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Power and Sample Size in Cost- Effectiveness Analysis

Author

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  • Eugene M. Laska
  • Morris Meisner
  • Carole Siegel

Abstract

For resource allocation under a constrained budget, optimal decision rules for mutually exclusive programs require that the treatment with the highest incremental cost-effec tiveness ratio (ICER) below a willingness-to-pay (WTP) criterion be funded. This is equivalent to determining the treatment with the smallest net health cost. The designer of a cost-effectiveness study needs to select a sample size so that the power to reject the null hypothesis, the equality of the net health costs of two treatments, is high. A recently published formula derived under normal distribution theory overstates sample- size requirements. Using net health costs, the authors present simple methods for power analysis based on conventional normal and on nonparametric statistical theory. Key words: cost-effectiveness analysis; power; sample size; cost-effectiveness ratios; net health costs; net health benefits; statistical analysis. (Med Decis Making 1999;19: 339-343)

Suggested Citation

  • Eugene M. Laska & Morris Meisner & Carole Siegel, 1999. "Power and Sample Size in Cost- Effectiveness Analysis," Medical Decision Making, , vol. 19(3), pages 339-343, August.
    • Handle: RePEc:sae:medema:v:19:y:1999:i:3:p:339-343
    DOI: 10.1177/0272989X9901900312
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    References listed on IDEAS

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    1. Aaron A. Stinnett & John Mullahy, 1998. "Net Health Benefits," Medical Decision Making, , vol. 18(2_suppl), pages 68-80, April.
    2. Aaron A. Stinnett & John Mullahy, 1998. "Net Health Benefits: A New Framework for the Analysis of Uncertainty in Cost-Effectiveness Analysis," NBER Technical Working Papers 0227, National Bureau of Economic Research, Inc.
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    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. Henry Glick, 2011. "Sample Size and Power for Cost-Effectiveness Analysis (Part 1)," PharmacoEconomics, Springer, vol. 29(3), pages 189-198, March.
    3. A. Gafni & S. D. Walter & S. Birch & P. Sendi, 2008. "An opportunity cost approach to sample size calculation in cost‐effectiveness analysis," Health Economics, John Wiley & Sons, Ltd., vol. 17(1), pages 99-107, January.
    4. Niklas Zethraeus & Magnus Johannesson & Bengt Jönsson & Mickael Löthgren & Magnus Tambour, 2003. "Advantages of Using the Net-Benefit Approach for Analysing Uncertainty in Economic Evaluation Studies," PharmacoEconomics, Springer, vol. 21(1), pages 39-48, January.

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