Skip to main content Accessibility help
×
Home

On value frameworks and opportunity costs in health technology assessment

  • Neill Booth (a1)

Abstract

Objectives

Proceeding from a basic concept underpinning economic evaluation, opportunity cost, this study aims to explain how different approaches to economics diverge quite dramatically in their ideas of what constitutes appropriate valuation, both in principle and practice. Because the concept of opportunity cost does not inherently specify how valuation should be undertaken or specify how appropriate any economic value framework (EVF) might be, the three main economics-based approaches to providing evidence about value for health technology assessment are described.

Methods

This paper describes how the three main EVFs—namely, the extra-welfarist, welfarist, and classical—are most typically understood, applied, and promoted. It then provides clarification and assessment of related concepts and terminology.

Results

Although EVFs differ, certain underlying characteristics of valuation were identified as fundamental to all approaches to economic evaluation in practice. The study also suggests that some of the rhetoric and terms employed in relation to the extra-welfarist approach are not wholly justified and, further, that only the welfarist approach ensures adherence to welfare-economic principles. Finally, deliberative analysis, especially when connected with a classical economic approach, can serve as a useful supplement to other analytical approaches.

Conclusions

All three approaches to economic evaluation have something to offer assessment processes, but they all display limitations too. Therefore, the author concludes that the language of economic evaluation should be used with sufficient humility to prevent overselling of EVFs, especially with regard to the qualities of evidence they provide for priority setting processes.

