Simulation or cohort models? Continuous time simulation and discretized Markov models to estimate cost-effectiveness

The choice of model design for decision analytic models in cost-effectiveness analysis has been the subject of discussion. The current work addresses this issue by noting that, when time is to be explicitly modelled, we need to represent phenomena occurring in continuous time. Multistate models evaluated in continuous time might be used but closed form solutions of expected time in each state may not exist or may be difficult to obtain. Two approximations can then be used for costeffectiveness estimation: (1) simulation models, where continuous time estimates are obtained through Monte Carlo simulation, and (2) discretized models. This work draws recommendations on their use by showing that, when these alternative models can be applied, it is preferable to implement a cohort discretized model than a simulation model. Whilst the bias from the first can be minimized by reducing the cycle length, the second is inherently stochastic. Even though specialized literature advocates this framework, the current practice in economic evaluation is to define clinically meaningful cycle lengths for discretized models, disregarding potential biases.