Cost‐Effectiveness Analysis, Health‐Care Policy, and Operations Research Models

Abstract

Cost‐effectiveness analysis is often used to formally investigate the trade‐offs between the economic costs and the health consequences of new medical technologies. Starting with Ontario and Australia in the early 1990s, many public sector drug plans began requiring cost‐effectiveness estimates for all new drugs prior to their approval for reimbursement. Owing to the difficulties in obtaining cost‐effectiveness estimates directly from clinical trials, many cost‐effectiveness estimates are obtained using decision‐analytic and Monte Carlo simulation models. In this article, we give a brief overview of cost‐effectiveness analysis in health care; we discuss some of the types of models that are commonly used and we give a description of how cost‐effectiveness analysis is used in health policy decision making in three different jurisdictions.

From Data to Improved Decisions: Operations Research in Healthcare Delivery

“…26,27 Monte Carlo simulation models are commonly classified into first-order (i.e., microsimulation) and secondorder models (i.e., stochastic sensitivity analysis). 28 Microsimulation and stochastic sensitivity analysis are commonly used in healthcare applications. Microsimulation consists of simulating sample paths of the healthcare trajectories of individual patients over time by utilizing random numbers and computing performance measures, such as cost or gain for the sampled trajectories, where the average of the performance measure serves as an estimate of the mean performance measure for the system.…”

The right amount of chemotherapy in non-curable disease: Insights from health economics

“…Recently published warnings have appeared in both general and specialty medical journals [5,6]. Experts note that the direct medical costs of cancer in the USA have increased from nearly $27 billion in 1990 [7] to more than $90 billion in 2008 [8] more than two-fold increase even after adjusting for inflation [9]. Smith and Hillner [4] report that annual direct costs in the USA for cancer care are projected to increase by over 66% from $104 billion in 2006 to over $173 billion in 2020 [4,10].…”