A multiple account framework for cost-benefit analysis

The paper presents a spreadsheet-based multiple account framework for cost-benefit analysis which incorporates all the usual concerns of cost-benefit analysts such as shadow-pricing to account for market failure. distribution of net benefits. sensitivity and risk analysis, cost of public funds, and environmental effects. The approach is generalizable to a wide range of projects and situations and offers a number of advantages to both analysts and decision-makers, including transparency, a check on internal consistency, and a detailed summary of project net benefits disaggregated by stakeholder group. Of particular importance is the ease with which this framework allows for a project to be evaluated from alternative decision-making perspectives and under alternative policy scenarios where the trade-offs among the project's stakeholders can readily be identified and quantified. (C) 2004 Elsevier Ltd. All rights reserved.

Cost-benefit analyses for your group and yourself: The rationality of decision-making in conflict

Two studies in the context of English-French relations in Québec suggest that individuals who strongly identify with a group derive the individual-level costs and benefits that drive expectancy-value processes (rational decision-making) from group-level costs and benefits. In Study 1, high identifiers linked group- and individual-level outcomes of conflict choices whereas low identifiers did not. Group-level expectancy-value processes, in Study 2, mediated the relationship between social identity and perceptions that collective action benefits the individual actor and between social identity and intentions to act. These findings suggest the rational underpinnings of identity-driven political behavior, a relationship sometimes obscured in intergroup theory that focuses on cognitive processes of self-stereotyping. But the results also challenge the view that individuals' cost-benefit analyses are independent of identity processes. The findings suggest the importance of modeling the relationship of group and individual levels of expectancy-value processes as both hierarchical and contingent on social identity processes

Normative influence and rational conflict decisions: Group norms and cost-benefit analyses for intergroup behavior

The present paper articulates a model in which ingroup and outgroup norms inform 'rational' decision-making (cost-benefit analysis) for conflict behaviors. Norms influence perceptions of the consequences of the behavior, and individuals may thus strategically conform to or violate norms in order to acquire benefits and avoid costs. Two studies demonstrate these processes in the context of conflict in Quebec. In the first study, Anglophones' perceptions of Francophone and Anglophone norms for pro-English behaviors predicted evaluations of the benefits and costs of the behaviors, and these cost-benefit evaluations in turn mediated the norm-intention links for both group norms. In the second study, a manipulated focus on supportive versus hostile ingroup and outgroup norms also predicted cost-benefit evaluations, which mediated the norm-intention relationships. The studies support a model of strategic conflict choices in which group norms inform, rather than suppress, rational expectancy value processes. Implications for theories of decision-making and normative influence are discussed.

Probabilistic cost benefit analysis of generation investment in a deregulated electricity market

A new methodology is proposed for the analysis of generation capacity investment in a deregulated market environment. This methodology proposes to make the investment appraisal using a probabilistic framework. The probabilistic production simulation (PPC) algorithm is used to compute the expected energy generated, taking into account system load variations and plant forced outage rates, while the Monte Carlo approach has been applied to model the electricity price variability seen in a realistic network. The model is able to capture the price and hence the profitability uncertainties for generator companies. Seasonal variation in the electricity prices and the system demand are independently modeled. The method is validated on IEEE RTS system, augmented with realistic market and plant data, by using it to compare the financial viability of several generator investments applying either conventional or directly connected generator (powerformer) technologies. The significance of the results is assessed using several financial risk measures.

Assessing cost-effectiveness of drug interventions for schizophrenia

Objective: To assess from a health sector perspective the incremental cost-effectiveness of eight drug treatment scenarios for established schizophrenia. Method: Using a standardized methodology, costs and outcomes are modelled over the lifetime of prevalent cases of schizophrenia in Australia in 2000. A two-stage approach to assessment of health benefit is used. The first stage involves a quantitative analysis based on disability-adjusted life years (DALYs) averted, using best available evidence. The robustness of results is tested using probabilistic uncertainty analysis. The second stage involves application of 'second filter' criteria (equity, strength of evidence, feasibility and acceptability) to allow broader concepts of benefit to be considered. Results: Replacing oral typicals with risperidone or olanzapine has an incremental cost-effectiveness ratio (ICER) of A$48 000 and A$92 000/DALY respectively. Switching from low-dose typicals to risperidone has an ICER of A$80 000. Giving risperidone to people experiencing side-effects on typicals is more cost-effective at A$20 000. Giving clozapine to people taking typicals, with the worst course of the disorder and either little or clear deterioration, is cost-effective at A$42 000 or A$23 000/DALY respectively. The least cost-effective intervention is to replace risperidone with olanzapine at A$160 000/DALY. Conclusions: Based on an A$50 000/DALY threshold, low-dose typical neuroleptics are indicated as the treatment of choice for established schizophrenia, with risperidone being reserved for those experiencing moderate to severe side-effects on typicals. The more expensive olanzapine should only be prescribed when risperidone is not clinically indicated. The high cost of risperidone and olanzapine relative to modest health gains underlie this conclusion. Earlier introduction of clozapine however, would be cost-effective. This work is limited by weaknesses in trials (lack of long-term efficacy data, quality of life and consumer satisfaction evidence) and the translation of effect size into a DALY change. Some stakeholders, including SANE Australia, argue the modest health gains reported in the literature do not adequately reflect perceptions by patients, clinicians and carers, of improved quality of life with these atypicals.

