IDEAS home Printed from
   My bibliography  Save this article

An Educational Review About Using Cost Data for the Purpose of Cost-Effectiveness Analysis


  • Matthew Franklin

    () (University of Sheffield)

  • James Lomas

    (University of York)

  • Simon Walker

    (University of York)

  • Tracey Young

    (University of Sheffield)


This paper provides an educational review covering the consideration of costs for cost-effectiveness analysis (CEA), summarising relevant methods and research from the published literature. Cost data are typically generated by applying appropriate unit costs to healthcare resource-use data for patients. Trial-based evaluations and decision analytic modelling represent the two main vehicles for CEA. The costs to consider will depend on the perspective taken, with conflicting recommendations ranging from focusing solely on healthcare to the broader ‘societal’ perspective. Alternative sources of resource-use are available, including medical records and forms completed by researchers or patients. Different methods are available for the statistical analysis of cost data, although consideration needs to be given to the appropriate methods, given cost data are typically non-normal with a mass point at zero and a long right-hand tail. The choice of covariates for inclusion in econometric models also needs careful consideration, focusing on those that are influential and that will improve balance and precision. Where data are missing, it is important to consider the type of missingness and then apply appropriate analytical methods, such as imputation. Uncertainty around costs should also be reflected to allow for consideration on the impacts of the CEA results on decision uncertainty. Costs should be discounted to account for differential timing, and are typically inflated to a common cost year. The choice of methods and sources of information used when accounting for cost information within CEA will have an effect on the subsequent cost-effectiveness results and how information is presented to decision makers. It is important that the most appropriate methods are used as overlooking the complicated nature of cost data could lead to inaccurate information being given to decision makers.

Suggested Citation

  • Matthew Franklin & James Lomas & Simon Walker & Tracey Young, 2019. "An Educational Review About Using Cost Data for the Purpose of Cost-Effectiveness Analysis," PharmacoEconomics, Springer, vol. 37(5), pages 631-643, May.
  • Handle: RePEc:spr:pharme:v:37:y:2019:i:5:d:10.1007_s40273-019-00771-y
    DOI: 10.1007/s40273-019-00771-y