Copyright

Corresponding author

Author for correspondence: Neill Booth, E-mail: neill.booth@uta.fi

References

Hide All
1.Culyer, AJ (2018) Cost, context, and decisions in health economics and health technology assessment. Int J Technol Assess Health Care 34(5), 434–41.
2.Culyer, AJ, Jönsson, B (ed.) (1986) Public and private health services: complementarities and conflicts. Oxford: Basil Blackwell.
3.Williams, A (1974) The cost-benefit approach. Br Med Bull 30(3), 252–6.
4.Birch, S, Gafni, A (1992) Cost effectiveness/utility analyses. Do current decision rules lead us to where we want to be? J Health Econ 11(3), 279–96.
5.Coast, J (2004) Is economic evaluation in touch with society's health values? BMJ 329(7476), 1233–6.
6.Drummond, M (1980) Principles of economic appraisal in health care. Oxford: Oxford University Press.
7.Drummond, M, Sculpher, M, Claxton, K et al. (2015) Methods for the economic evaluation of health care programmes. 4th ed. Oxford: Oxford University Press.
8.Smith, A (1776) An inquiry into the nature and causes of the wealth of nations. London: Strahan and Cadell; Book I, Chapter VI, 1.
9.Green, DI (1894) Pain-cost and opportunity-cost. Q J Econ 8(2), 218–29.
10.Coase, RH (ed.) (1977) Economic forces at work (A collection of papers by Armen Albert Alchian). Indianapolis: Liberty Press.
11.Buchanan, JM (2008) Opportunity cost. The new Palgrave dictionary of economics. 2nd ed. London: Palgrave Macmillan UK, 15.
12.McIntosh, E, Donaldson, C, Ryan, M (1999) Recent advances in the methods of cost-benefit analysis in healthcare. Matching the art to the science. Pharmacoeconomics 15(4), 357–67.
13.Sloan, FA, Hsieh, CR (2017) Health economics. 2nd ed. Cambridge, Massachusetts: MIT Press.
14.Tianviwat, S, Chongsuvivatwong, V, Birch, S (2009) Optimizing the mix of basic dental services for Southern Thai schoolchildren based on resource consumption, service needs and parental preference. Community Dent Oral Epidemiol 37(4), 372–80.
15.Edlin, R, McCabe, C, Hulme, C et al. (2015) Cost effectiveness modelling for health technology assessment: a practical course. London: Adis.
16.Brent, RJ (2014) Cost-benefit analysis and health care evaluations. 2nd edn. Cheltenham: Edward Elgar.
17.Neumann, PJ, Ganiats, TG, Russell, LB et al. (eds.) (2016) Cost-effectiveness in health and medicine. 2nd ed. Oxford: Oxford University Press.
18.Culyer, AJ (2015) Why do/should we do economic evaluation? Value Outcomes Spotlight 1(2), 810.
19.Karimi, M, Brazier, J (2016) Health, health-related quality of life, and quality of life: What is the difference? Pharmacoeconomics 34(7), 645–9.
20.Birch, S, Donaldson, C (1987) Applications of cost-benefit analysis to health care: Departures from welfare economic theory. J Health Econ 6(3), 211–25.
21.Sendi, P, Gafni, A, Birch, S (2002) Opportunity costs and uncertainty in the economic evaluation of health care interventions. Health Econ 11(1), 2331.
22.Birch, S, Gafni, A (2011) The inconvenient economic truth: benefits forgone as an input to economic evaluation and implications for decision-making. In: Rosen, B, Israeli, A, Shortell, S, eds. Improving health and healthcare who is responsible? Who is accountable? Jerusalem, Israel: The Israel National Institute for Health Policy Research, 601–22.
23.Nyborg, K (2014) Project evaluation with democratic decision-making: What does cost–benefit analysis really measure? Ecol Econ 106, 124–31.
24.Shackley, P, Donaldson, C (2000) Willingness to pay for publicly-financed health care: how should we use the numbers? Appl Econ 32(15), 2015–21.
25.Quade, ES (1971) A history of cost-effectiveness. Santa Monica, CA: RAND Corporation.
26.Franklin, B (1842) Memoirs of Benjamin Franklin. New York: Harper & Brothers.
27.Simon, HA (1957) Administrative behavior: a study of decision-making processes in administrative organization. New York: Macmillan.
28.Ilias, G, Joanna, C, Ed, D et al. (2016) Maximizing health or sufficient capability in economic evaluation? A methodological experiment of treatment for drug addiction. Med Decis Making 37(5), 498511.
29.Daniels, N, van der Wilt, GJ (2016) Health technology assessment, deliberative process, and ethically contested issues. Int J Technol Assess Health Care 32(1–2), 10–5.
30.Claxton, K (1999) The irrelevance of inference: A decision-making approach to the stochastic evaluation of health care technologies. J Health Econ 18(3), 341–64.
31.Paulden, M (2016) Opportunity cost and social values in health care resource allocation. Alberta: University of Alberta.
32.Hurley, J (1998) Chapter 16: Welfarism, extra-welfarism and evaluative economic analysis in the health sector. In: Barer, ML, Getzen, TE, Stoddart, GL, eds. Health, health care and health economics: perspectives on distribution. Chichester: Wiley, pp. 373–95.
33.Mooney, G (1979) Values in health care. In: Lee, K, ed. Economics and health planning. London: Croom Helm, pp. 2344.
34.Culyer, AJ (2016) Cost-effectiveness thresholds in health care: a bookshelf guide to their meaning and use. Health Econ, Policy Law 11(4), 415–32.
35.Thokala, P, Ochalek, J, Leech, AA, Tong, T (2018) Cost-effectiveness thresholds: the past, the present and the future. Pharmacoeconomics 36(5), 509–22.