Incremental cost-effectiveness of exercise echocardiography vs. SPECT imaging for the evaluation of stable chest pain

Aims Technological advances in cardiac imaging have led to dramatic increases in test utilization and consumption of a growing proportion of cardiovascular healthcare costs. The opportunity costs of strategies favouring exercise echocardiography or SPECT imaging have been incompletely evaluated. Methods and results We examined prognosis and cost-effectiveness of exercise echocardiography (n=4884) vs. SPECT (n=4637) imaging in stable, intermediate risk, chest pain patients. Ischaemia extent was defined as the number of vascular territories with echocardiographic wall motion or SPECT perfusion abnormalities. Cox proportional hazard models were employed to assess time to cardiac death or myocardial infarction (MI). Total cardiovascular costs were summed (discounted and inflation-corrected) throughout follow-up. A cost-effectiveness ratio = 2% annual event risk), SPECT ischaemia was associated with earlier and greater utilization of coronary revascularization (P < 0.0001) resulting in an incremental cost-effectiveness ratio of $32 381/LYS. Conclusion Health care policies aimed at allocating limited resources can be effectively guided by applying clinical and economic outcomes evidence. A strategy aimed at cost-effective testing would support using echocardiography in low-risk patients with suspected coronary disease, whereas those higher risk patients benefit from referral to SPECT imaging.

Cost-effectiveness of combination peginterferon alpha-2a and ribavirin compared with interferon alpha-2b and ribavirin in patients with chronic hepatitis C

BACKGROUND: Sustained virological response (SVR) is the primary objective in the treatment of chronic hepatitis C (CHC). Results from a recent clinical trial of patients with previously untreated CHC demonstrate that the combination of peginterferon alpha-2a and ribavirin produces a greater SVR than interferon alpha-2b and ribavirin combination therapy. However, the cost-effectiveness of peginterferon alpha-2a plus ribavirin in the U.S. setting has not been investigated. METHODS: A Markov model was developed to investigate cost-effectiveness in patients with CHC using genotype to guide treatment duration. SVR and disease progression parameters were derived from the clinical trials and epidemiologic studies. The impact of treatment on life expectancy and costs were projected for a lifetime. Patients who had an SVR were assumed to remain virus-free for the rest of their lives. In genotype 1 patients, the SVRs were 46% for peginterferon alpha-2a plus ribavirin and 36% for interferon alpha-2b plus ribavirin. In genotype 2/3 patients, the SVRs were 76% for peginterferon alpha-2a plus ribavirin and 61% for interferon alpha-2b plus ribavirin. Quality of life and costs were based on estimates from the literature. All costs were based on published U.S. medical care costs and were adjusted to 2003 U.S. dollars. Costs and benefits beyond the first year were discounted at 3%. RESULTS: In genotype 1, peginterferon alpha-2a plus ribavirin increases quality-adjusted life expectancy (QALY) by 0.70 yr compared to interferon alpha-2b plus ribavirin, producing a cost-effectiveness ratio of $2,600 per QALY gained. In genotype 2/3 patients, peginterferon alpha-2a plus ribavirin increases QALY by 1.05 yr in comparison to interferon alpha-2b plus ribavirin. Peginterferon alpha-2a combination therapy in patients with HCV genotype 2 or 3 is dominant (more effective and cost saving) compared to interferon alpha-2b plus ribavirin. Results weighted by genotype prevalence (75% genotype 1; 25% genotype 2 or 3) also show that peginterferon alpha-2a plus ribavirin is dominant. Peginterferon alpha-2a and ribavirin remained cost-effective (below $16,500 per QALY gained) under sensitivity analyses on key clinical and cost parameters. CONCLUSION: Peginterferon alpha-2a in combination with ribavirin with duration of therapy based on genotype, is cost-effective compared with conventional interferon alpha-2b in combination with ribavirin when given to treatment-naive adults with CHC.

Assessing cost-effectiveness in mental health: vocational rehabilitation for schizophrenia and related conditions

Objective: Existing evidence suggests that vocational rehabilitation services, in particular individual placement and support (IPS), are effective in assisting people with schizophrenia and related conditions gain open employment. Despite this, such services are not available to all unemployed people with schizophrenia who wish to work. Existing evidence suggests that while IPS confers no clinical advantages over routine care, it does improve the proportion of people returning to employment. The objective of the current study is to investigate the net benefit of introducing IPS services into current mental health services in Australia. Method: The net benefit of IPS is assessed from a health sector perspective using cost-benefit analysis. A two-stage approach is taken to the assessment of benefit. The first stage involves a quantitative analysis of the net benefit, defined as the benefits of IPS (comprising transfer payments averted, income tax accrued and individual income earned) minus the costs. The second stage involves application of 'second-filter' criteria (including equity, strength of evidence, feasibility and acceptability to stakeholders) to results. The robustness of results is tested using the multivariate probabilistic sensitivity analysis. Results: The costs of IPS are $A10.3M (95% uncertainty interval $A7.4M-$A13.6M), the benefits are $A4.7M ($A3.1M-$A6.5M), resulting in a negative net benefit of $A5.6M ($A8.4M-$A3.4M). Conclusions: The current analysis suggests that IPS costs are greater than the monetary benefits. However, the evidence-base of the current analysis is weak. Structural conditions surrounding welfare payments in Australia create disincentives to full-time employment for people with disabilities.

