Cost–Benefit Analysis and Health Care Evaluations
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Cost–Benefit Analysis and Health Care Evaluations

Robert J. Brent

Cost–benefit analysis is the only method of economic evaluation which can effectively indicate whether a health care treatment or intervention is worthwhile. This book attempts to build a bridge between cost–benefit analysis, as developed by economists, and the health care evaluation literature which relies on other evaluation approaches such as cost-minimization, cost-effectiveness analysis and cost–utility analysis.
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Chapter 10: Cost–Utility Analysis and Equity

Robert J. Brent


10.1 INTRODUCTION The QALYs that have been constructed so far have been built on the assumption that everyone’s QALYs are valued the same. In this chapter we analyze why and how to value individual or group QALYs differently. A major way that unequally weighted QALYs were introduced into CUA was via outcomes measured in terms of Disability Adjusted Life Years (DALYs). We cover DALYs in section 10.2 after we have clarified the meaning of equity and the role of QALY weights. DALYs give different weights to different age groups. Section 10.3 discusses the general issue of QALYs and age discrimination (ageism). DALYs rely on a different instrument for measuring utilities, that is, the person trade-off (PTO) method. The case for and against the PTO method in CUA is presented in section 10.4. The applications cover evaluations based on DALYs and the estimation of weights using the PTO method. 10.1.1 Equity in CUA Assuming costs are the same, Wagstaff (1991) associates the situation where person 1 gains more QALYs from treatment than person 2 as signifying that person 1 has a greater capacity to benefit from treatment. If one defines equity as requiring that people who ‘need’ treatment get treatment, then capacity to benefit is not sufficient for equity. For Wagstaff, following Williams (1974), interprets someone ‘needing treatment’ as meaning that the treatment is required to reach some socially desired improvement in health. Persons dying from thirst in the desert can be...

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