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Power and sample assessments for tests of hypotheses on cost‐effectiveness ratios

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  • Joseph C. Gardiner
  • Marianne Huebner
  • James Jetton
  • Cathy J. Bradley

Abstract

We address the issue of statistical power and sample size for cost‐effectiveness studies. Tests of hypotheses on the cost‐effectiveness ratio (CER) are constructed from the net cost and incremental effectiveness measures. When the difference in effectiveness is known, we derive formulae for statistical power and sample size assessments for one‐ and two‐sided tests of hypotheses of the CER. We also construct a test of the joint hypothesis of cost‐effectiveness and effectiveness and derive an expression connecting power and sample size. Our methods account for the correlation between cost and effectiveness and lead to smaller sample size requirements than comparative methods that ignore the correlation. The implications of our formulae for cost‐effectiveness studies are illustrated through numerical examples. When compared with trials designed to demonstrate effectiveness alone, our results indicate that a trial appropriately powered to demonstrate cost‐effectiveness might require sample sizes many times greater. Copyright © 2000 John Wiley & Sons, Ltd.

Suggested Citation

  • 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.
    • Handle: RePEc:wly:hlthec:v:9:y:2000:i:3:p:227-234
    DOI: 10.1002/(SICI)1099-1050(200004)9:3<227::AID-HEC509>3.0.CO;2-Z
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    References listed on IDEAS

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    1. Tambour, Magnus & Zethraeus, Niklas & Johannesson, Magnus, 1997. "A Note on Confidence Intervals in Cost-Effectiveness Analysis," SSE/EFI Working Paper Series in Economics and Finance 181, Stockholm School of Economics.
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