Cost-effectiveness of cognitive-behavioural therapy and drug interventions for major depression

Objective: Antidepressant drugs and cognitive-behavioural therapy (CBT) are effective treatment options for depression and are recommended by clinical practice guidelines. As part of the Assessing Cost-effectiveness - Mental Health project we evaluate the available evidence on costs and benefits of CBT and drugs in the episodic and maintenance treatment of major depression. Method: The cost-effectiveness is modelled from a health-care perspective as the cost per disability-adjusted life year. Interventions are targeted at people with major depression who currently seek care but receive non-evidence based treatment. Uncertainty in model inputs is tested using Monte Carlo simulation methods. Results: All interventions for major depression examined have a favourable incremental cost-effectiveness ratio under Australian health service conditions. Bibliotherapy, group CBT, individual CBT by a psychologist on a public salary and tricyclic antidepressants (TCAs) are very cost-effective treatment options falling below $A10 000 per disability-adjusted life year (DALY) even when taking the upper limit of the uncertainty interval into account. Maintenance treatment with selective serotonin re-uptake inhibitors (SSRIs) is the most expensive option (ranging from $A17 000 to $A20 000 per DALY) but still well below $A50 000, which is considered the affordable threshold. Conclusions: A range of cost-effective interventions for episodes of major depression exists and is currently underutilized. Maintenance treatment strategies are required to significantly reduce the burden of depression, but the cost of long-term drug treatment for the large number of depressed people is high if SSRIs are the drug of choice. Key policy issues with regard to expanded provision of CBT concern the availability of suitably trained providers and the funding mechanisms for therapy in primary care.

Cost-effectiveness analysis of a kidney and cardiovascular disease treatment program in an Australian aboriginal population

The objective of the study was to assess, from a health service perspective, whether a systematic program to modify kidney and cardiovascular disease reduced the costs of treating end-stage kidney failure. The participants in the study were 1,800 aboriginal adults with hypertension, diabetes with microalbuminuria or overt albuminuria, and overt albuminuria, living on two islands in the Northern Territory of Australia during 1995 to 2000. Perindopril was the primary treatment agent, and other medications were also used to control blood pressure. Control of glucose and lipid levels were attempted, and health education was offered. Evaluation of program resource use and costs for follow-up periods was done at 3 and 4.7 years. On an intention-to-treat basis, the number of dialysis starts and dialysis-years avoided were estimated by comparing the fate of the treatment group with that of historical control subjects, matched for disease severity, who were followed in the before the treatment program began. For the first three years, an estimated 11.6 person-years of dialysis were avoided, and over 4.7 years, 27.7 person-years of dialysis were avoided. The net cost of the program was $1,210 more per person per year than status quo care, and dialyses avoided gave net savings of $1.0 million at 3 years and $3.4 million at 4.6 years. The treatment program provided significant health benefit and impressive cost savings in dialysis avoided. (C) 2005 by the National Kidney Foundation, Inc.

Evidence-based medicine is affordable: The cost-effectiveness of current compared with optimal treatment in rheumatoid and osteoarthritis

Objective. To determine the cost-effectiveness of averting the burden of disease. We used secondary population data and metaanalyses of various government-funded services and interventions to investigate the costs and benefits of various levels of treatment for rheumatoid arthritis (RA) and osteoarthritis (OA) in adults using a burden of disease framework. Method. Population burden was calculated for both diseases in the absence of any treatment as years lived with disability (YLD), ignoring the years of life lost. We then estimated the proportion of burden averted with current interventions, the proportion that could be averted with optimally implemented cut-rent evidence-based guidelines, and the direct treatment cost-effectiveness ratio in dollars per YLD averted for both treatment levels. Results. The majority of people with arthritis sought medical treatment. Current treatment for RA averted 26% of the burden, with a cost-effectiveness ratio of $19,000 per YLD averted. Optimal, evidence-based treatment would avert 48% of the burden. with a cost-effectiveness ratio of $12,000 per YLD averted. Current treatment of OA in Australia averted 27% of the burden, with a cost-effectiveness ratio of $25,000 per YLD averted. Optimal, evidence-based treatment would avert 39% of the burden, with an unchanged cost-effectiveness ratio of $25,000 per YLD averted. Conclusion. While the precise dollar costs in each country will differ, the relativities at this level of coverage should remain the same. There is no evidence that closing the gap between evidence and practice would result in a drop in efficiency.