Cost-effectiveness analysis when the WTA is greater than the WTP Academic Article uri icon

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abstract

  • The incremental cost effectiveness ratio has long been the standard parameter of interest in the assessment of the cost-effectiveness of a new treatment. However, due to concerns with interpretability and statistical inference, authors have suggested using the willingness-to-pay for a unit of health benefit to define the incremental net benefit as an alternative. The incremental net benefit has a more consistent interpretation and is amenable to routine statistical procedures. These procedures rely on the fact that the willingness-to-accept compensation for a loss of a unit of health benefit (at some cost saving) is the same as the willingness-to-pay for it. Theoretical and empirical evidence suggest, however, that in health care the willingness-to-accept is about twice as much as the willingness-to-pay. We use Bayesian methods to provide a statistical procedure for the cost-effectiveness comparison of two arms of a randomized clinical trial that allows the willingness-to-pay and the willingness-to-accept to have different values. An example is provided.

publication date

  • November 15, 2001