Money Matters: How Cost-Effectiveness Studies Are Done

Extract

No one likes to admit that money matters in health care, but it does. One tool for comparing the cost of treatments or interventions, such as chemoprevention, is the cost-effectiveness study.

A cost-effectiveness study compares the incremental cost of treatment to the incremental benefit. To determine cost per life-year gained, a researcher will take the cost of the treatment—usually determined in part from the average wholesale price for a drug or data from Medicare or a large health maintenance organization when determining the costs of surgery and other procedures—and compare that with the number of years of life saved by the treatment, while accounting for years lost to side effects from the treatment.

“Doctors really like to know in black and white what the benefit is—life-year saved. But quality of life is important, too,” said Victor R. Grann, M.D., clinical professor of medicine at Columbia University in New York.

Quality-adjusted life-year calculations take into account the cost a person associates with a variety of factors, such as taking a pill every day for the rest of a person's life and the side effects of an intervention. “ Doctors hate this concept [quality-adjusted life-year] because they think they're curing everyone,” said Grann.