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Discounting the Recommendations of the Second Panel on Cost-Effectiveness in Health and Medicine

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Listed:
  • Mike Paulden

    (University of Alberta)

  • James F. O’Mahony

    (Trinity College Dublin)

  • Christopher McCabe

    (University of Alberta)

Abstract

Twenty years ago, the “Panel on Cost-effectiveness in Health and Medicine” published a landmark text setting out appropriate methods for conducting cost-effectiveness analyses of health technologies. In the two decades since, the methods used for economic evaluations have advanced substantially. Recently, a “second panel” (hereafter “the panel”) was convened to update the text and its recommendations were published in November 2016. The purpose of this paper is to critique the panel’s updated guidance regarding the discounting of costs and health effects. The advances in discounting methodology since the first panel include greater theoretical clarity regarding the specification of discount rates, how these rates vary with the analytical perspective chosen, and whether the healthcare budget is constrained. More specifically, there has been an important resolution of the debate regarding the conditions under which differential discounting of costs and health effects is appropriate. We show that the panel’s recommendations are inconsistent with this recent literature. Importantly, the panel’s departures from previously published findings do not arise from an alternative interpretation of theory; rather, we demonstrate that this is due to fundamental errors in methodology and logic. The panel also failed to conduct a formal review of relevant empirical evidence. We provide a number of suggestions for how the panel’s recommendations could be improved in future.

Suggested Citation

  • Mike Paulden & James F. O’Mahony & Christopher McCabe, 2017. "Discounting the Recommendations of the Second Panel on Cost-Effectiveness in Health and Medicine," PharmacoEconomics, Springer, vol. 35(1), pages 5-13, January.
    • Handle: RePEc:spr:pharme:v:35:y:2017:i:1:d:10.1007_s40273-016-0482-0
    DOI: 10.1007/s40273-016-0482-0
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    References listed on IDEAS

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    1. Karl Claxton & Mark Sculpher & Anthony Culyer & Chris McCabe & Andrew Briggs & Ron Akehurst & Martin Buxton & John Brazier, 2006. "Discounting and cost‐effectiveness in NICE – stepping back to sort out a confusion," Health Economics, John Wiley & Sons, Ltd., vol. 15(1), pages 1-4, January.
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    Cited by:

    1. Basu, Anirban, 2020. "A welfare-theoretic model consistent with the practice of cost-effectiveness analysis and its implications," Journal of Health Economics, Elsevier, vol. 70(C).
    2. Elahe Khorasani & Majid Davari & Abbas Kebriaeezadeh & Farshad Fatemi & Ali Akbari Sari & Vida Varahrami, 2022. "A comprehensive review of official discount rates in guidelines of health economic evaluations over time: the trends and roots," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 23(9), pages 1577-1590, December.
    3. Boshen Jiao & Zafar Zafari & Brian Will & Kai Ruggeri & Shukai Li & Peter Muennig, 2017. "The Cost-Effectiveness of Lowering Permissible Noise Levels Around U.S. Airports," IJERPH, MDPI, vol. 14(12), pages 1-10, December.

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