Skip to main content
SpringerLink
Log in

Unrelated Medical Costs in Life-Years Gained

Should They be Included in Economic Evaluations of Healthcare Interventions?

  • Current Opinion
  • Published:
PharmacoEconomics Aims and scope Submit manuscript

Abstract

Which costs and benefits to consider in economic evaluations of healthcare interventions remains an area of much controversy. Unrelated medical costs in life-years gained is an important cost category that is normally ignored in economic evaluations, irrespective of the perspective chosen for the analysis. National guidelines for pharmacoeconomic research largely endorse this practice, either by explicitly requiring researchers to exclude these costs from the analysis or by leaving inclusion or exclusion up to the discretion of the analyst. However, the inclusion of unrelated medical costs in life-years gained appears to be gaining support in the literature.

This article provides an overview of the discussions to date. The inclusion of unrelated medical costs in life-years gained seems warranted, in terms of both optimality and internal and external consistency. We use an example of a smoking-cessation intervention to highlight the consequences of different practices of accounting for costs and effects in economic evaluations. Only inclusion of all costs and effects of unrelated medical care in life-years gained can be considered both internally and externally consistent. Including or excluding unrelated future medical costs may have important distributional consequences, especially for interventions that substantially increase length of life. Regarding practical objections against inclusion of future costs, it is important to note that it is becoming increasingly possible to accurately estimate unrelated medical costs in life-years gained. We therefore conclude that the inclusion of unrelated medical costs should become the new standard.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Table I

Similar content being viewed by others

Notes

  1. However, it must be noted that the debate does continue.[20]

  2. While we do not wish to fully address here which perspective is most appropriate, it is clear that some costs may be more relevant for healthcare decision makers than others.[22] On the other hand, simply and completely leaving certain costs out of an economic evaluation may still be considered a short-sighted strategy.

  3. Those costs in normal life-years unrelated to the intervention are normally excluded from the analysis, since these costs are independent of changes in length and quality of life (QOL) due to the intervention under study. Therefore, these costs are generally the same for all treatment strategies and cancel out.

  4. It should be noted that the cost categorization outlined here is common but certainly not perfect or complete. For example, during life-years gained, people may also require informal care, which would be something like ‘indirect direct non-medical costs’, etc. It appears to becoming more common to use less aggregate cost categories (e.g. productivity costs, informal care, travel costs, etc.) with more meaningful labels.

  5. Note that Meltzer[18] extends the discussion by also arguing in favour of including all future non-medical costs, such as survivor consumption and survivor earnings.

  6. The latter would normally result in more work and a less favourable ICER, which casts some doubt on whether researchers have incentives to include these costs when it is not a requirement.

  7. We do not wish to dwell on this point here, but some have argued that since the utility measure (i.e. the QALY) in health economic evaluations is defined rather narrowly, one might argue that a more narrow consideration of costs would also be appropriate.[11,36]

  8. The two other criteria are “Exclude the costs of those resources that produce utility that is not being measured in the denominator, even though the costs are causally associated with the intervention” and “Include the costs of those resources consumed that are causally related to the intervention, but that have no countervailing utility gains.”[11]

  9. As was pointed out by one of the anonymous reviewers of our article, scarcity may also enter the equation via the use of utility functions including leisure.[18]

  10. As mentioned previously (section 1), the issue of inclusion of unrelated medical costs is largely independent of the perspective adopted.

  11. Note that the percentage of QALYs gained attributable to unrelated medical care depends on both the intervention and population.[13] Varying this percentage from 25% to 75% resulted in ratios ranging from €5 800 to €1 900 per QALY gained in scenario 1 and from €3 700 to €1 200 per QALY gained in scenario 2.

  12. In the smoking-cessation example, discounting was applied according to the recommendations in the Dutch guidelines for pharmacoeconomic research;[14] costs were discounted at a rate of 4%, while effects — in terms of QALYs — were discounted at 1.5%.

