IDEAS home Printed from https://ideas.repec.org/a/sae/medema/v15y1995i3p254-263.html
   My bibliography  Save this article

Confidence Intervals for Cost - Effectiveness Ratios

Author

Listed:
  • Joseph Gardiner
  • Andrew Hogan
  • Margaret Holmes-Rovner
  • David Rovner
  • Lawrence Griffith
  • Joel Kupersmith

Abstract

The problem of variability in computed cost-effectiveness ratios (CERs) is usually addressed by performing sensitivity analyses to determine the effects on these ratios of plausible ranges of values of input parameters. However, the sampling variation that exists in these estimated parameters can be utilized to obtain confidence intervals for cost-effectiveness ratios. As cost-effectiveness analysis becomes more widely used, new techniques need to be de veloped for establishing when a difference in strategies evaluated is meaningful. A first step is to establish the precision of the CER itself. The authors estimate the precision of a CER in the context of a statistical model in which the primary outcome is survival, with cost and effectiveness defined in terms of the underlying survival distribution (S). Effectiveness (α) is measured by life expectancy, restricted to a finite time horizon and discounted at a fixed rate r, α = √ e- rt S(t)dt. Cumulative cost (β) per patient is regarded as resource utilization an d incurred randomly over time depending on the survival experience of the patient, p = √ e - rt S(t)dC(t), where C(t) is the total potential resources utilized up to time t. Average cost effectiveness (ACE) of a single strategy is β/α, and when comparing two strategies, the CER is Δβ/Δα, the ratio of the incremental cost to the difference in mean survival. Utilizing the sampling distribution of the Kaplan-Meier estimate of S yields standard errors and confidence intervals for ACE and CER. The technique is applied to survival data from 218 previously studied patients to assess 95% confidence intervals for the CER and ACE of the implantable cardioverter defibrillator as compared with electrophysiology-guided therapy. Key words: cost-effectiveness analysis; sensitivity analysis; Kaplan-Meier estimate; av erage cost-effectiveness; cardioverter defibrillator; survival data. (Med Decis Making 1995;15:254-263)

