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The final outcome of any resource allocation decision in healthcare cannot be determined in advance. Thus, decision makers, in deciding which new program to implement (or not), need to accommodate the uncertainty of different potential outcomes (i.e., change in both health and costs) that can occur, the size and nature (i.e., 'bad' or 'good') of these outcomes, and how they are being valued. Using the decision-making plane, which explicitly incorporates opportunity costs and relaxes the assumptions of perfect divisibility and constant returns to scale of the cost-effectiveness plane, all the potential outcomes of each resource allocation decision can be described.In this study, we describe the development and testing of an instrument, using a discrete choice experiment methodology, allowing the measurement of public preferences for potential outcomes falling in different quadrants of the decision-making plane.In a sample of 200 participants providing 4200 observations, we compared four versions of the preference-elicitation instrument using a range of indicators.We identified one version that was well accepted by the participants and with good measurement properties.This validated instrument can now be used in a larger representative sample to study the preferences of the public for potential outcomes stemming from re-allocation of healthcare resources.

In their critique of our paper, Hoch et al. [1] ask if it matters whether Canada’s separate health technology assessment (HTA) process for cancer drugs has an economic rationale. They say that the answer is no. However, as we will show later, on the basis of their actual comments, there seems to be ambiguity in what this ‘no’ really means. Hoch et al. also suggest that there were other rationales and objectives set for the establishment of a separate HTA review process for cancer drugs. Unfortunately, they do not identify or explore what these other rationales and objectives might have been, nor do they discuss what these are now and moving forward. Hence, we are left in the dark as to what these might be. Their response reminds us of the famous quotation (above) from Alice in Wonderland. We are left not really knowing where the authors want to go and why. Since we do not know what alternative rationale and objective(s) the authors have in mind, we focus the remainder of our response on comments that we think relate to the subject of our publication (i.e. whether an economic rationale has been provided for the establishment of a separate reimbursement review process for cancer drugs). Specifically, we address the following three issues. First, we discuss whether Hoch et al. really think that an economic rationale is not ‘‘needed to justify the creation and adoption of a separate cancer drug HTA process’’ and what appears to be confusion in their comments between an economic rationale (referred to in our paper as ‘‘a rationale that is consistent with an economic perspective’’ [2]) and goal(s) (or objectives) to achieve through allocation of resources (e.g. to improve population health). Second, we address Hoch et al.’s suggestion that ‘‘decision makers may be pursuing different objectives from academic researchers.’’ Third, we discuss Hoch et al.’s prescription for how to make ‘‘positive contributions that help decision makers address the challenges that decision makers have.’’

Various methods have been proposed to address uncertainty in economic evaluations of healthcare programmes. One approach suggested in the literature is to estimate separate confidence intervals for the incremental costs and effects of a new health programme in comparison with an existing programme. These intervals are then combined to generate a rectangular confidence region in the cost-effectiveness plane that implicitly defines a corresponding confidence interval for the incremental cost-effectiveness ratio (ICER). The same approach has been used to calculate sample sizes and study power. This application of the rectangle method is consistent with the adoption of ICERs and a threshold as a decision rule, this being the most commonly used approach in empirical applications of cost-effectiveness analysis, as well as the one recommended by agencies that assess medical technology around the world. In this paper, we first outline the rectangle method, and then propose a modification that recognises that separate inferences are being drawn on the cost and effectiveness domains, and that corrects for multiple statistical comparisons. The confidence rectangle is otherwise too small, the corresponding confidence interval for the ICER is too narrow and sample sizes are under-estimated. Our modification corrects these problems. A further difficulty is that the placement of the confidence rectangle around the null value is somewhat arbitrary, and does not correspond to a unique value of ICERs. As a result, different values of sample size and power for the estimation of ICERs can be obtained, depending on the null values of the cost and effectiveness. We conclude that it is important to clearly identify the analytic goal in terms of estimating differential costs, differential effects or a combination of the two using the ICER index. These ideas are illustrated using numerical examples.

