Cost Effectiveness Analysis

• This is the most common type of

pharmacoeconomic analysis found in the
pharmacy literature.
• A CEA measures cost in monetary units and
outcomes in natural health units such as
clinical laboratory values, years of life saved,
or prevention of an event.
• An advantage of using a CEA is that health
units are common outcomes practitioners can
readily understand and these outcomes do
not need to be converted to monetary values.
• Furthermore, different treatments that have
same treatment goal may also be evaluated.
• The methodology can only compare options
with the same type of outcome, and only one
outcome can be measured at a time. For
example, two treatments with two distinctly
different outcomes (ie, years of live saved vs
disability days avoided) cannot necessarily be
assessed in unison with CEA.
• Law and others assessed two antidiabetic
medications by comparing the percentage of
patients who achieved good glycemic control
as the outcome measures.
• Bloom and others compared two medical
treatments for gastroesophageal reflux
disease (GERD), using both healed ulcers
confirmed by endoscopy and symptom-free
days as the outcomes measured.
 Cost effectiveness grid
Cost effectiveness Lower cost Same cost Higher cost

Lower effectiveness A B C

Same effectiveness D E F

Higher effectiveness G H I
 Think of comparing a new drug with
the current standart treatment

The new therapy is considered cost-effective if:

• Both more effective and less costly (cell G)
• More effective at the same price (cell H)
• Has the same effectiveness at a lower price
(cell D)
The new product is not cost-effectiv if:
• Less effective and more costly (cell C)
• Has the same effectiveness but costs more
(cell F)
• Has lower effectiveness for the same costs
(cell B)
There are three other possibilities:That the new
drug is
• more expensive and more effective (cell I)—a
very common finding
• Less expensive but less effective (cell A)
• Has the same price and the same
effectiveness as the standart product (cell E)
• For the middle cell E, other factors may be
considered to determine which medication
migh be best.
• For other two cells an incremental cost-
effectivenee ratio (ICER) is calculated to
determine the extra cost for extra unit of
outcome.
 Cost-conseqeunce analysis
Alternatife Cost for 12 months of Lowering of LDL in 12
medication months (mg/dl)

Current preferred medication $1,000 25

New medication $1,500 30

 Average cost-effectiveness ratio
Alternatife Cost for 12 Lowering of LDL in Average cost per
months of 12 months (mg/dl) reduction in LDL
medication

Current preferred $1,000 25 $40 per mg/dl

medication

New medication $1,500 30 $50 per mg/dl

 Incremental cost-effectiveness ratio
(ICER)
Alternatife Cost for 12 Lowering of LDL in Incremental cost
months of 12 months (mg/dl) per marginal
medication reduction in LDL

Current preferred $1,000 25 (1500-1000)/(30-

medication 25) = $100 per
New medication $1,500 30 mg/dl