• Credits
  • Section Writer: Dr. Om J Lakhani
  • Section Editor: Dr. Om J Lakhani

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• Q. What are the 4 main types of health economic evaluations?

  • 1. Cost minimization
  • 2. Cost-effectiveness
  • 3. Cost-utility
  • 4. Cost-benefit

• Q. What are the different types of costs?

  • 1. Direct costs- associated directly with medical treatment - eg: cost of medicines, etc
  • 2. Indirect costs- associated indirectly due to illness- eg: loss of work time - missed wages, etc
  • 3. Intangible costs- they are pain, suffering, grief, etc- things to which we are not able to put a value to it

• Q. What is cost-minimization analysis?

  • This is the comparison of the same medication manufactured by different companies with different cost

• Q. What is Cost effectiveness analysis ?

  • This is used when we are using different interventions to achieve the same outcome (the outcome is measured in natural units)
  • For example, life years gained, or kilos lost, etc are natural units
  • Example- diet versus semaglutide for kilos lost is an example of Cost effectiveness analysis

• Q. What is the formula for Cost effectiveness?

  • Cost-effectiveness = All direct or indirect costs / Benefits measured in terms of life years saved or healthy days
  • It is cost/outcome

• Q. What is Cost utility analysis?

  • This is used when we want to compare different outcomes for different interventions
  • Here we use QALY- the quality of adjusted life years in the denominator
  • For example, we want to compare kidney transplants versus weight loss programs in the public health situation
    • since they measure different outcomes - we use a common denominator called QALY

• Q. How is QALY measured ?

  • QALY = number of years gained x quality of life
  • Quality of life is 0 - being the worst, 1 being the best - so it is a fraction
    • This is measured using various tools like SF-36 etc

• Q. What is ICER?

  • INCREMENTAL COST EFFECTIVENESS RATO (ICER)
  • This measures the difference in cost versus the outcome of two different measures
  • 

• Q. What are the four situations with ICER?

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• Q. What is cost- benefit analaysis ?

  • This includes comparisons of all costs - direct, indirect, and intangible with the benefits achieved