Cost-utility analysis

Cost-utility analysis (CUA) is a form of economic evaluation used to guide procurement decisions. The most common example is in pharmaceutical purchasing, especially for new treatments where data on all the benefits and harms is often uncertain.

Overview

CUA is a method that compares the relative costs and outcomes (effects) of different courses of action. It is a form of cost-effectiveness analysis, and it compares the cost per quality-adjusted life year (QALY) gained for the different treatments.

Methodology

The first step in a CUA is to calculate the total cost associated with each alternative being considered. This includes both the direct costs of the treatment and any indirect costs, such as those associated with side effects.

The next step is to calculate the total QALYs gained from each alternative. This is done by estimating the number of additional years of life that would be gained from the treatment, and then adjusting this figure to take into account the quality of those years.

The final step is to divide the total cost by the total QALYs to give a cost per QALY figure. This can then be compared with the cost per QALY for other treatments to determine which provides the best value for money.

Limitations

There are several limitations to the CUA method. Firstly, it assumes that all health outcomes can be measured in terms of QALYs, which is not always the case. Secondly, it assumes that the only important factor in deciding between different treatments is the cost per QALY, which may not be the case for all decision makers. Finally, it requires a lot of data, which may not be available for all treatments.

See also

• Cost-effectiveness analysis
• Quality-adjusted life year
• Health economics

Cost-utility analysis Resources
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