Cost-Effectiveness Analysis in Health Intervention Economics
Summary
Cost-effectiveness analysis (CEA) has become an indispensable tool for informing decisions about allocating scarce health resources. By comparing the additional costs and health gains of competing interventions, CEA quantifies value in terms of cost per unit of health benefit – most often quality-adjusted life years (QALYs) or disability-adjusted life years (DALYs). The analysis typically follows a standardised process: defining the decision problem and perspective, identifying and measuring costs and outcomes, modelling long-term health and economic consequences, and applying a cost-effectiveness threshold to judge efficiency. Beyond pure efficiency, modern CEA frameworks incorporate opportunity costs, budget impact, equity considerations and feasibility constraints to guide policy in diverse settings. The establishment of transparent threshold values—based on health opportunity costs or societal willingness to pay—anchors deliberations on which interventions represent best value for money. Such thresholds facilitate priority setting both in high-income health systems and in lower-income contexts striving for universal health coverage. Advances in data availability, dynamic modelling techniques and integration of non-health sector benefits have broadened the scope of CEA, enabling more nuanced analyses of preventive measures, treatment innovations and public health programmes. As global health challenges grow more complex, CEA continues to evolve as a rigorous yet accessible framework to support evidence-informed resource allocation, ensuring that limited budgets yield maximal health improvements and advancing equity across populations.
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Cost-Effectiveness Analysis in Health Intervention Economics publication trend
The graph below shows the total number of articles in cost-effectiveness analysis in health intervention economics across all publications each year (not limited to Nature Index journals).
Technical terms
Incremental cost-effectiveness ratio (ICER): The additional cost per additional health outcome (e.g. QALY) when comparing one intervention with an alternative.
Cost-effectiveness threshold: A benchmark value indicating the maximum acceptable cost per health unit (QALY or DALY) that a health system is willing to pay for an intervention.
Quality-adjusted life year (QALY): A composite measure of health outcome that adjusts life expectancy by quality of life on a scale from 0 (death) to 1 (perfect health).
Disability-adjusted life year (DALY): A measure of disease burden representing years of healthy life lost due to morbidity and premature mortality.
Opportunity cost: The health benefits foregone when resources used for one intervention cannot be deployed elsewhere in the health system.
Net benefit: The monetary valuation of health gains minus intervention costs, facilitating direct comparison across alternatives at a given threshold.
References
- Determining the efficiency path to universal health coverage: cost-effectiveness thresholds for 174 countries based on growth in life expectancy and health expenditures. The Lancet Global Health (2023).
- Aligning opportunity cost and net benefit criteria: the health shadow price. Frontiers in Public Health (2024).
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