IDEAS home Printed from
   My bibliography  Save this article

Stratified cost-effectiveness analysis: a framework for establishing efficient limited use criteria


  • Douglas Coyle

    (Department of Medicine, University of Ottawa, and Ottawa Health Research Institute, Ottawa, ON, Canada)

  • Martin J. Buxton

    (Health Economics Research Group, Brunel University, Uxbridge, UK)

  • Bernie J. O'Brien

    (Department of Clinical Epidemiology and Biostatistics, McMaster University, and Centre for Evaluation of Medicines, St. Joseph's Hospital, Hamilton, ON, Canada)


The cost-effectiveness of new health care technologies is conditional upon who receives what therapy and under what circumstances. Understanding this heterogeneity in cost-effectiveness, health care payers often limit reimbursement of therapies to a more restrictive sub-group of patients than that indicated in a product's licensing. Such limits may be based upon clinical or demographic criteria that are prognostic of costs, outcomes or both. However, there is little guidance on how to estimate and interpret stratified cost-effectiveness analysis. In this paper we present a framework for estimating the benefits from stratification that permits consideration of both the opportunity cost resulting from a lack of adherence with criteria and the efficiency loss associated with incorporating equity concerns. Copyright © 2003 John Wiley & Sons, Ltd.

Suggested Citation

  • Douglas Coyle & Martin J. Buxton & Bernie J. O'Brien, 2003. "Stratified cost-effectiveness analysis: a framework for establishing efficient limited use criteria," Health Economics, John Wiley & Sons, Ltd., vol. 12(5), pages 421-427.
  • Handle: RePEc:wly:hlthec:v:12:y:2003:i:5:p:421-427
    DOI: 10.1002/hec.788

    Download full text from publisher

    File URL:
    File Function: Link to full text; subscription required
    Download Restriction: no

    References listed on IDEAS

    1. Alan Williams, 1997. "Intergenerational Equity: An Exploration of the 'Fair Innings' Argument," Health Economics, John Wiley & Sons, Ltd., vol. 6(2), pages 117-132.
    2. K. Claxton & P. J. Neumannn & S. S. Araki & M. C. Weinstein, "undated". "Bayesian Value-of-Information Analysis: An Application to a Policy Model of Alzheimer's Disease," Discussion Papers 00/39, Department of Economics, University of York.
    3. Dolan, Paul, 1998. "The measurement of individual utility and social welfare," Journal of Health Economics, Elsevier, vol. 17(1), pages 39-52, January.
    4. James C. Felli & Gordon B. Hazen, 1999. "A Bayesian approach to sensitivity analysis," Health Economics, John Wiley & Sons, Ltd., vol. 8(3), pages 263-268.
    5. Bleichrodt, Han, 1997. "Health utility indices and equity considerations," Journal of Health Economics, Elsevier, vol. 16(1), pages 65-91, February.
    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.
    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. Elamin Elbasha & Jagpreet Chhatwal, 2015. "Characterizing Heterogeneity Bias in Cohort-Based Models," PharmacoEconomics, Springer, vol. 33(8), pages 857-865, August.
    2. Rosella Levaggi & Paolo Pertile, 2016. "Pricing policies when patients are heterogeneous: a welfare analysis," Working Papers 17/2016, University of Verona, Department of Economics.
    3. Gravelle, Hugh & Siciliani, Luigi, 2008. "Ramsey waits: Allocating public health service resources when there is rationing by waiting," Journal of Health Economics, Elsevier, vol. 27(5), pages 1143-1154, September.
    4. Jacco Thijssen, 2007. "Ramsey Waits: A Computational Study on General Equilibrium Pricing of Derivative Securities," Discussion Papers 07/16, Department of Economics, University of York.
    5. Janneke Grutters & Mark Sculpher & Andrew Briggs & Johan Severens & Math Candel & James Stahl & Dirk Ruysscher & Albert Boer & Bram Ramaekers & Manuela Joore, 2013. "Acknowledging Patient Heterogeneity in Economic Evaluation," PharmacoEconomics, Springer, vol. 31(2), pages 111-123, February.
    6. Hui Zhang & Gregory Zaric, 2015. "Using price–volume agreements to manage pharmaceutical leakage and off-label promotion," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 16(7), pages 747-761, September.
    7. Gregory S. Zaric, 2008. "Optimal drug pricing, limited use conditions and stratified net benefits for Markov models of disease progression," Health Economics, John Wiley & Sons, Ltd., vol. 17(11), pages 1277-1294.
    8. George Laking & Joanne Lord & Alastair Fischer, 2006. "The economics of diagnosis," Health Economics, John Wiley & Sons, Ltd., vol. 15(10), pages 1109-1120.
    9. repec:eee:socmed:v:198:y:2018:i:c:p:27-35 is not listed on IDEAS
    10. Richard M. Nixon & Simon G. Thompson, 2005. "Methods for incorporating covariate adjustment, subgroup analysis and between-centre differences into cost-effectiveness evaluations," Health Economics, John Wiley & Sons, Ltd., vol. 14(12), pages 1217-1229.
    11. Joanne Lord & George Laking & Alastair Fischer, 2006. "Non-linearity in the cost-effectiveness frontier," Health Economics, John Wiley & Sons, Ltd., vol. 15(6), pages 565-577.
    12. repec:kap:ijhcfe:v:17:y:2017:i:2:d:10.1007_s10754-016-9209-1 is not listed on IDEAS
    13. Laura Levaggi & Rosella Levaggi, 2016. "Welfare analysis of rationing in health care provision," Working papers 39, Società Italiana di Economia Pubblica.

    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:wly:hlthec:v:12:y:2003:i:5:p:421-427. 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: (Wiley Content Delivery) or (Christopher F. Baum). 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.