Economic Evaluation in Health Technology Assessment

Economic evaluation within health technology assessment underpins systematic appraisal of the costs and outcomes associated with new and existing health interventions. By comparing alternative courses of action in terms of economic and clinical consequences, analysts inform decisions on resource allocation, pricing and reimbursement. Core approaches include cost–effectiveness analysis, cost–utility analysis and, less commonly, cost–benefit analysis. Each method integrates direct healthcare costs, and sometimes wider societal costs, with measures of health benefit, often expressed in quality-adjusted life years or other utility-based metrics. Methodological rigour is achieved through transparent specification of perspective, time horizon, discounting and model structure, whether built on trial data or synthesised evidence. Sensitivity and uncertainty analyses explore the robustness of results to key assumptions, while emerging techniques encompass probabilistic models, value-of-information analysis and dynamic modelling. In a global context of constrained budgets and rising demands, economic evaluations enable health systems to identify interventions that maximise value for money, guide pricing negotiations and support equitable access to effective technologies.

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Economic Evaluation in Health Technology Assessment publication trend

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Technical terms

Cost–effectiveness analysis (CEA): A method comparing relative costs and health outcomes of two or more interventions to assess value for money.

Quality-adjusted life year (QALY): A measure that combines length of life and health-related quality of life into a single index.

Incremental cost-effectiveness ratio (ICER): The additional cost per additional unit of health gain when comparing two interventions.

Perspective: The viewpoint adopted in an analysis, determining which costs and outcomes are included (for example, healthcare system or societal).

Sensitivity analysis: Techniques used to assess how results change with variation in key parameters or assumptions.

References

1. How health technology assessment can help to address challenges in drug repurposing: a conceptual framework. Drug Discovery Today (2024).
2. Consolidated Health Economic Evaluation Reporting Standards (CHEERS) 2022 Explanation and Elaboration: A Report of the ISPOR CHEERS II Good Practices Task Force. Value in Health (2022).
3. Perspective and Costing in Cost-Effectiveness Analysis, 1974–2018. PharmacoEconomics (2020).