Dealing with Bad Risk in Cost-Effectiveness Analysis: The Cost-Effectiveness Risk-Aversion Curve

Pedram Sendi ()
Additional contact information
Pedram Sendi: Basel University Hospital

PharmacoEconomics, 2021, vol. 39, issue 2, No 3, 169 pages

Abstract: Abstract Cost-effectiveness analysis has been advocated and is widely used to inform policy and decision makers in setting priorities for resource allocation. Since the costs and effects of health care interventions are uncertain, much research interest has focused on handling uncertainty in cost-effectiveness analysis. The most widely used method to summarize uncertainty in cost-effectiveness analysis is the cost-effectiveness acceptability curve, which estimates the probability that an intervention is cost effective for a wide range of threshold ratios. However, by estimating the uncertainty associated with incremental costs and effects, information about the uncertainty associated with the costs and effects of the individual programs is lost, which may be important to inform risk-averse decision makers. In the present paper, we suggest to penalize the expected net monetary benefit (NMB) of a program for its downside risk (i.e. bad risk), which preserves the uncertainty of the individual programs and rank orders programs according to their risk-adjusted NMB. The cost-effectiveness risk-aversion curve (CERAC) is introduced, which estimates the net benefit-to-risk ratio for a wide range of threshold rations. The CERAC is a helpful additional tool to inform decision and policy makers who are risk averse, and can easily be constructed using the results of a cost-effectiveness analysis.

Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s40273-020-00969-5 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:pharme:v:39:y:2021:i:2:d:10.1007_s40273-020-00969-5

Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/40273

DOI: 10.1007/s40273-020-00969-5

Access Statistics for this article

PharmacoEconomics is currently edited by Timothy Wrightson and Christopher I. Carswell

More articles in PharmacoEconomics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().