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

Author

Listed:
  • 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)

Abstract

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.

Suggested Citation

  • J. Jaime Caro & Erik Nord & Uwe Siebert & Alistair McGuire & Maurice McGregor & David Henry & Gérard de Pouvourville & Vincenzo Atella & Peter Kolominsky-Rabas, 2010. "The efficiency frontier approach to economic evaluation of health-care interventions," Health Economics, John Wiley & Sons, Ltd., vol. 19(10), pages 1117-1127.
  • Handle: RePEc:wly:hlthec:v:19:y:2010:i:10:p:1117-1127
    DOI: 10.1002/hec.1629
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    File URL: http://hdl.handle.net/10.1002/hec.1629
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    References listed on IDEAS

    as
    1. 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.
    2. Dan Horsky & Paul Nelson, 1996. "Evaluation of Salesforce Size and Productivity Through Efficient Frontier Benchmarking," Marketing Science, INFORMS, vol. 15(4), pages 301-320.
    3. McCabe, C & Claxton, K & Culyer, AJ, 2008. "The NICE Cost-Effectiveness Threshold: What it is and What that Means," MPRA Paper 26466, University Library of Munich, Germany.
    4. 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.
    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.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Maarten Ijzerman & Lotte Steuten, 2011. "Early assessment of medical technologies to inform product development and market access," Applied Health Economics and Health Policy, Springer, vol. 9(5), pages 331-347, September.
    2. Maarten Ijzerman & Janine Til & John Bridges, 2012. "A Comparison of Analytic Hierarchy Process and Conjoint Analysis Methods in Assessing Treatment Alternatives for Stroke Rehabilitation," The Patient: Patient-Centered Outcomes Research, Springer;Johns Hopkins Bloomberg School of Public Health, vol. 5(1), pages 45-56, March.
    3. Mark Sculpher & Karl Claxton, 2010. "Sins of omission and obfuscation: IQWIG's guidelines on economic evaluation methods," Health Economics, John Wiley & Sons, Ltd., vol. 19(10), pages 1132-1136.
    4. Klingler, Corinna & Shah, Sara M.B. & Barron, Anthony J.G. & Wright, John S.F., 2013. "Regulatory space and the contextual mediation of common functional pressures: Analyzing the factors that led to the German Efficiency Frontier approach," Health Policy, Elsevier, vol. 109(3), pages 270-280.
    5. Martin Emmert & Frank Eijkenaar & Heike Kemter & Adelheid Esslinger & Oliver Schöffski, 2012. "Economic evaluation of pay-for-performance in health care: a systematic review," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 13(6), pages 755-767, December.
    6. Charalabos-Markos Dintsios & Andreas Gerber, 2010. "Some essential clarifications: IQWiG comments on two critiques of the efficiency frontier approach," Health Economics, John Wiley & Sons, Ltd., vol. 19(10), pages 1139-1141.
    7. repec:spr:eujhec:v:19:y:2018:i:2:d:10.1007_s10198-017-0882-x is not listed on IDEAS
    8. Werner B. F. Brouwer & Frans F. H. Rutten, 2010. "The efficiency frontier approach to economic evaluation: will it help German policy making?," Health Economics, John Wiley & Sons, Ltd., vol. 19(10), pages 1128-1131.
    9. repec:bla:glopol:v:8:y:2017:i::p:69-75 is not listed on IDEAS
    10. 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.

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