Cost-effectiveness analysis

Cost-effectiveness analysis compares the costs and health outcomes of alternative interventions to assess how efficiently each uses resources. It commonly expresses outcomes in natural health units or quality-adjusted life-years.

Incremental cost-effectiveness ratio: The difference in cost between two interventions divided by their difference in health outcomes. This ratio summarizes the additional cost required for each additional unit of health gain.
Health technology assessment: The systematic evaluation of a health technology's clinical, economic, organizational, and ethical effects. Cost-effectiveness analysis is one component of many assessments used to guide health-system decisions.
Cost-benefit analysis: An economic evaluation that expresses both costs and benefits in monetary terms. Unlike cost-effectiveness analysis, it assigns monetary values to health outcomes.
Probabilistic sensitivity analysis: A method that propagates uncertainty in model inputs by repeatedly sampling from probability distributions. It estimates how uncertainty across many assumptions affects cost-effectiveness results.
Quality-adjusted life year: A measure combining length of life and health-related quality of life into a single value. QALYs let analysts compare interventions that affect survival and quality of life differently.
National Institute for Health and Care Excellence: A public body in England that issues guidance on health and social care, including technology appraisals. NICE uses economic evidence, including cost-effectiveness estimates, in some recommendations.
Cost-minimization analysis: An evaluation comparing costs when the alternatives are assumed to have equivalent outcomes. It is appropriate only when outcome equivalence is established, rather than measured as a difference.
Value of information: An estimate of the benefit of reducing uncertainty before making a decision. It can show whether further research could improve decisions enough to justify its cost.
Cost-utility analysis: An economic evaluation that measures health outcomes using utility-based units, commonly quality-adjusted life-years. This common form of cost-effectiveness analysis uses a shared outcome measure across diseases.
Pharmacoeconomics: The study of the costs and consequences of pharmaceutical products and services. Drug evaluations often use cost-effectiveness methods to inform reimbursement and prescribing.

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