Skip to main content
Log in

The Role of Cost—Consequence Analysis in Healthcare Decision—Making

  • Leading Article
  • Cost-Consequence Analysis in Decision-Making
  • Published:
PharmacoEconomics Aims and scope Submit manuscript

Summary

A greater understanding of value associated with new pharmaceutical products should lead to better decision—making. Most commonly cost—effectiveness ratios (CERs) are used to indicate value; however, researchers have recently shown that CER estimates are rarely used by decision—makers in making formulary decisions. In this article, a cost—consequence approach to estimating the value for money of a new treatment for a specific disease is described. Using a cost—consequence approach, the impact of the new treatment on lifetime resource use and costs (including specific healthcare service use and costs, and productivity losses) and health outcomes (including disease symptoms, life expectancy and quality of life) for an individual or group of individuals is estimated and presented in a tabular format. The cost—consequence format is more likely to be approachable, readily understandable and applied by healthcare decision—makers than a simple CER. The decision—maker may use selected items from the costconsequence analysis to compute composite measures of drug value, such as cost per life—year gained or cost per quality—adjusted life—year (QALY) gained. In general, the cost—consequence approach, by making the impact of the new treatment as comprehensive and transparent as possible, will enable decision—makers to select the components most relevant to their perspective and will also give them confidence that the data are credible to use as the basis for resource allocation decisions.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  1. Organization for Economic Cooperation and Development (OECD). OECD health data 1996. Washington, DC: OECD, 1996

    Google Scholar 

  2. Government Accounting Office (GAO). Health care spending control: the experience of France, Germany, and Japan. Washington, DC: GAO, 1991. Publication no.: GAO/HRD-92-9

    Google Scholar 

  3. Government Accounting Office (GAO). German health reforms: changes result in lower health costs in 1993. Washington DC: GAO, 1994. Publication no.: GAO/HEHS-95-27

    Google Scholar 

  4. Schieber GJ, Poullier JP, Greenwald LM. US health expenditure performance: an international comparison and data update. Health Care Financ Rev 1992; 13: 1–15

    PubMed  CAS  Google Scholar 

  5. Drummond MF, Stoddart Gl, Torrance GW. Methods for the economic evaluation of health care programmes. 2nd ed. New York: Oxford University Press, 1997

    Google Scholar 

  6. Bootman L, Townsend R, Mc Grath W. Principles of pharmacoeconomics. 2nd ed. Cincinnati (OH): Harvey Whitney Books Company, 1996

    Google Scholar 

  7. Russell LB, Gold MR, Siegel JE, et al. The role of cost—effectiveness analysis in health and medicine. JAMA 1996; 276: 1172–7

    Article  PubMed  CAS  Google Scholar 

  8. Davies L, Coyle D, Drummond M, et al. Current status of economic appraisal of health technology in the European Community: report of the network. Soc Sci Med 1994; 38: 1601–7

    Article  PubMed  CAS  Google Scholar 

  9. Canadian Coordinating Office on Health Technology Assessment (CCOHTA). Guidelines for economic evaluation of pharmaceuticals. 1st ed. Ottawa: CCOHTA, 1994

    Google Scholar 

  10. Commonwealth Department of Health, Housing and Community Services. Guidelines for the pharmaceutical industry on preparation of submissions to the Pharmaceutical Benefits Advisory Committee: including submissions involving economic analyses. Canberra: Australian Government Publishing Service, 1992

    Google Scholar 

  11. Soumerai SB, Ross—Degas D, Avorn J, et al. Effects of Medicaid drug payment limits on admission to hospitals and nursing homes. N Engl J Med 1991; 325: 1072–7

    Article  PubMed  CAS  Google Scholar 

  12. Schwartz RM, Luby AM, Scanlon JW, et al. Effect of surfactant on morbidity, mortality, and resource use in newborn infants weighing 500 to 1500g. N Engl J Med 1994; 330: 1476–80

    Article  PubMed  CAS  Google Scholar 

  13. Backhouse ME, Mauskopf JA, Jones D, et al. Economic outcomes of synthetic surfactant rescue therapy in infants weighing 1250g or more with respiratory stress syndrome: results from a randomized trial. Pharmacoeconomics 1994; 6 (4): 358–69

    Article  PubMed  CAS  Google Scholar 

  14. Nichol KL, Lind A, Margolis KL, et al. The effectiveness of vaccination against influenza in healthy working adults. N Engl J Med 1995; 333: 889–93

