Evaluation of costs in cost-effectiveness evaluation

I have stated in the preceding section that when discussing cost-effectiveness, it is important to assess both the cost and outcome. Then, how should the magnitude of these two aspects be calculated? First, let us discuss the measurement for cost.

1. Types of cost

There are various types of “costs needed for treatment.”

It is easy to remember the expense paid to hospitals or clinics, and pharmacies for prescription medicines. However, the cost needed for treatment may also include the transportation expenses to go to distant hospitals, expenses for purchase of wheelchairs or beds used for home care, and the expenses of repairing the home for treatment.

If your income decreases because you cannot work during your long-term hospital stay, it may be counted as a large cost for you (or society). There are various views among academics about to what extent these types of costs should be taken into consideration in the cost-effectiveness analysis.

2. Which types of costs should be taken into consideration

How is the range of cost to be taken into consideration when discussing the cost-effectiveness determined? It depends on the “perspective” of the analysis.

If analysis is conducted from the perspective of the patients, for example, only the out-of-pocket payment is included by the analysis. The transportation expenses paid by the patient and the reduced patient income associated with his/her should be also counted as expenses for the patient.

On the other hand, if analysis is conducted from the perspective of the government, the patient’s out-of-pocket payment, transportation fees, expenses for home repair and reduction of patient income do not involve payment from tax and social insurance premium. Only the portion of expenses of treatment paid from insurance premium and tax may be related to the government.

When the MHLW discusses the cost-effectiveness of medicines and medical devices, analysis has to be principally performed from the “perspective of public healthcare payer.” Simply put, such a perspective encompasses all payments related to public medical expenses, including the out-of-pocket payment and payment from the insurance premium and tax (that is, the entire expenses of healthcare).

On the other hand, the portion not related to public healthcare is not taken into consideration. That is, your transportation fees and decrease of income are not included. This does not mean that the MHLW does not attach importance to the personal expenses required for treatment. This is because the intention of the MHLW is to evaluate the cost-effectiveness of medicines and medical devices within the framework of public health insurance system.

3. Also considering the expenses of healthcare needed in the future

As described above, the cost-effectiveness analysis of medicines and medical devices take into consideration the public expenses needed for treatment. But such is not limited to the current expenses.

For example, assume a diabetic patient whose blood glucose level is now well controlled by treatment. At present, this patient needs to bear the expenses for treatment, but the treatment received at present can lead to prevention of various complications affecting the heart, brain, kidneys, eyes, etc., in the future. If hemodialysis is eventually needed because of the progression of kidney disease, that would entail a large expense. This is significant from the viewpoint of healthcare expenses if the need for hemodialysis could be prevented.

For this reason, assessment of the cost-effectiveness additionally includes the expenses which may be necessitated by illness in the future or the expenses which can be prevented by treatment. This is because evaluation of healthcare expenses taking only a short term into consideration would not suffice.

Here, the expression “in the future” refers to the expenses which may be saved by prevention years or decades later. The magnitude of such expenses is not clear at present. For this reason, the future expenses are estimated using various health economic models. The expenses which can be saved or which may be additionally needed are predicted using these models for the cost-effectiveness.