  13. This issue is part of a broader discussion about the welfare theoretic foundation of QALYs, i.e. whether QALYs can be interpreted as utilities.[36]

References

  1. Drummond MF, Sculpher MJ, Torrance GW, et al. Methods for the economic evaluation of health care programmes. 3rd ed. New York: Oxford University Press Inc, 2005

    Google Scholar 

  2. Gold MR, Siegel JE, Russel LB, et al., editors. Cost-effectiveness in health and medicine. Oxford: Oxford University Press, 1996

    Google Scholar 

  3. Johannesson M. A note on the depreciation of the societal perspective in economic evaluation of health care. Health Policy 1995; 33: 59–66

    Article  PubMed  CAS  Google Scholar 

  4. National Institute for Health and Clinical Excellence. Guide to the methods of technology appraisal. London: NICE, 2008[online]. Available from URL: http://www.nice.org.uk/media/B52/A7/TAMethodsGuideUpdatedJune2008.pdf [Accessed 2008 Jul 17]

  5. Johannesson M, Meltzer D. Some reflections on cost-effectiveness analysis. Health Econ 1998; 7 (1): 1–7

    Article  PubMed  CAS  Google Scholar 

  6. Brouwer WBF, van Exel NJA, Koopmanschap MA, et al. Productivity costs before and after absence from work: as important as common? Health Policy 2002; 61: 173–87

    Article  PubMed  CAS  Google Scholar 

  7. Brouwer WBF, Rutten FFH, Koopmanschap MA. Costing in economic evaluations. In: Drummond MF, McGuire A, editors. Economic evaluation in health care: merging theory with practice. New York: Oxford University Press, 2001

    Google Scholar 

  8. Russell LB. Is prevention better than cure? Washington, DC: The Brookings Institution, 1986

    Google Scholar 

  9. Garber AM, Phelps CE. Economic foundations of cost-effectiveness analysis. J Health Econ 1997; 16: 1–31

    Article  PubMed  CAS  Google Scholar 

  10. Meltzer D, Johannesson M. Inconsistencies in the ‘societal perspective’ on costs of the panel on cost-effectiveness in health and medicine. Med Decis Making 1999; 19: 371–7

    Article  PubMed  CAS  Google Scholar 

  11. Nyman JA. Should the consumption of survivors be included as a cost in cost-utility analysis? Health Econ 2004; 13: 417–27

    Article  PubMed  Google Scholar 

  12. Gandjour A, Lauterbach KW. Does prevention save costs? Considering deferral of the expensive last year of life. J Health Econ 2005; 24: 715–24

    Article  PubMed  Google Scholar 

  13. van Baal PHM, Feenstra TL, Hoogenveen RT, et al. Unrelated medical care in life years gained and the cost utility of primary prevention: in search of a ‘perfect’ cost-utility ratio. Health Econ 2007; 16: 421–33

    Article  PubMed  Google Scholar 

  14. Health Care Insurance Board (CVZ). Guidelines for pharmacoeconomic research, actualized version [in Dutch]. Diemen: Health Care Insurance Board, 2006

    Google Scholar 

  15. Stone PW, Chapman RH, Sandberg EA, et al. Measuring costs in cost-utility analyses. Int Technol Assess Health Care 2000; 16: 111–24

    Article  CAS  Google Scholar 

  16. Clarke PM, Gray AM, Briggs A, et al. Cost-utility analyses of intensive blood glucose and tight blood pressure control in type 2 diabetes (UKPDS 72). Diabetologia 2005; 48: 868–77

    Article  PubMed  CAS  Google Scholar 

  17. Godfrey C, Parrott S, Coleman T, et al. The cost-effectiveness of the English smoking treatment services: evidence from practice. Addiction 2005; 100 Suppl. 2: 70–83

    Article  PubMed  Google Scholar 

  18. Meltzer D. Accounting for future costs in medical cost-effectiveness analysis. J Health Econ 1997; 16: 33–64

    Article  PubMed  CAS  Google Scholar 

  19. Weinstein MC, Manning Jr WG. Theoretical issues in cost-effectiveness analysis. J Health Econ 1997; 16: 121–8

    Article  PubMed  CAS  Google Scholar 

  20. Lee RH. Future costs in cost effectiveness analysis. J Health Econ 2008; 27 (4): 809–18

    Article  PubMed  Google Scholar 

  21. van Baal PH, Polder JJ, de Wit GA, et al. Lifetime medical costs of obesity: prevention no cure for increasing health expenditure. PLoS Med 2008; 5 (2): e29