    Article  PubMed  CAS  Google Scholar 

  15. Greenberg PE, Stigli EL, Finkelstein SN, et al. The economic burden of depression. J Clin Psychiatry 1993; 54: 405–18

    PubMed  CAS  Google Scholar 

  16. Drummond M. Cost—of—illness studies: a major headache. Pharmacoeconomics 1992; 2 (1): 1–4

    Article  PubMed  CAS  Google Scholar 

  17. Koopmanschap MA, Van Inveld B. Towards a new approach for estimating indirect costs of disease. Soc Sci Med 1992; 34: 1005–10

    Article  PubMed  CAS  Google Scholar 

  18. Thompson MS. Willingness to pay and accept risks to cure chronic disease. Am J Public Health 1986; 76: 392–6

    Article  PubMed  CAS  Google Scholar 

  19. Stergachis A. Overview of cost—consequence modeling in outcomes research. Pharmacotherapy 1995; 15 (5 Pt 2): 40S–2S

    PubMed  CAS  Google Scholar 

  20. Mauskopf JA, Schulman K, Bell L, et al. A strategy for collecting pharmacoeconomic data during phase II/III clinical trials. Pharmacoeconomics 1996; 9 (3): 264–77

    Article  PubMed  CAS  Google Scholar 

  21. Drummond M, Davies L. Economic analysis alongside clinical trials: revisiting the methodological issues. Int J Technol Assess Health Care 1991; 7: 561–73

    Article  PubMed  CAS  Google Scholar 

  22. Paul JE, Tilson HH. Use and opportunities for administrative data bases in pharmacoeconomic research. In: Spilker B, editor. Quality of life and pharmacoeconomics in clinical trials. 2nd ed. Philadelphia: Lippincott—Raven Publishers, 1996

    Google Scholar 

  23. Hlatky MA, Califf RM, Harrell FE, et al. Comparisons of predictions based on observational data with the results of randomized controlled clinical trials of coronary artery bypass surgery. J Am Coll Card 1988; 11: 237–45

    Article  CAS  Google Scholar 

  24. Luce BR, Lyles CA, Rentz AM. The view from managed care pharmacy. Health Aff 1996; 15: 168–76

    Article  CAS  Google Scholar 

  25. Handley MR, Stuart ME. An evidence—based approach to evaluating and improving clinical practice: guideline development. HMO Pract 1994; 8: 11–20

    Google Scholar 

  26. Lieu AT, Cochi SL, Black SB, et al. Cost—effectiveness of a routine varicella vaccination program for US children. JAMA 1994; 271: 375–81

    Article  PubMed  CAS  Google Scholar 

  27. Platt R, Zaleznik DF, Hopkins DD et al. Perioperative antibiotic prophylaxis for herniorrhaphy and breast surgery. N Engl J Med 1990; 322: 153–60

    Article  PubMed  CAS  Google Scholar 

  28. Testa MA, Anderson RB, Nackley JF, Quality of Life Hypertension Study Group. Quality of life and antihypertensive therapy in men: a comparison of captopril with enalapril. N Engl J Med 1993; 328: 907–13

    Article  PubMed  CAS  Google Scholar 

  29. Paul JE, Mauskopf JA, Bell L. Cost—consequence models for varicella—zoster virus infections. Pharmacotherapy 1995; 15 (5 Pt 2): 49S–58S

    PubMed  CAS  Google Scholar 

  30. Grant DM, Mauskopf JA, Bell L, et al. Comparison of valaciclovir and acyclovir for the treatment of herpes zoster in immunocompetent patients over 50 years of age: a costconsequence model. Pharmacotherapy 1997; 17: 333–41

    PubMed  CAS  Google Scholar 

  31. Bozzette AS, Kanouse DE, Berry S, et al. Health status and function with zidovudine or zalcitabine as initial therapy for AIDS. JAMA 1995; 273: 295–301

    Article  PubMed  CAS  Google Scholar 

  32. Aberg-Wistedt A, Cressell T, Lidberg Y, et al. Two—year outcome of team—based intensive case management for patients with schizophrenia. Psychiatr Serv 1995; 46: 1263–6

    PubMed  CAS  Google Scholar 

Download references

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Josephine A. Mauskopf.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Mauskopf, J.A., Paul, J.E., Grant, D.M. et al. The Role of Cost—Consequence Analysis in Healthcare Decision—Making. Pharmacoeconomics 13, 277–288 (1998). https://doi.org/10.2165/00019053-199813030-00002

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.2165/00019053-199813030-00002

Keywords

Navigation