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Education And Debate

Taking account of future technology in cost effectiveness analysis

BMJ 2004; 329 doi: (Published 23 September 2004) Cite this as: BMJ 2004;329:733

This article has a correction. Please see:

  1. Joshua A Salomon, assistant professor (,
  2. Milton C Weinstein, Henry J Kaiser professor of health policy and management2,
  3. Sue J Goldie, associate professor2
  1. 1 Department of Population and International Health, Harvard School of Public Health, Harvard Center for Population and Development Studies, 9 Bow Street, Cambridge MA 02138, USA
  2. 2 Department of Health Policy and Management, Harvard School of Public Health, Boston MA 02115, USA
  1. Correspondence to: J A Salomon
  • Accepted 28 June 2004

Economic evaluations in health and medicine usually ignore the possibility of future advances in treatment. But when technological innovation is rapid such considerations can have major implications


Cost effectiveness analysis provides a tool for evaluating allocation of resources by characterising different healthcare interventions in terms of the extra cost per added unit of health benefit (box 1).1 Such analyses are being used increasingly to set national and international health priorities. The UK's National Institute for Clinical Excellence, for example, is charged with guiding decisions on use of new and existing technologies in the NHS, based in part on cost effectiveness considerations.2 3 In recent years innovation in healthcare technology has occurred at an unprecedented pace for some problems, with new options rapidly supplanting existing interventions.4 We explore how cost effectiveness analysis could be extended to reflect evolving technologies, and how accounting explicitly for future treatment prospects might affect a typical analysis, using treatment for hepatitis C virus (HCV) infection as an example.

Box 1: Cost effectiveness analysis

The basic principle of a cost effectiveness analysis is that all consequences of decisions should be identified, measured, and valued. Cost effectiveness analysis provides a formal framework for comparing the relation between the health and economic consequences of different healthcare interventions. The results are summarised as an incremental cost effectiveness ratio. In this ratio, the net change in health outcomes associated with a particular strategy (compared with an alternative) is included in the denominator, typically expressed as quality adjusted life years (QALYs), and the net change in costs or resource use with a particular strategy (compared with an alternative) is included in the numerator. The incremental cost effectiveness ratio for a strategy is calculated in reference to the next most effective option, excluding strategies that are dominated (those with higher costs and lower benefits than …

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