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# Costutility analysis

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##  CUA in health economics

In health economics the purpose of CUA is to estimate the ratio between the cost of a healthrelated intervention and the benefit it produces in terms of the number of years lived in full health by the beneficiaries. Hence it can be considered a special case of cost-effectiveness analysis, and the two terms are often used interchangeably. Cost is measured in monetary units. Benefit needs to be expressed in a way that allows health states that are considered less preferable to full health to be given quantitative values. However, unlike costbenefit analysis, the benefits do not have to be expressed in monetary terms. In HTAs it is usually expressed in quality-adjusted life years (QALYs). If, for example, intervention A allows a patient to live for three additional years than if no intervention had taken place, but only with a quality of life weight of 0.6, then the intervention confers 3 * 0.6 = 1.8 QALYs to the patient. If intervention B confers two extra years of life at a quality of life weight of 0.75, then it confers an additional 1.5 QALYs to the patient. The net benefit of intervention A over intervention B is therefore 1.8 1.5 = 0.3 QALYs. The incremental cost-effectiveness ratio (ICER) is the ratio between the difference in costs and the difference in benefits of two interventions. The ICER may be stated as (C1 C0)/(E1 E0) in a simple example where C0 and E0 represent the cost and gain, respectively, from taking no health intervention action. C1 and E1 would represent the cost and gain, respectively of taking a specific action. So, an example in which the costs and gains, respectively, are \$140,000 and 3.5, would yield a value of \$40,000. These values are often used by policy makers and hospital administrators to determine relative priorities when determining treatments for disease conditions. It is important to note that CUA measures

relative patient or general population utility of a treatment or pharmacoeconomic intervention. Its results give no absolute indicator of the value of a certain treatment. The National Institute for Health and Clinical Excellence (NICE) is part of the National Health Service (NHS) in the UK and has been using QALYs to measure the health benefits delivered by various treatment regimens. There is some question as to how well coordinated NICE and NHS are in making decisions about resource allocation. According to a recent study cost effectiveness often does not appear to be the dominant consideration in decisions about resource allocation made elsewhere in the NHS.[1] While QALYs are used in the United States, they are not utilized to the same degree as they are in Europe. In the United Kingdom, as of January 2005, the (NICE) is believed to have a threshold of about 30,000 per QALY roughly twice the mean income after tax although a formal figure has never been made public [2] Thus, any health intervention which has an incremental cost of more than 30,000 per additional QALY gained is likely to be rejected and any intervention which has an incremental cost of less than or equal to 30,000 per extra QALY gained is likely to be accepted as cost-effective. This implies a value of a full life of about 2.4 million. In North America, a similar figure of US\$50000 per QALY is often suggested as a threshold ICER for a cost-effective intervention. A complete compilation of costutility analyses in the peer reviewed medical literature is available at the CEA Registry Website