36.Claxton, K, Martin, S, Soares, M et al. (2015) Methods for the estimation of the NICE cost effectiveness threshold. Health Technol Assess 19(14), xxixxxxiv.
37.Birch, S, Gafni, A (2006) The biggest bang for the buck or bigger bucks for the bang: the fallacy of the cost-effectiveness threshold. J Health Serv Res Policy 11, 4651.
38.Caro, JJ (2009) Pursuing efficiency: a dead end for HTA? Value Health 12, S49.
39.Cleemput, I, Neyt, M, Thiry, N et al. (2011) Using threshold values for cost per quality-adjusted life-year gained in healthcare decisions. Int J Technol Assess Health Care 27(1), 71–6.
40.Birch, S, Gafni, A (2016) Population needs, opportunity costs and economic methods for financial sustainability in health care systems. In: Ethgen, O, Staginnus, U, eds. The future of health economics. London: Routledge, pp. 169180.
41.Gafni, A (2006) Economic evaluation of health-care programmes: is CEA better than CBA? Environ Resour Econ 34(3), 407–18.
42.Mooney, G (2012) The health of nations: towards a new political economy. London: Zed Books.
43.Vickers, G (1981) Systems analysis: a tool subject or judgment demystified? Policy Sci 14(1), 23.
44.Baltussen, R, Jansen, MPM, Bijlmakers, L et al. (2017) Value assessment frameworks for HTA agencies: the organization of evidence-informed deliberative processes. Value Health 20(2), 256–60.
45.Garrison, LP Jr, Neumann, PJ, Willke, RJ et al. (2018) A health economics approach to US value assessment frameworks—summary and recommendations of the ISPOR special task force report [7]. Value Health 21(2), 161–5.
46.Mauskopf, JA (1998) Prevalence-based economic evaluation. Value Health 1(4), 251–9.
47.Deaton, A, Cartwright, N (2018) Understanding and misunderstanding randomized controlled trials. Soc Sci Med 210, 221.
48.Manski, CF (2019) The lure of incredible certitude. Econ Philos, 130, https://doi.org/10.1017/S0266267119000105.
49.Oortwijn, W, Sampietro-Colom, L, Habens, F (2017) Developments in value frameworks to inform the allocation of healthcare resources. Int J Technol Assess Health Care 33, 17.
50.Schultze, CL (1969) Why benefit-cost analysis? In: Hinrichs, HH, Taylor, GM, eds. Program budgeting and benefit-cost analysis: cases, text and readings. Pacific Palisades: Goodyear Publishing Company, Inc., pp. 18.
51.Enthoven, AC (1966) Operations research at the national policy level. In: Tucker, SA, ed. A modern design for defense decision: a McNamara-Hitch-Enthoven anthology. Washington: Industrial College of the Armed Forces, pp. 149160.
52.Marsh, KD, Sculpher, M, Caro, JJ, Tervonen, T (2018) The use of MCDA in HTA: great potential, but more effort needed. Value Health 21(4), 394–7.
53.Culyer, AJ, Bombard, Y (2012) An equity framework for health technology assessments. Med Decis Making 32(3), 428–41.
54.Williams, B (1981) Conflicts of values. In: Williams, B, ed. Moral luck: philosophical papers 1973–1980. Cambridge: Cambridge University Press, 7182.
55.European network for Health Technology Assessment (EUnetHTA) project. (2016) HTA core model: version 3.0. Available at http://www.corehta.info/model/HTACoreModel3.0.pdf. Accessed 2018.
56.Sandel, MJ (2013) Market reasoning as moral reasoning: why economists should re-engage with political philosophy. J Econ Perspect 27(4), 121–40.
57.Mooney, G (1998) “Communitarian claims” as an ethical basis for allocating health care resources. Soc Sci Med 47(9), 1171–80.
58.Hitch, CJ, McKean, RN (1960) The economics of defense in the nuclear age. Cambridge, Mass: Harvard University Press.
59.Wildavsky, A (1993) Speaking truth to power: the art and craft of policy analysis. New Brunswick, NJ: Transaction.
60.Mooney, G (2002) Priority setting in mental health services. Appl Health Econ Health Policy 1(2), 6574.
61.Birch, S (1997) As a matter of fact: evidence-based decision-making unplugged. Health Econ 6(6), 547–59.
62.Stone, DA (2002) Policy paradox: the art of political decision making. New York: W.W. Norton.
63.Brazier, JE, Rowen, D, Lloyd, A, Karimi, M (2019) Future directions in valuing benefits for estimating QALYs: is time up for the EQ-5D? Value Health 22(1), 62–8.
64.Culyer, AJ, Chalkidou, K (2019) Economic evaluation for health investments en route to universal health coverage: cost-benefit analysis or cost-effectiveness analysis? Value Health 22(1), 99103.
65.Mooney, G, Russell, E, Weir, R (1980) Choices for health care. London: MacMillan, 177 p.
66.O'Donnell, R (2016) Complexities in the examination of opportunity cost. J Econ Educ 47(1), 2631.
67.Daddario, EQ (1967) House of Representatives Bill 6698. Washington: U.S. Govt. Print. Off., March 7, 1967.
68.Macfie, AL (1949) What kind of experience is economizing? Ethics 60(1), 1934.
69.Marseille, E, Larson, B, Kazi, DS et al. (2015) Thresholds for the cost-effectiveness of interventions: alternative approaches. Bull World Health Organ 93(2), 118–24.

Keywords

On value frameworks and opportunity costs in health technology assessment

  • Neill Booth (a1)

Metrics

Altmetric attention score

Full text views

Total number of HTML views: 0
Total number of PDF views: 0 *
Loading metrics...

Abstract views

Total abstract views: 0 *
Loading metrics...

* Views captured on Cambridge Core between <date>. This data will be updated every 24 hours.

Usage data cannot currently be displayed