Objectives: To measure preferences and willingness to pay (WTP) for a novel anaesthetic (dental gel) versus existing anaesthetic options for periodontal maintenance visits. Design: The study was conducted by developing and administering a survey, composed of a modified decision aid and a WTP instrument. The decision aid provided clinical information in layman’ terms. Patients stated their anaesthetic preference; WTP elicited the hypothetical amount of money a subject would pay to have dental gel available for maintenance cleaning, should they require anaesthetic. Patients: Periodontal recall patients (n = 97; ‘recall’) and participants from the general population (n = 196; ‘general’) from southwestern Ontario, Canada. Results: The overwhelming majority of participants chose dental gel over injectable local anaesthetic or no anaesthetic as their first anaesthetic preference (general: 81.0%; recall: 82.5%). The median WTP for dental gel was 20.00 Canadian dollars ($Can) per visit for the general population and $Can10.00 for the recall population (1999 values). The majority of participants were willing to pay an insurance premium for dental gel, even if they did not personally prefer dental gel (general: 72.4%; recall: 73.2%). The median monthly premium to have dental gel available for any plan beneficiary requiring scaling and root planing (SRP) during maintenance was $Can2.00 per month for both groups. Conclusions: In this population, an alternative to traditional injectable local anaesthetic (i.e. dental gel) was overwhelmingly preferred by both general population participants and recall patients for maintenance cleaning procedures. Most participants were willing to pay to have dental gel available, either for themselves or for others.

In Canada, there are two separate review processes for the public reimbursement of drugs: one for cancer drugs (originally called the Joint Oncology Drug Review [JODR] and now called the pan-Canadian Oncology Drug Review [pCODR]) and one for drugs in all other disease areas (called the Common Drug Review). We explore whether a justification that is derived from an economic perspective has been provided, in Canada or elsewhere, for cancer drugs to have a separate reimbursement review process (i.e. to be ‘treated separately’) relative to drugs in all other disease areas. Literature reviews and internet searches were undertaken to identify, collect and analyze relevant documents that would provide information regarding whether an economic rationale has been provided for cancer drugs to be treated separately for resource allocation purposes. Although a number of reasons for cancer drugs to be treated separately were cited both by the JODR and pCODR and in the peer-reviewed literature, a rationale derived from an economic perspective did not appear to be documented. From an economic perspective, separating cancer drugs for resource allocation purposes is likely to impede drug plan decision makers’ ability to allocate resources in a manner that maximizes the total aggregate health benefit for the population from available resources. While we acknowledge the challenges that cancer drugs pose to drug reimbursement decision makers, we suggest that separating the reimbursement review of cancer drugs requires further scrutiny.

The National Institute for Clinical Excellence (NICE) responds to requests by the Department of Health for guidance on the use of selected new and established technologies in the National Health Service (NHS) in England and Wales. This paper asks whether the NICE methodological guidelines help NHS decision makers meet the objectives of maximum health improvements from NHS resources and an equitable availability of technologies. The analytical basis of the guidelines is a comparison of the costs and consequences of new and existing methods of dealing with particular conditions using the incremental cost-effectiveness ratio. We explain why information on the costs and consequences of a particular technology in isolation is insufficient to address issues of efficiency of resource use. We argue that to increase efficiency, decision makers need information on opportunity costs. We show that in the absence of such information decision makers cannot identify the efficient use of resources. Finally we argue that economics provides valid methods for identifying the maximisation of health improvements for a given allocation of resources and we describe an alternative practical approach to this problem. Drawing on the experience of Ontario, Canada where an approach similar to that proposed by NICE has been in use for almost a decade, and recent reports about the consequences of NICE decisions to date, we conclude that instead of increasing the efficiency or equity of the use of NHS resources, NICE methodological guidelines may lead to: (i) uncontrolled increases in NHS expenditures without evidence of any increase in total health improvements; (ii) increased inequities in the availability of services; and (iii) concerns about the sustainability of public funding for new technologies.

The advent of highly active antiretroviral therapy (HAART), including protease inhibitors and/or non-nucleoside reverse transcriptase inhibitors, for the treatment of HIV infection has led to a dramatic decline of morbidity and mortality. The acquisition costs of HAART are substantial. However, these costs are partially offset by reduced inpatient care for opportunistic infections and other AIDS-related diseases. Furthermore, job productivity in patients infected with HIV is increased under HAART. In developed countries with a low unemployment rate, the discounted value of savings caused by increased productivity in earlier years exceeds the discounted value of later increases in costs resulting from morbidity. Therefore, HAART represents a very efficient treatment strategy that leads to overall cost savings when taking a societal perspective.

