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Country-level cost-effectiveness thresholds: initial estimates and the need for further research

Author

Listed:
  • Beth Woods

    (Centre for Health Economics, University of York, UK)

  • Paul Revill

    (Centre for Health Economics, University of York, UK)

  • Mark Sculpher

    (Centre for Health Economics, University of York, UK)

  • Karl Claxton

    (Centre for Health Economics, University of York, UK)

Abstract

Healthcare systems in low- and middle-income countries (LMICs) face considerable population healthcare needs with markedly fewer resources than those in developed countries. The way in which available resources are allocated across competing priorities is crucial in affecting how much health is generated overall, who receives healthcare interventions and who goes without. Cost-effectiveness analysis (CEA) is one tool that can assist policy-makers in resource allocation. The central concern in CEA is whether the health gains offered by an intervention are large enough relative to its costs to warrant adoption. This requires some notion of the value that must be realized by an intervention, which is most frequently represented using a cost-effectiveness threshold (CET). CETs should be based on estimates of the forgone benefit associated with alternative priorities which consequently cannot be implemented as a result of the commitment of resources to an alternative. For most health care systems these opportunity costs fall predominantly on health as a result of fixed budgets or constraints on health systems’ abilities to increase expenditures. However, many CEAs to inform decisions in LMICs have used aspirational expressions of value, such as the World Health Organization’s (WHO) recommended CETs (of 1-3 times GDP per capita in a country) which are not based upon opportunity costs. In contrast, we estimate CETs for a number of countries based upon recent empirical estimates of foregone benefit (from the English NHS) and international income elasticities of the value of health. The resulting CETs are much lower than those previously posited by WHO. There is no intention to provide definitive CETs; rather, the study is intended to provoke further research in this area of crucial policy importance and outlines how more robust estimates of CETs could be generated.

Suggested Citation

  • Beth Woods & Paul Revill & Mark Sculpher & Karl Claxton, 2015. "Country-level cost-effectiveness thresholds: initial estimates and the need for further research," Working Papers 109cherp, Centre for Health Economics, University of York.
  • Handle: RePEc:chy:respap:109cherp
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    References listed on IDEAS

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    Cited by:

    1. James O’Mahony & Diarmuid Coughlan, 2016. "The Irish Cost-Effectiveness Threshold: Does it Support Rational Rationing or Might it Lead to Unintended Harm to Ireland’s Health System?," PharmacoEconomics, Springer, vol. 34(1), pages 5-11, January.
    2. Aidan Hollis, 2016. "Sustainable Financing of Innovative Therapies: A Review of Approaches," PharmacoEconomics, Springer, vol. 34(10), pages 971-980, October.
    3. Culyer, Anthony J., 2016. "Cost-effectiveness thresholds in health care: a bookshelf guide to their meaning and use," Health Economics, Policy and Law, Cambridge University Press, vol. 11(04), pages 415-432, October.
    4. Jessica Ochalek & Karl Claxton & Paul Revill & Mark Sculpher & Alexandra Rollinger, 2016. "Supporting the development of an essential health package: principles and initial assessment for Malawi," Working Papers 136cherp, Centre for Health Economics, University of York.
    5. repec:spr:pharme:v:36:y:2018:i:2:d:10.1007_s40273-017-0585-2 is not listed on IDEAS
    6. Amani Thomas Mori & Ole Frithjof Norheim & Bjarne Robberstad, 2016. "Budget Impact Analysis of Using Dihydroartemisinin–Piperaquine to Treat Uncomplicated Malaria in Children in Tanzania," PharmacoEconomics, Springer, vol. 34(3), pages 303-314, March.
    7. Beth Woods & Claire Rothery & Paul Revill & Timothy Hallett & Andrew Phillips & Karl Claxton., 2018. "Setting research priorities in Global Health:Appraising the value of evidence generation activities to support decision-making in health care," Working Papers 155cherp, Centre for Health Economics, University of York.
    8. repec:spr:pharme:v:36:y:2018:i:5:d:10.1007_s40273-017-0604-3 is not listed on IDEAS
    9. repec:spr:pharme:v:36:y:2018:i:5:d:10.1007_s40273-017-0606-1 is not listed on IDEAS

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