    Download full text from publisher

    File URL:
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    1. Glick, Henry A. & Doshi, Jalpa A. & Sonnad, Seema S. & Polsky, Daniel, 2014. "Economic Evaluation in Clinical Trials," OUP Catalogue, Oxford University Press, edition 2, number 9780199685028.
    2. James J. Heckman, 1976. "The Common Structure of Statistical Models of Truncation, Sample Selection and Limited Dependent Variables and a Simple Estimator for Such Models," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 5, number 4, pages 475-492, National Bureau of Economic Research, Inc.
    3. Andrew Briggs & Mark Sculpher & Martin Buxton, 1994. "Uncertainty in the economic evaluation of health care technologies: The role of sensitivity analysis," Health Economics, John Wiley & Sons, Ltd., vol. 3(2), pages 95-104, March.
    4. Miqdad Asaria & Katja Grasic & Simon Walker, 2016. "Using Linked Electronic Health Records to Estimate Healthcare Costs: Key Challenges and Opportunities," PharmacoEconomics, Springer, vol. 34(2), pages 155-160, February.
    5. Jones, A. M. & Lomas, J. & Moore, P. & Rice, N., 2013. "A quasi-Monte Carlo comparison of developments in parametric and semi-parametric regression methods for heavy tailed and non-normal data: with an application to healthcare costs," Health, Econometrics and Data Group (HEDG) Working Papers 13/30, HEDG, c/o Department of Economics, University of York.
    6. Simon Walker & Mark Sculpher & Karl Claxton & Steve Palmer, 2012. "Coverage with evidence development, only in research, risk sharing or patient access scheme? A framework for coverage decisions," Working Papers 077cherp, Centre for Health Economics, University of York.
    7. Andrew M. Jones & James Lomas & Nigel Rice, 2015. "Healthcare Cost Regressions: Going Beyond the Mean to Estimate the Full Distribution," Health Economics, John Wiley & Sons, Ltd., vol. 24(9), pages 1192-1212, September.
    8. Andrew R. Willan & Andrew H. Briggs & Jeffrey S. Hoch, 2004. "Regression methods for covariate adjustment and subgroup analysis for non‐censored cost‐effectiveness data," Health Economics, John Wiley & Sons, Ltd., vol. 13(5), pages 461-475, May.
    9. Karl Claxton & Simon Walker & Steven Palmer & Mark Sculpher, 2010. "Appropriate Perspectives for Health Care Decisions," Working Papers 054cherp, Centre for Health Economics, University of York.
    10. Joanna Thorn & Joanna Coast & David Cohen & William Hollingworth & Martin Knapp & Sian Noble & Colin Ridyard & Sarah Wordsworth & Dyfrig Hughes, 2013. "Resource-Use Measurement Based on Patient Recall: Issues and Challenges for Economic Evaluation," Applied Health Economics and Health Policy, Springer, vol. 11(3), pages 155-161, June.
    11. Claudia Geue & James Lewsey & Paula Lorgelly & Lindsay Govan & Carole Hart & Andrew Briggs, 2012. "Spoilt For Choice: Implications Of Using Alternative Methods Of Costing Hospital Episode Statistics," Health Economics, John Wiley & Sons, Ltd., vol. 21(10), pages 1201-1216, October.
    12. Gerald Richardson & Andrea Manca, 2004. "Calculation of quality adjusted life years in the published literature: a review of methodology and transparency," Health Economics, John Wiley & Sons, Ltd., vol. 13(12), pages 1203-1210, December.
    13. Mark J. Sculpher & Karl Claxton & Mike Drummond & Chris McCabe, 2006. "Whither trial‐based economic evaluation for health care decision making?," Health Economics, John Wiley & Sons, Ltd., vol. 15(7), pages 677-687, July.
    14. Lukasz Tanajewski & Matthew Franklin & Georgios Gkountouras & Vladislav Berdunov & Judi Edmans & Simon Conroy & Lucy E Bradshaw & John R F Gladman & Rachel A Elliott, 2015. "Cost-Effectiveness of a Specialist Geriatric Medical Intervention for Frail Older People Discharged from Acute Medical Units: Economic Evaluation in a Two-Centre Randomised Controlled Trial (AMIGOS)," PLOS ONE, Public Library of Science, vol. 10(5), pages 1-18, May.
    15. Briggs, Andrew & Sculpher, Mark & Claxton, Karl, 2006. "Decision Modelling for Health Economic Evaluation," OUP Catalogue, Oxford University Press, number 9780198526629.
    16. Andrea Manca & Neil Hawkins & Mark J. Sculpher, 2005. "Estimating mean QALYs in trial‐based cost‐effectiveness analysis: the importance of controlling for baseline utility," Health Economics, John Wiley & Sons, Ltd., vol. 14(5), pages 487-496, May.
    17. Paul Revill & Simon Walker & Valentina Cambiano & Andrew Phillips & Mark J Sculpher, 2018. "Reflecting the real value of health care resources in modelling and cost-effectiveness studies—The example of viral load informed differentiated care," PLOS ONE, Public Library of Science, vol. 13(1), pages 1-13, January.
    18. Baptiste Leurent & Manuel Gomes & James R. Carpenter, 2018. "Missing data in trial‐based cost‐effectiveness analysis: An incomplete journey," Health Economics, John Wiley & Sons, Ltd., vol. 27(6), pages 1024-1040, June.
    19. Borislava Mihaylova & Andrew Briggs & Anthony O'Hagan & Simon G. Thompson, 2011. "Review of statistical methods for analysing healthcare resources and costs," Health Economics, John Wiley & Sons, Ltd., vol. 20(8), pages 897-916, August.
    20. Sarah Byford & Morven Leese & Martin Knapp & Helen Seivewright & Susan Cameron & Vanessa Jones & Kate Davidson & Peter Tyrer, 2007. "Comparison of alternative methods of collection of service use data for the economic evaluation of health care interventions," Health Economics, John Wiley & Sons, Ltd., vol. 16(5), pages 531-536, May.
    21. Drummond, Michael F. & Sculpher, Mark J. & Claxton, Karl & Stoddart, Greg L. & Torrance, George W., 2015. "Methods for the Economic Evaluation of Health Care Programmes," OUP Catalogue, Oxford University Press, edition 4, number 9780199665884.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Matthew Franklin & James Lomas & Gerry Richardson, 2020. "Conducting Value for Money Analyses for Non-randomised Interventional Studies Including Service Evaluations: An Educational Review with Recommendations," PharmacoEconomics, Springer, vol. 38(7), pages 665-681, July.

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:pharme:v:37:y:2019:i:5:d:10.1007_s40273-019-00771-y. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla) or (Springer Nature Abstracting and Indexing). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.