Cost-effectiveness analysis or cost-effectiveness model (CEA or CEM)
Aim: To compare the cost to benefit ratio of two products
Application: To characterise the relative efficacy and safety of a product in terms of healthcare value
Identifies: Cost and quality drivers, target patient segments, and patient benefits
Informs: Messaging and interactions with healthcare providers and payers
The cost of healthcare is always an important aspect, but most decisions on product coverage and reimbursement are not made oblivious to patient outcomes. Clinical data is almost always required, and a key question is the balance between costs and beneficial outcomes. A cost-effectiveness analysis (CEA) or cost-effectiveness model (CEM) estimates the cost of healthcare provision and the potential patient outcomes, both positive and negative (e.g. adverse events), and quantifies the cost-benefit ratio between them. This can be in terms of the cost per health outcome (e.g. hospitalization) avoided or cost per patient life year gained. For healthcare providers, these are commonly presented as an incremental cost-effectiveness ratio (ICER). The ICER is the difference in cost between the two interventions divided by the difference in health outcomes between the two interventions. To try out a working CEM, specifically a cost-utility analysis for hypertension treatments, please follow this link: example.