Economics notes: Using cost effectiveness information

This is the seventh in a series of occasional notes on economics How should the results of economic evaluations be interpreted and used by decision makers in health care? In cost benefit analyses the decision rule is in principle straightforward: if benefits exceed costs then the programme should be implemented; if not, it should be rejected. However, the use of cost benefit analysis is limited by the need to place monetary valuations on health outcomes, and cost utility analyses are more widely used, with results presented in terms of the cost per QALY (quality adjusted life year). Unfortunately, no clear decision rule exists for cost utility analyses. Some analysts have suggested setting a threshold value for the cost per QALY that represents the willingness of society to pay for additional QALYs. But others argue such thresholds could lead to uncontrolled expenditure growth …