Suggested Citation

  • Joseph Gardiner & Andrew Hogan & Margaret Holmes-Rovner & David Rovner & Lawrence Griffith & Joel Kupersmith, 1995. "Confidence Intervals for Cost - Effectiveness Ratios," Medical Decision Making, , vol. 15(3), pages 254-263, August.
    • Handle: RePEc:sae:medema:v:15:y:1995:i:3:p:254-263
    DOI: 10.1177/0272989X9501500308
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/0272989X9501500308
    Download Restriction: no
    File URL: https://libkey.io/10.1177/0272989X9501500308?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Phelan, Michael J., 1990. "Estimating the transition probabilities from censored Markov renewal processes," Statistics & Probability Letters, Elsevier, vol. 10(1), pages 43-47, June.
    2. Peter Doubilet & Colin B. Begg & Milton C. Weinstein & Peter Braun & Barbara J. McNeil, 1985. "Probabilistic Sensitivity Analysis Using Monte Carlo Simulation," Medical Decision Making, , vol. 5(2), pages 157-177, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Joseph C. Gardiner & Marianne Huebner & James Jetton & Cathy J. Bradley, 2000. "Power and sample assessments for tests of hypotheses on cost‐effectiveness ratios," Health Economics, John Wiley & Sons, Ltd., vol. 9(3), pages 227-234, April.
    2. Ernst, Richard, 2017. "Theories of Health Care Cost-Effectiveness Analysis," SocArXiv gjbcp, Center for Open Science.
    3. Elena Polverejan & Joseph C. Gardiner & Cathy J. Bradley & Margaret Holmes‐Rovner & David Rovner, 2003. "Estimating mean hospital cost as a function of length of stay and patient characteristics," Health Economics, John Wiley & Sons, Ltd., vol. 12(11), pages 935-947, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. A. E. Ades & Karl Claxton & Mark Sculpher, 2006. "Evidence synthesis, parameter correlation and probabilistic sensitivity analysis," Health Economics, John Wiley & Sons, Ltd., vol. 15(4), pages 373-381, April.
    2. Pedram Sendi & Huldrych F Günthard & Mathew Simcock & Bruno Ledergerber & Jörg Schüpbach & Manuel Battegay & for the Swiss HIV Cohort Study, 2007. "Cost-Effectiveness of Genotypic Antiretroviral Resistance Testing in HIV-Infected Patients with Treatment Failure," PLOS ONE, Public Library of Science, vol. 2(1), pages 1-8, January.
    3. Karl Claxton & Elisabeth Fenwick & Mark J. Sculpher, 2012. "Decision-making with Uncertainty: The Value of Information," Chapters, in: Andrew M. Jones (ed.), The Elgar Companion to Health Economics, Second Edition, chapter 51, Edward Elgar Publishing.
    4. Ya-Chen Shih & Josephine Mauskopf & Rohit Borker, 2007. "A Cost-Effectiveness Analysis of First-Line Controller Therapies for Persistent Asthma," PharmacoEconomics, Springer, vol. 25(7), pages 577-590, July.
    5. James C. Felli & Gordon B. Hazen, 2004. "Javelin Diagrams: A Graphical Tool for Probabilistic Sensitivity Analysis," Decision Analysis, INFORMS, vol. 1(2), pages 93-107, June.
    6. Jordan Amdahl & Jose Diaz & Arati Sharma & Jinhee Park & David Chandiwana & Thomas E Delea, 2017. "Cost-effectiveness of pazopanib versus sunitinib for metastatic renal cell carcinoma in the United Kingdom," PLOS ONE, Public Library of Science, vol. 12(6), pages 1-18, June.
    7. Glenn D. Rennels & Edward H. Shortliffe & Perry L. Miller, 1987. "Choice and Explanation in Medical Management," Medical Decision Making, , vol. 7(1), pages 22-31, February.
    8. Rowan Iskandar & Carlo Federici & Cassandra Berns & Carl Rudolf Blankart, 2022. "An approach to quantify parameter uncertainty in early assessment of novel health technologies," Health Economics, John Wiley & Sons, Ltd., vol. 31(S1), pages 116-134, September.
    9. Catherine A. Goodman & Paul G. Coleman & Anne J. Mills, 2001. "Changing the first line drug for malaria treatment—cost‐effectiveness analysis with highly uncertain inter‐temporal trade‐offs," Health Economics, John Wiley & Sons, Ltd., vol. 10(8), pages 731-749, December.
    10. Carus, Jana & Heuner, Maike & Paul, Maike & Schröder, Boris, 2017. "Which factors and processes drive the spatio-temporal dynamics of brackish marshes?—Insights from development and parameterisation of a mechanistic vegetation model," Ecological Modelling, Elsevier, vol. 363(C), pages 122-136.
    11. Gabriel Rogers & Ruth Garside & Stuart Mealing & Martin Pitt & Rob Anderson & Matthew Dyer & Ken Stein & Margaret Somerville, 2008. "Carmustine Implants for the Treatment of Newly Diagnosed High-Grade Gliomas," PharmacoEconomics, Springer, vol. 26(1), pages 33-44, January.
    12. Junxiang Zhou & Yixin Wang & Gang Jiang, 2020. "Oxycodone versus morphine for cancer pain titration: A systematic review and pharmacoeconomic evaluation," PLOS ONE, Public Library of Science, vol. 15(4), pages 1-19, April.
    13. 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.
    14. Nadia Yakhelef & Martine Audibert & Gabriella Ferlazzo & Joseph Sitienei & Steve Wanjala & Francis Varaine & Maryline Bonnet & Helena Huerga, 2020. "Cost-effectiveness of diagnostic algorithms including lateral-flow urine lipoarabinomannan for HIV-positive patients with symptoms of tuberculosis," Post-Print halshs-03170014, HAL.
    15. David J. Vanness & W. Ray Kim, 2002. "Bayesian estimation, simulation and uncertainty analysis: the cost‐effectiveness of ganciclovir prophylaxis in liver transplantation," Health Economics, John Wiley & Sons, Ltd., vol. 11(6), pages 551-566, September.
    16. Leivo, T. & Salomaa, A. & Kosunen, T. U. & Tuominen, R. & Farkkila, M. & Linna, M. & Sintonen, H., 2004. "Cost-benefit analysis of Helicobacter pylori screening," Health Policy, Elsevier, vol. 70(1), pages 85-96, October.
    17. J. Robert Beck, 1986. "Independent Development of Probabilistic Sensitivity Analysis," Medical Decision Making, , vol. 6(2), pages 66-67, June.
    18. Björn Stollenwerk & Stephanie Stock & Uwe Siebert & Karl W. Lauterbach & Rolf Holle, 2010. "Uncertainty Assessment of Input Parameters for Economic Evaluation: Gauss’s Error Propagation, an Alternative to Established Methods," Medical Decision Making, , vol. 30(3), pages 304-313, May.
    19. Mehmet A. Ergun & Ali Hajjar & Oguzhan Alagoz & Murtuza Rampurwala, 2022. "Optimal breast cancer risk reduction policies tailored to personal risk level," Health Care Management Science, Springer, vol. 25(3), pages 363-388, September.
    20. Knoblauch, Theresa A.K. & Trutnevyte, Evelina, 2018. "Siting enhanced geothermal systems (EGS): Heat benefits versus induced seismicity risks from an investor and societal perspective," Energy, Elsevier, vol. 164(C), pages 1311-1325.

    Corrections

    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:sae:medema:v:15:y:1995:i:3:p:254-263. See general information about how to correct material in RePEc.

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.