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Inference for the Cost-Effectiveness Acceptability Curve and Cost-Effectiveness Ratio


  • Anthony O’Hagan


  • John Stevens
  • Jacques Montmartin


The aim of this article is to consider Bayesian and frequentist inference methods for measures of incremental cost effectiveness in data obtained via a clinical trial. The most useful measure is the cost-effectiveness (C/E) acceptability curve. Recent publications on Bayesian estimation have assumed a normal posterior distribution, which ignores uncertainty in estimated variances, and suggest unnecessarily complicated methods of computation. We present a simple Bayesian computation for the C/E acceptability curve and a simple frequentist analogue. Our approach takes account of errors in estimated variances, resulting in calculations that are based on distributions rather than normal distributions. If inference is required about theC/E ratio,we argue that the standard frequentist procedures give unreliable or misleading inferences, and present instead a Bayesian interval. Copyright Adis International Limited 2000

Suggested Citation

  • Anthony O’Hagan & John Stevens & Jacques Montmartin, 2000. "Inference for the Cost-Effectiveness Acceptability Curve and Cost-Effectiveness Ratio," PharmacoEconomics, Springer, vol. 17(4), pages 339-349, April.
  • Handle: RePEc:spr:pharme:v:17:y:2000:i:4:p:339-349
    DOI: 10.2165/00019053-200017040-00004

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    References listed on IDEAS

    1. Magnus Tambour & Niklas Zethraeus, 1998. "Bootstrap confidence intervals for cost‐effectiveness ratios: some simulation results," Health Economics, John Wiley & Sons, Ltd., vol. 7(2), pages 143-147, March.
    2. Andrew Briggs & Paul Fenn, 1998. "Confidence intervals or surfaces? Uncertainty on the cost-effectiveness plane," Health Economics, John Wiley & Sons, Ltd., vol. 7(8), pages 723-740.
    3. Michael Drummond & Bernie O'Brienm, 1993. "Clinical importance, statistical significance and the assessment of economic and quality‐of‐life outcomes," Health Economics, John Wiley & Sons, Ltd., vol. 2(3), pages 205-212, October.
    4. Eugene M. Laska & Morris Meisner & Carole Siegel, 1997. "Statistical Inference for Cost–Effectiveness Ratios," Health Economics, John Wiley & Sons, Ltd., vol. 6(3), pages 229-242, May.
    5. Ben A. Van Hout & Maiwenn J. Al & Gilad S. Gordon & Frans F. H. Rutten, 1994. "Costs, effects and C/E‐ratios alongside a clinical trial," Health Economics, John Wiley & Sons, Ltd., vol. 3(5), pages 309-319, September.
    6. Aaron A. Stinnett & John Mullahy, 1998. "Net Health Benefits: A New Framework for the Analysis of Uncertainty in Cost-Effectiveness Analysis," NBER Technical Working Papers 0227, National Bureau of Economic Research, Inc.
    7. Andrew H. Briggs, 1999. "A Bayesian approach to stochastic cost‐effectiveness analysis," Health Economics, John Wiley & Sons, Ltd., vol. 8(3), pages 257-261, May.
    8. Daniel F. Heitjan & Alan J. Moskowitz & William Whang, 1999. "Bayesian estimation of cost‐effectiveness ratios from clinical trials," Health Economics, John Wiley & Sons, Ltd., vol. 8(3), pages 191-201, May.
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