in this case cost per QALY. An intervention is deemed cost-effective if it produces the desired outcome at a reasonable price, typically the lowest cost to realize a QALY among competing interventions. Thus, if an analyst is comparing three different interventions, all other things being equal, the cost-effective intervention is the one for which the cost per QALY is the least. (This simplification ignores additional concerns—the other things not being equal—such as who benefits from the extra life years.) Often, analysts will label cost-effective an intervention not compared directly with alternative investments. In such instances, typically they are comparing their findings to a standard in the literature. As a rule of thumb, ratios in the range of $50,000 to $100,000 or lower per life year lost are generally considered cost-effective (Ubel, Hirth, et al., 2003).2

In theory, a well-designed CBA and CEA of the same intervention should yield the identical conclusion about the desirability of the intervention (Bleichodt and Quiggin, 1999). An intervention will be cost-effective—that is, cost less per unit of benefit than alternative interventions—if its benefits exceed its costs and do so with a net benefit that is greater than that of the alternative interventions. In practice, however, because researchers often focus on somewhat different outcomes depending on the method being used,3 one cannot assume that CBA and CEA will yield identical conclusions about intervention desirability. Furthermore, all of these analyses rest on assumptions related to the quantification and valuation of important outcomes, assumptions that can drive the conclusions reached. Indeed, standard practice in CBA and CEA should include use of sensitivity analysis, a family of methods to evaluate whether bottom-line conclusions are sensitive to assumptions made in the analysis (Gold, Russell, et al., 1996).

The health care literature is dominated by CEAs; that is, one finds relatively few CBAs (Hammitt, 2002). The principal reason is the inability, or reluctance, of analysts or policy makers to place dollar values on important health outcomes. As we describe below, however, the prevention field seems to be an exception: the majority of studies to date have employed CBA.


Prevention, by definition, is undertaken to avoid harmful outcomes; the potential benefits of prevention are therefore equivalent to the net harms, or costs, of those outcomes. MEB disorders among young people account


Ubel, Hirth, and colleagues (2003) assert that the cost-effectiveness threshold should be raised to $200,000 or more per QALY.


For example, researchers using CBA may ignore improvements in health-related quality of life, because other benefits, such as reduced crime and increased employment, are easier to quantify in dollar terms.

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