Nigel & Sculpher, Mark & Sowden, Amanda, 2009. "Methods for assessing the cost-effectiveness of public health interventions: Key challenges and recommendations," Health Policy, Elsevier, vol. 93(2-3), pages 85-92, December.
  11. Mike Paulden & Anthony J Culyer, 2010. "Does cost-effectiveness analysis discriminate against patients with short life expectancy? Matters of logic and matters of context," Working Papers 055cherp, Centre for Health Economics, University of York.
  12. Mareike Schad & Jürgen John, 2012. "Towards a social discount rate for the economic evaluation of health technologies in Germany: an exploratory analysis," The European Journal of Health Economics, Springer, vol. 13(2), pages 127-144, April.

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