How Sensitive Are Cost-Effectiveness Analyses to Choice of Parametric Distributions?

Simon G. Thompson and Richard M. Nixon
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Simon G. Thompson: MRC Biostatistics Unit, Institute of Public Health, Cambridge, UK, simon.thompson@mrc-bsu.cam.ac.uk
Richard M. Nixon: MRC Biostatistics Unit, Institute of Public Health, Cambridge, UK

Medical Decision Making, 2005, vol. 25, issue 4, 416-423

Abstract: Background . Cost-effectiveness analyses of clinical trial data are based on assumptions about the distributions of costs and effects. Cost data usually have very skewed distributions and can be difficult to model. The authors investigate whether choice of distribution can make a difference to the conclusions drawn. Methods . The authors compare 3 distributions for cost data—normal, gamma, and lognormal—using similar parametric models for the cost-effectiveness analyses. Inferences on the cost-effectiveness plane are derived, together with cost-effectiveness acceptability curves. These methods are applied to data from a trial of rapid magnetic resonance imaging (rMRI) investigation in patients with low back pain. Results . The gamma and lognormal distributions fitted the cost data much better than the normal distribution. However, in terms of inferences about cost-effectiveness, it was the normal and gamma distributions that gave similar results. Using the lognormal distribution led to the conclusion that rMRI was cost-effective for a range of willingness-to-pay values where assuming a gamma or normal distribution did not. Conclusions . Conclusions from cost-effectiveness analyses are sensitive to choice of distribution and, in particular, to how the upper tail of the cost distribution beyond the observed data is modeled. How well a distribution fits the data is an insufficient guide to model choice. A sensitivity analysis is therefore necessary to address uncertainty about choice of distribution.

Keywords: cost-effectiveness analysis; parametric methods; distributional assumptions; sensitivity analysis; robustness (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:medema:v:25:y:2005:i:4:p:416-423

DOI: 10.1177/0272989X05276862

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