In this paper, we consider the role of willingness to pay (WTP) as a method for measuring the impact of healthcare programmes on population well-being. Alternative methods of outcome valuation, such as quality-adjusted life-years (QALYs), measure values through individuals’ willingness to trade off a particular commodity, future life. Moreover, the method of valuation fails to incorporate several dimensions of benefit relevant to measuring well-being that are particularly important in programmes aimed at the prevention and control of influenza. In contrast, WTP provides a broad method of valuation based on individuals’ willingness to trade off a much wider range of commodities. In addition, WTP incorporates externalities and uncertainty within individual valuations. We show that the main limitations of the WTP approach are not avoided by adoption of the QALY approach.

Objective: The objectives of this study were (i) to develop a conceptual framework for selecting hospitals for unit cost estimates in national and international multicentre trials and (ii) to test the impact of alternative hospital selection on the cost results. Design and setting: Within the conceptual framework, the following considerations which can be used when selecting a sample of hospitals for unit cost estimates in multicentre trials were identified: the number of hospitals; the sampling method; and the desired level of geographical subanalysis. Results from a recently completed international multicentre trial were used to explore changes in cost results obtained by using alternativemethods of selecting and stratifying hospitals for unit cost estimates. Patients and participants: The study included 5041 women from 72 hospitals in 6 countries with prelabour rupture of the membranes at term. Interventions: The women were randomly assigned to induction of labour with intravenous oxytocin, induction of labour with prostaglandin E2 gel, or expectant management for up to 4 days with labour induced if complications developed. Main outcome measures and results: Across each of the 4 management strategies of the study, the method of selecting and stratifying hospitals resulted in a 30 to 55% difference between the lowest and highest median unit cost estimates. In some cases, the relative ranking of the least to most expensive strategy varied across methods of hospital selection. The statistical comparisons across strategies found that the method used had a substantial impact on the conclusions of the economic evaluation. Conclusions: Unit cost information should be collected from as many hospitals as possible. Multivariate hospital cost studies are needed to identify important cost drivers that will assist with hospital selection in the future.

Despite renewed enthusiasm for the use of willingness to pay (WTP) in healthcare applications, there are still a lot of objections, resentment and scepticism regarding the desirability and feasibility of this technique. Objections can be classified into different categories: e.g. theoretical, feasibility of measurement, misunderstanding of economic concepts and emotional. In this commentary, I have tried to explain the nature of the 'emotional' objections to the use of WTP. I argue that such objections are not helpful and distract attention from the proper scientific debates about the important topics of theoretical foundation for economic evaluations and feasibility of measurement of individuals' WTP. I believe that some of the emotional objections to WTP stem from perceptions about the relationship between the WTP measure and actual payment for health services. Hence, I discuss the use of the WTP methodology in 2 distinct contexts--cost-benefit analysis (CBA) and market research. Understanding the difference between these 2 most common areas of use will help alleviate objections based on emotions, allow us to use the technique where there seems to be no objections to its use (i.e. market research) and concentrate on the scientific debate where objections exist (i.e. the case of CBA).

Decisions about medical treatment and health programmes involve both technical and value judgements. For the purpose of performing an economic appraisal of different health interventions (including drug interventions), a single global score is essential as the measure of outcome. This measure should enable us to compare different interventions that affect both duration and quality of life at different levels of effect. This article provides a short but critical overview of the most commonly used measure of outcome in such cases--the quality adjusted life years (QALY). We describe the measure and discuss its limitations. More specifically we discuss problems stemming from the fact that QALYs do not fully reflect individual preferences and the fact that different (not necessarily comparable) methods of measurement can be used to generate the weights. We also discuss the issue of the equity implications of the methods used to aggregate the QALY values of individuals to arrive at a community health outcome measure. Our conclusion is that the use of QALY does not coincide with achieving the stated goal of economic evaluations (i.e. efficient allocation of resources to enable maximisation of the health of the community for any given level of resources). An alternative measure of outcome--the healthy years equivalent (HYE), which does not suffer from many of the major limitations associated with the QALY measure--is described and discussed.