Something old, something new, something borrowed, something blue: a framework for the marriage of health econometrics and cost-effectiveness analysis.
Economic evaluation is often seen as a branch of health economics divorced from mainstream econometric techniques. Instead, it is perceived as relying on statistical methods for clinical trials. Furthermore, the statistic of interest in cost-effectiveness analysis, the incremental cost-effectiveness ratio is not amenable to regression-based methods, hence the traditional reliance on comparing aggregate measures across the arms of a clinical trial. In this paper, we explore the potential for health economists undertaking cost-effectiveness analysis to exploit the plethora of established econometric techniques through the use of the net-benefit framework - a recently suggested reformulation of the cost-effectiveness problem that avoids the reliance on cost-effectiveness ratios and their associated statistical problems. This allows the formulation of the cost-effectiveness problem within a standard regression type framework. We provide an example with empirical data to illustrate how a regression type framework can enhance the net-benefit method. We go on to suggest that practical advantages of the net-benefit regression approach include being able to use established econometric techniques, adjust for imperfect randomisation, and identify important subgroups in order to estimate the marginal cost-effectiveness of an intervention.
Department of Epidemiology and Biostatistics, University of Western Ontario, London, Canada. jeffhoch@biostats.uwo.ca
Jeffrey S
JS
Hoch
Andrew H
AH
Briggs
Andrew R
AR
Willan
D015142:Baltimore; D003156:Community Mental Health Services; D003362:Cost-Benefit Analysis / Q000379:methods / Q000706:statistics & numerical data*; D006302:Health Services Research / Q000191:economics / Q000379:methods*; D006703:Ill-Housed Persons / Q000523:psychology; D006801:Humans; D001523:Mental Disorders / Q000191:economics / Q000628:therapy; D017059:Models, Econometric; D017063:Outcome Assessment, Health Care / Q000191:economics* / Q000379:methods; D011897:Random Allocation; D016032:Randomized Controlled Trials as Topic; D012044:Regression Analysis; D013808:Therapeutic Community; D016896:Treatment Outcome