An Introduction to Economic Evaluation: What's in a Name?

Objective: This paper describes the main types of economic evaluation techniques. Method: To examine the strengths and limitations of different types of economic evaluations, we used a hypothetical example to review the reasoning underlying each method and to illustrate when it is appropriate to use each method. Results: The choice of economic evaluation method reflects a decision about what should represent "success" and how success should be valued. Measures of benefit and cost must be considered systematically and simultaneously. Claiming that a new treatment is cost-effective requires making a value judgment based on the personal beliefs of the claimant. Even when cost and effect data are objective, a verdict of cost-effective is subjective. The conclusions of an economic study can change significantly, depending on which patient outcome is used to measure success. Conclusions: Clinicians must be sure that important patient outcomes are not excluded from economic evaluations. Economic evaluation is a process designed to produce an estimate rather than a decision. New treatment can be more costly and still be cost-effective (if the extra benefit is valued more than the extra cost to produce it). However, since economic evaluation does not explicitly consider a decision maker's available budget, a new treatment can be deemed cost-effective but too expensive to approve.