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Cost-Effectiveness Thresholds: the Past, the Present and the Future

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Abstract

Cost-effectiveness (CE) thresholds are being discussed more frequently and there have been many new developments in this area; however, there is a lack of understanding about what thresholds mean and their implications. This paper provides an overview of the CE threshold literature. First, the meaning of a CE threshold and the key assumptions involved (perfect divisibility, marginal increments in budget, etc.) are highlighted using a hypothetical example, and the use of historic/heuristic estimates of the threshold is noted along with their limitations. Recent endeavours to estimate the empirical value of the thresholds, both from the supply side and the demand side, are then presented. The impact on CE thresholds of future directions for the field, such as thresholds across sectors and the incorporation of multiple criteria beyond quality-adjusted life-years as a measure of ‘value’, are highlighted. Finally, a number of common issues and misconceptions associated with CE thresholds are addressed.

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Notes

  1. CE thresholds reflecting opportunity costs can also be used to calculate the net benefit of an intervention (i.e. if net health benefit, benefit in terms of health over and above health opportunity costs).

  2. As described earlier, the shadow price of 0.0001818 relates to intervention B and as such is only applicable for a range of budgets between £42 million (i.e. total costs of fully funded A and D) and £64 million (i.e. total costs of fully funded A, D and B).

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Acknowledgements

The authors would like to thank Brian Reddy and Simon Walker for their advice on the Irish threshold and economic evaluation across multiple sectors, respectively.

Funding

This research received no specific grant from any funding agency in the public, commercial, or not-for-profit sectors.

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Authors and Affiliations

  1. Health Economics and Decision Science, School of Health and Related Research, University of Sheffield, Regent Court, 30 Regent Street, Sheffield, S1 4DA, UK

    Praveen Thokala & Thaison Tong

  2. Centre for Health Economics, University of York, Heslington, York, YO10 5DD, UK

    Jessica Ochalek

  3. Center for the Evaluation of Value and Risk in Health (CEVR), Tufts Medical Center, Boston, MA, 02111, USA

    Ashley A. Leech

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  1. Praveen Thokala
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  2. Jessica Ochalek
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Contributions

PT conceived the initial idea for the paper, and all authors (PT, JO, AL, TT) contributed to developing the outline of the paper. TT led on the hypothetical example, including the development of the Microsoft Excel file in the ESM; JO led on the sections on empirical estimates of the supply side threshold; AL led on the section about the WHO-CHOICE guidelines and contributed to the demand side thresholds; and PT led on the remaining sections in the paper. All authors were involved in the multiple revisions of the paper before signing off on the final version.

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Correspondence to Praveen Thokala.

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Praveen Thokala, Jessica Ochalek, Ashley Leech, and Thaison Tong have no conflicts of interest to declare.

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Thokala, P., Ochalek, J., Leech, A.A. et al. Cost-Effectiveness Thresholds: the Past, the Present and the Future. PharmacoEconomics 36, 509–522 (2018). https://doi.org/10.1007/s40273-017-0606-1

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