    Article  Google Scholar 

  22. Brouwer WBF, van Exel NJA, Baltussen RMPM, et dollar is a dollar is a dollar: or is it? Value Health 2005; 9: 341–7

    Article  Google Scholar 

  23. Koopmanschap MA, Rutten FFH, van Ineveld BM, et al. The friction cost method for measuring indirect costs of disease. J Health Econ 1995; 14: 171–89

    Article  PubMed  CAS  Google Scholar 

  24. Brouwer WBF, Koopmanschap MA, Rutten FH. Productivity costs measurement through quality of life? A response to the recommendation of the Washington Panel. Health Econ 1997; 3: 253–9

    Article  Google Scholar 

  25. Brouwer WBF, Koopmanschap MA, Rutten FH. Productivity costs in cost-effectiveness analysis: numerator or denominator. A further discussion. Health Econ 1997; 6: 511–4

    Article  PubMed  CAS  Google Scholar 

  26. Johannesson M, Karlsson G. The friction cost method: a comment. J Health Econ 1997; 16: 249–56

    Article  PubMed  CAS  Google Scholar 

  27. Weinstein MC, Siegel JE, Garber AM, et al. Productivity costs and health-related quality of life: a response to the Erasmus Group. Health Econ 1997; 5: 505–10

    Article  Google Scholar 

  28. Brouwer WBF, Koopmanschap MA. How to calculate indirect costs in economic evaluations. Pharmacoeconomics 1998; 13 (5 Pt 1): 563–9

    Article  PubMed  CAS  Google Scholar 

  29. Brouwer WBF, Koopmanschap MA. On the economic foundations of CEA: ladies and gentlemen, take your positions! J Heath Econ 2000; 19: 439–59

    Article  CAS  Google Scholar 

  30. Brouwer WBF, Koopmanschap MA. The friction cost method: leisure for nothing and replacement for free? Pharmacoeconomics 2005; 23 (2): 105–11

    Article  PubMed  Google Scholar 

  31. Weinstein MC, Fineberg HV, Elstein AS, et al. Clinical decision analysis. Philadelphia (PA): Saunders, 1980

    Google Scholar 

  32. Gandjour A. Consumption costs and earnings during added years of life: a reply to Nyman. Health Econ 2006; 15: 315–7

    Article  PubMed  Google Scholar 

  33. Nyman JA. More on survival consumption costs in cost-utility analysis. Health Econ 2006; 15: 319–22

    Article  Google Scholar 

  34. Richardson JRJ, Olsen JA. In defence of societal sovereignty: a comment on Nyman ‘the inclusion of survivor consumption in CUA’. Health Econ 2006; 15: 311–3

    Article  PubMed  Google Scholar 

  35. Lundin D, Ramsberg J. On survival consumption costs: a reply to Nyman. Health Econ 2008; 17: 293–7

    Article  PubMed  Google Scholar 

  36. Liljas B, Karlsson GS, Stålhammer N. On future non-medical costs in economic evaluations. Health Econ 2008; 17: 579–91

    Article  PubMed  Google Scholar 

  37. Mushlin AI, Fintor L. Is screening for breast cancer cost-effective? Cancer 1992; 69 Suppl. 7: 1957–62

    Article  PubMed  CAS  Google Scholar 

  38. Pharmaceutical Benefits Board (LFN). General guidelines for economic evaluations from the Pharmaceutical Benefits Board. Solna: LFN, 2003[online]. Available from URL: http://www.lfn.se/upload/English/ENG_lfnar2003-eng.pdf [Accessed 2008 Jan 18]

  39. Brouwer WBF, van Exel NJA, van Baal PHM. Costs in life-years gained: is it time for a new guideline? [in Dutch]. VGE-Informatiebulletin 2007; 24 (1): 11–4

