Cost-Effectiveness Analysis When the Willingness to Accept is Greater Than the Willingness to Pay

Abstract

There are three approaches to health economic evaluation for comparing two therapies: cost minimization, incremental cost-effectiveness ratios (ICER), and incremental net benefit (INB). Of the three, the ICER method has long been the standard in the assessment of the cost-effectiveness analysis of a new treatment. However, due to concerns with interpretability and statistical inference inherent to the ICER statistic and its confidence intervals, authors have suggested the use of incremental net benefit (INB) approach as an alternative. The INB can be expressed either in units of effectiveness or costs. When analyzing data from a clinical trial, expressing incremental net benefit in units of cost allows the investigator to examine all three approaches in a single graph, complete with the corresponding statistical inferences. Furthermore, if costs and effectiveness are not censored, this can be achieved using common statistical procedures. The standard INB analysis assumes that the willingness-to-accept (WTA) compensation for the loss of a unit of health benefit (at some cost saving) is the same as the willingness-to-pay (WTP) for it. Theoretical and empirical evidence suggest, however, that in health care the WTA is about twice the WTP. In this thesis we show that the method of INB analysis can be adapted to capture the WTA vs WTP disparity. Using the Bayesian theory, statistical procedures are provided for the cost-effectiveness analysis in the comparison of two arms of a randomized clinical trial that allows WTA and WTP to have different values. An example that adjusts the disparity between WT A and WTP is provided.