Abstract

Background

Recent policy developments and journal articles have emphasized a divergence: when interventions are found to be cost-effective but unaffordable. This apparent paradox reflects a conventional practice of cost-effectiveness analysis that does not properly evaluate the opportunity costs of an intervention that imposes non-marginal costs on the healthcare system.

Objective

Taking the perspective of an exogenously resource constrained decision maker, this paper presents a framework by which concerns for affordability can be appropriately incorporated within cost-effectiveness analysis.

Methods

A net benefit framework is proposed where health opportunity costs are estimated for each simulation iteration within each time period. The framework is applied to a hypothetical case study based on the recent experience of the English NHS with new hepatitis C drugs.

Results

Under the proposed framework, but not under conventional cost-effectiveness analysis, estimates of health opportunity costs differ between scenarios involving different profiles of budget impact even when their net present value, or expected value, are the same.

Conclusions

The framework presented here reflects the importance of the scale of budget impacts along with their uncertainty distribution and time profile. In doing so it resolves issues with the conduct of conventional cost-effectiveness analysis where affordability concerns are not explicitly incorporated.