    Google Scholar 

  40. Zweifel P, Felder S, Meiers M. Ageing of population and health care expenditure: a red herring? Health Econ 1999; 8: 485–96

    Article  PubMed  CAS  Google Scholar 

  41. Serup-Hansen N, Wickstrøm J, Kristiansen I. Future health care costs: do health care costs during the last year of life matter? Health Policy 2002; 62: 161–72

    Article  PubMed  Google Scholar 

  42. Seshamani M, Gray AM. Time to death and death expenditure: an improved model for the impact of demographic change on health care costs. Age Ageing 2004; 33: 556–61

    Article  PubMed  Google Scholar 

  43. Werblow A, Felder S, Zweifel P, et al. Population ageing and health care expenditure: a school of ‘red herrings’? Health Econ 2007; 16: 1109–26

    Article  PubMed  Google Scholar 

  44. Garber AM. Realistic rigor in cost-effectiveness methods. Med Decis Making 1999; 19: 378–9

    Article  PubMed  CAS  Google Scholar 

  45. Garber AM, Phelps CE. Future costs and the future of cost-effectiveness analysis. J Health Econ 2008; 27 (4): 819–21

    Article  PubMed  Google Scholar 

  46. Meltzer D. Response to ‘Future costs and the future of cost-effectiveness analysis’. J Health Econ 2008; 27 (4): 822–5

    Article  PubMed  Google Scholar 

  47. Blomqvist Å. Defining the value of a statistical life: a comment. J Health Econ 2002; 21: 169–75

    Article  Google Scholar 

  48. Feenstra TL, Hamber-van Reenen HH, Hoogenveen RT, et al. Cost-effectiveness of face-to-face smoking cessation interventions: a dynamic modeling study. Value Health 2005; 8: 178–90

    Article  PubMed  Google Scholar 

  49. Silagy C, Lancaster T, Stead L, et al. Nicotine replacement therapy for smoking cessation. Cochrane Database Syst Rev 2002: CD000146

  50. Gyrd-Hansen D, Søgaard J, Kronborg O. Colorectal cancer screening: efficiency and effectiveness. Health Econ 1998; 7: 9–20

    Article  PubMed  CAS  Google Scholar 

  51. Manns B, Meltzer D, Taub K, et al. Illustrating the impact of including future costs in economic evaluations: an application to end-stage renal disease care. Health Econ 2003; 12: 949–58

    Article  PubMed  Google Scholar 

  52. Brouwer WBF, Culyer AJ, van Exel NJA, et al. Welfarism vs extra-welfarism. J Health Econ 2008; 27: 325–38

    Article  PubMed  Google Scholar 

Download references

Acknowledgements

This study was part of the project ‘Living longer in good health’, which was financially supported by Netspar. The opinions expressed in the paper are those of the authors.

The authors have no conflicts of interest that are directly relevant to the content of this article.

Author information

Authors and Affiliations

  1. Department of Health Policy & Management and Institute for Medical Technology Assessment, Erasmus University Medical Center, PO Box 1738, 3000 DR, Rotterdam, the Netherlands

    David R. Rappange, Pieter H. M. van Baal, N. Job A. van Exel, Frans F. H. Rutten & Werner B. F. Brouwer

  2. Centre for Prevention and Health, Services Research, National Institute for Public Health and the Environment, Bilthoven, the Netherlands

    Pieter H. M. van Baal & Talitha L. Feenstra

Authors
  1. David R. Rappange
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Pieter H. M. van Baal
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. N. Job A. van Exel
    View author publications

    You can also search for this author in PubMed Google Scholar

  4. Talitha L. Feenstra
    View author publications

    You can also search for this author in PubMed Google Scholar

  5. Frans F. H. Rutten
    View author publications

    You can also search for this author in PubMed Google Scholar

  6. Werner B. F. Brouwer
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to David R. Rappange.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Rappange, D.R., van Baal, P.H.M., van Exel, N.J.A. et al. Unrelated Medical Costs in Life-Years Gained. Pharmacoeconomics 26, 815–830 (2008). https://doi.org/10.2165/00019053-200826100-00003

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.2165/00019053-200826100-00003

Keywords

Search

Navigation