1. Imagine the following 5 possible treatments with their costs and effectiveness measured in expected life extensions.
Treatment | Costs | Years |
1 |
10 | 0.6 |
2 | 20 | 1.0 |
3 | 25 | 1.2 |
4 | 25 | 0.8 |
5 | 30 | 1.0 |
A) Plot all treatments and draw the Cost Effectiveness Frontier and describe what it shows.
B) What is ICER for treatmet 2, as compared with, treatment 1? How would a policy maker use this cost effectiveness information by itself?
C) Imagine the value of life was 20 per year. What is the cost-beneficial treatment?
a)
Cost effectivebess frontier shows that treatment 1,2 &3 lie on the frontier while treatment 4 & 5 are not on frontier. Treatment 4 has equivalent cost ot treatment 3 but has less years. Treatment 5 has same years like treatment 2 but less cost.
b)
ICER for treatment 2 = (Cost of treatment 2 - Cost of treatment 1) / (Years treatment 2 - years treatment 1)
=(20-10)/(1-0.6) = 10/0.4 = 25
Cost effectiveness information can help comparing two alternatives and select the best one.
c)
Treatment 1 is most cost beneficial treatment.
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