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The efficiency frontier approach to economic evaluation of health-care interventions

  • J. Jaime Caro
  • Erik Nord

    (Norwegian Institute of Public Health, Oslo, Norway)

  • Uwe Siebert

    (UMIT - University for Health Sciences, Medical Informatics and Technology, Hall i.T., Austria)

  • Alistair McGuire

    (London School of Economics, London, United Kingdom)

  • Maurice McGregor

    (McGill University, Montreal, Canada)

  • David Henry

    (University of Newcastle|ICES, Australia)

  • Gérard de Pouvourville

    (ESSEC Business School, Cergy, France)

  • Vincenzo Atella

    (University 'Tor Vergata', Rome, Italy)

  • Peter Kolominsky-Rabas

    (IQWiG, Cologne, Germany)

Background: IQWiG commissioned an international panel of experts to develop methods for the assessment of the relation of benefits to costs in the German statutory health-care system. Proposed methods: The panel recommended that IQWiG inform German decision makers of the net costs and value of additional benefits of an intervention in the context of relevant other interventions in that indication. To facilitate guidance regarding maximum reimbursement, this information is presented in an efficiency plot with costs on the horizontal axis and value of benefits on the vertical. The efficiency frontier links the interventions that are not dominated and provides guidance. A technology that places on the frontier or to the left is reasonably efficient, while one falling to the right requires further justification for reimbursement at that price. This information does not automatically give the maximum reimbursement, as other considerations may be relevant. Given that the estimates are for a specific indication, they do not address priority setting across the health-care system. Conclusion: This approach informs decision makers about efficiency of interventions, conforms to the mandate and is consistent with basic economic principles. Empirical testing of its feasibility and usefulness is required. Copyright © 2010 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/hec.1629
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Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

Volume (Year): 19 (2010)
Issue (Month): 10 ()
Pages: 1117-1127

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Handle: RePEc:wly:hlthec:v:19:y:2010:i:10:p:1117-1127
Contact details of provider: Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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  1. Johnes, Jill & Johnes, Geraint, 1995. "Research funding and performance in U.K. University Departments of Economics: A frontier analysis," Economics of Education Review, Elsevier, vol. 14(3), pages 301-314, September.
  2. Christopher McCabe & Karl Claxton & Anthony J. Culyer, 2008. "The NICE Cost-Effectiveness Threshold: What it is and What that Means," PharmacoEconomics, Springer Healthcare | Adis, vol. 26(9), pages 733-744.
  3. Dorte Gyrd-Hansen, 2005. "Willingness to Pay for a QALY: Theoretical and Methodological Issues," PharmacoEconomics, Springer Healthcare | Adis, vol. 23(5), pages 423-432.
  4. Zuckerman, Stephen & Hadley, Jack & Iezzoni, Lisa, 1994. "Measuring hospital efficiency with frontier cost functions," Journal of Health Economics, Elsevier, vol. 13(3), pages 255-280, October.
  5. Erik Nord & Jose Luis Pinto & Jeff Richardson & Paul Menzel & Peter Ubel, 1999. "Incorporating societal concerns for fairness in numerical valuations of health programmes," Health Economics, John Wiley & Sons, Ltd., vol. 8(1), pages 25-39.
  6. Dan Horsky & Paul Nelson, 1996. "Evaluation of Salesforce Size and Productivity Through Efficient Frontier Benchmarking," Marketing Science, INFORMS, vol. 15(4), pages 301-320.
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