Blackwell Science, LtdOxford, UKVHEValue in Health1098-30152004 ISPOR75518528Original ArticleCost-Effectiveness ThresholdsEichler et al.
Volume 7 • Number 5 • 2004
VALUE IN HEALTH
Use of Cost-Effectiveness Analysis in Health-Care Resource
Allocation Decision-Making: How Are Cost-Effectiveness
Thresholds Expected to Emerge?
Hans-Georg Eichler, MD, MS,1,2 Sheldon X. Kong, PhD,2 William C. Gerth, MBA,2
Panagiotis Mavros, PhD,2 Bengt Jönsson, PhD3
1
2
Vienna Center for Pharmaceutical Policy, Department of Clinical Pharmacology, Medical University of Vienna, Vienna, Austria;
Outcomes Research, Merck & Co., Whitehouse Station, NJ, USA; 3Stockholm School of Economics, Stockholm, Sweden
ABST R ACT
Background: An increasing number of health-care systems, both public and private, such as managed-care
organizations, are adopting results from cost-effectiveness
(CE) analysis as one of the measures to inform decisions
on allocation of health-care resources. It is expected that
thresholds for CE ratios may be established for the
acceptance of reimbursement or formulary listing.
Objective: This paper provides an overview of the development of and debate on CE thresholds, reviews threshold figures (i.e., cost per unit of health gain) currently
proposed for or applied to resource-allocation decisions,
and explores how thresholds may emerge.
Discussion: At the time of this review, there is no evidence from the literature that any health-care system has
yet implemented explicit CE ratio thresholds. The fact
that some government agencies have utilized results from
CE analysis in pricing/reimbursement decisions allows for
retrospective analysis of the consistency of these decisions. As CE analysis becomes more widely utilized in
assisting health-care decision-making, this may cause
decision-makers to become increasingly consistent.
Conclusions: When CE analysis is conducted, wellestablished methodology should be used and transparency should be ensured. CE thresholds are expected to
emerge in many countries, driven by the need for transparent and consistent decision-making. Future thresholds
will likely be higher in most high-income countries than
currently cited rules of thumb.
Keywords: cost-effectiveness, decision making, efficiency,
health economics, health care, thresholds.
Introduction
decisions by formal health-economic analysis, the
most popular approach currently being the costeffectiveness (CE) analysis. This is frequently used
in decision making in some countries, for example,
Australia, Canada, Sweden, and the United Kingdom (UK). In most other countries, formal economic analysis is not yet a key input into the
decision-making process [1]. However, there is an
increasing awareness that resource allocation must
be addressed in a systematic rather than intuitive
manner. Several countries have recently introduced
guidelines or legislation to mandate CE assessment
of at least some aspects of health care, most often
for the reimbursement of pharmaceuticals [2].
It is therefore reasonable to expect that decisions
about resource allocation will increasingly rely on
CE analysis. Inevitably, this will call for more transparency and consistency in the decision-making
process and, in turn, for the definition of what policymakers regard as an “acceptable threshold” of
cost-effectiveness below which they will make avail-
Identifying the optimal allocation of available
resources to maximize health will be the key challenge to health-care systems such as government
agencies and managed-care organizations over the
next decade. Medical research is expected to continue to produce an ever-increasing number of alternatives for the detection, prevention, and treatment
of diseases. However, budgetary constraints will not
allow health-care systems to make all of these available for everybody. This is probably recognized by
health-care decision-makers in many countries, but
their response to the challenge is, as yet, heterogeneous. Some have implemented an explicit or semiexplicit approach to guiding resource-allocation
Address correspondence to: Hans-Georg Eichler, Department
of Clinical Pharmacology, Medical University of Vienna,