Making Choices in Health: WHO Guide to Cost-Effectiveness Analysis

You can buy the book here, though I should note that I’m certain that free versions of the book are also available online. I started reading it yesterday and I completed it today.

The book consists of two parts: Part one deals with “Methods for Generalized Cost-Effectiveness Analysis” and part two consists of “Background Papers and Applications”. If you’re weird, like me, (or if you’re a researcher in the field…) you’ll want to read both parts. They write in the introduction that: “The main objective of this Guide is to provide policy-makers and researchers with a clear understanding of the concepts and benefits of GCEA [generalized cost-effectiveness analysis]. It provides guidance on how to undertake studies using this form of analysis and how to interpret the results.” As mentioned the book has two parts. It’s very clear that part one is written mainly for the politicians and that part two is written for the researchers – and good luck finding a politician who’ll actually read part 2 (/or part 1..?). I like to think that part one can be read and understood by most people, including certainly most readers of this blog, and I do not believe it requires a lot of knowledge about statistics or mathematics; some papers in part 2 on the other hand require math beyond the level I’ve taken for the reader to understand all the steps taken (here are a few wikipedia articles I had a look at while reading this part of the book). They repeat themselves a bit here and there, but it’s not hard to just skim passages containing stuff you’ve already dealt with elsewhere.

It should be noted that although some of it is a bit technical, there’s some good stuff in part 2 as well – for instance I really liked this table (from the fourth study in part 2, Econometric estimation of country-specific hospital costs):

Table 3
Click to view full size. The obvious conclusion to draw here is that costs do not vary much across countries – no, they definitely do not… Actually I was very surprised to learn that there’s a huge amount of variation even within countries – in the same article they note that: “it must be emphasized that there is wide variation in the unit costs estimated from studies within a particular country […] These differences are sometimes of an order of magnitude, and cannot always be attributed to different methods. This implies that analysts cannot simply take the cost estimates from a single study in a country to guide their assessment of the cost-effectiveness of interventions, or the costs of scaling-up. In some cases, they could be wrong by an order of magnitude.”

In the first chapter they state that:

“It appears that the field can develop in two distinct directions, towards increasingly contextualized analyses or towards more generalized assessments. Cost-effectiveness studies and the sectoral application of CEA [cost effectiveness analyses] to a wide range of interventions can become increasingly context specific—at the individual study level by directly incorporating other social concerns such as distributional weights or a priority to treat the sick and at the sectoral level by developing complex resource allocation models that capture the full range of resource, ethical and political constraints facing decision-makers.
We fear that this direction will lead ultimately to less use of costeffectiveness information in the health policy dialogue. Highly contextualized analyses must by definition be undertaken in each context; the cost and time involved as well as the inevitable complexity of the resource allocation models will limit their practical use. The other direction for sectoral cost-effectiveness, the direction that WHO is promoting […] is to focus on the general assessment of the costs and health benefits of different interventions in the absence of various highly variable local decision constraints. A generalized league table of the cost-effectiveness of interventions for a group of populations with comparable health systems and epidemiological profiles can make the most powerful component of CEA readily available to inform health policy debates. Relative judgements on cost-effectiveness—e.g. treating tuberculosis with the DOTS strategy is highly cost-effective and providing liver transplants in cases of alcoholic cirrhosis is highly cost-ineffective—can have wide ranging influence and, as one input to an informed policy debate, can enhance allocative efficiency of many health systems.”

I’m not a health economist so I have no idea which way the field has developed since the book was written. The book isn’t exactly brand new (it’s from 2003) and so I figured one way to probe whether the recommendations have been followed in the years after the book was published was to try to figure out the extent to which one of the big ideas here, the use of Stochastic League Tables in CEAs, has been implemented. So I went to google scholar and searched for the term – and it gave me 7400+ results (and 589 since 2012). It seems to me that the use of these things at least have caught on. I incidentally have no idea to which extent researchers have now moved towards the use of GCEAs and away from the previously (?) widely used ‘incremental approach’ studies when performing these analyses. I posted the long quote above also to caution people unfamiliar with the literature against complaining about CEAs which are ‘not specific enough’ (a complaint I’ve made myself in the past…) – it may make a lot of sense to not make a CEA too specific, in order to make it more potentially useful to decisionmakers. A related point is that the idea of using CEAs in a formulaic way to decide which health interventions ‘pass the bar’ and which do not, and thus base decisions such as which health interventions should receive government support only on the outcome of CEAs, do not have much support in the field – as they put it in Murray, Lauer et al. (study 7 in the second part):

“The results of cost-effectiveness analysis should not be used in a formulaic way—starting with the intervention that has the lowest cost-effectiveness ratio, choosing the next most attractive intervention, and continuing until all resources have been used (10). There is generally too much uncertainty surrounding estimates for this approach; moreover, there are other goals of health policy in addition to improving population health. The tool is most powerful when it is used to classify interventions into broad categories such as those we used. This approach provides decision-makers with information on which interventions are low-cost ways of improving population health and which improve health at a much higher cost. This information enters the policy debate to be weighed against the effect of the interventions on other goals of health policy.”

(They also emphasize this aspect in the first part of the book). I could quote a lot of stuff from the book, but if you’re interested you’ll read it and if you’re not you’d probably not read my quotes either. If you’re interested in cost-effectiveness analyses, I think you should probably read this book – or at least the first part which is relatively easy and does not take that long to read. If you’re not interested in this stuff you should definitely stay away from it. But I think the book is a good starting point if you seek to understand some of the main concepts, issues, and tradeoffs involved when doing and interpreting CEAs.

One last thing I should note, primarily to the people who will not read the book: Many people think of the people doing stuff like cost-effectiveness analyses in this field as the bad guys. That’s because they’re the ones who keep reminding us that we can’t afford everything. When it comes to health care we don’t like to be reminded of this fact, because sometimes when it’s been decided by decisionmakers that public money should not be spent on X it means that someone will die. What I’d like to remind you of is that resource constraints don’t go away just because people prefer to ignore them; rather, when people disregard cost-effectiveness it may just mean that fewer people will be helped and more people will die than if a different course of action, perhaps the one suggested by a CEA, had been taken. CEAs may not provide the complete answer to how we should do these things and they have some limitations, but we should all keep in mind that it matters how we spend our money on this stuff, and that completely ignoring the resource constraint isn’t really a solution to the problems we face when dealing with these matters.


January 30, 2013 - Posted by | Books, Economics, health care, Health Economics

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