Cost Effectiveness

Definition

Improvement in the benefits of a program relative to its cost. 

Rationale

Cost effectiveness is used as an analytic tool to assess which medical care should be provided by comparing the cost and effectiveness of different interventions such as drugs and devices. It helps to inform healthcare decision-making as to allocation of funding and finding ways to deliver healthcare more efficiently.

Guidance

Advice from authors on searching for information:

Cost savings and cost effectiveness are distinct concepts that are often confused or used interchangeably. Newly developed and established drugs, procedures, and other interventions that decrease costs is cost saving. However, if the benefits provided by the drugs, procedures, and other interventions are sufficient, the intervention is considered to be cost-effective even if costs are not reduced.  Refer to the Robert Wood Johnson Foundation Cost Savings and Cost-Effectiveness of Clinical Preventive Care policy brief for more information.    

Groups such as government agencies (federal, state and local), institutions, professional societies, governing boards, or expert panels, can conduct cost effectiveness analyses.  Cost effective analyses are also conducted by non-governmental agencies such as hospitals, schools or specialty organizations. Consult the website of pertinent organizations for analyses related to a disease, disorder or condition.

Resources & Data

Organizations, repositories, websites, and other sources where you can find more information:

The Institute for Clinical and Economic Review (ICER) 
ICER contains resources and research related to cost effectiveness research.

The Tufts Medical Center Cost-Effectiveness Analysis (CEA) Registry.
The CEA Registry is a comprehensive database of 5,655 cost-utility analyses on a wide variety of diseases and treatments. See
 What is the CEA Registry? for guidance.

Data Limitations

Challenges you may encounter while searching for information:

Cost effectiveness research by nature is focused on a specific topic such as cardiology or vaccines. Studies may not be available for all topics. 

Publications

Articles, books, and other publications in translational science using the indicator:

Cost-Effectiveness Analysis. In: Jamison DT, Breman JG, Measham AR, et al., editors. Priorities in Health. Washington (DC): The International Bank for Reconstruction and Development/The World Bank; 2006. 

Neumann PJ, Sanders GD, Russell LB, Siegel JE, Ganiats TG, editors. Cost-Effectiveness in Health and Medicine, 2nd edition. Oxford; New York: Oxford University Press; 2017.

Russell L. The Science of Making Better Decisions About Health: Cost-Effectiveness and Cost-Benefit Analysis. 2014. Working Paper 2014-06. New Brunswick, NJ: Rutgers University Department of Economics; 2014.

Case Studies

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