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sumption is captured by the discount rate, which has been set at 3% for the committee’s basic analysis, as recommended in the review of cost-effectiveness methods (Gold et al., 1996). The discount rate is also used to amortize the fixed expenditure for vaccine development. Because some analysts question the appropriateness of discounting health effects (for a discussion of the issue, see Gold et al., 1996), the committee tested the impacts of using no discounting in its sensitivity analyses, which are reviewed later in this chapter.


The essential calculation for the cost-effectiveness ratio for each candidate vaccine is the net cost (i.e., the costs of vaccine development plus the costs of administering the vaccine to the target population, minus the saving in cost of care expected with the use of the vaccine) divided by the expected gain in health benefits. Interested readers are referred to several recent publications (e.g., Gold et al. 1996, Russell et al., 1996).

Health Benefits: The Denominator

Measuring the health benefits of vaccine use requires a quantitative assessment of a condition’s “burden of illness” in terms of both morbidity and mortality. The difference between the current burden of illness associated with each condition and the level that would be expected if a vaccine were in use represents the health benefit attributable to the vaccine. To compare the vaccines under study, the measure of the burden of illness must be applicable to widely varied conditions (e.g., pneumonia, meningitis, diarrhea, urethritis, melanoma, diabetes). The committee made this comparison using QALYs, a standard measure of burden of illness and health benefits for cost-effectiveness analyses (Gold et al., 1996).* QALYs reflect the combined impact of morbidity and mortality on the health-related quality of years of life lived. The measure can be applied to the total lifetime or to a specified interval such as the time spent with a temporary disability. The key steps in calculating health benefits are briefly reviewed here and illustrated further in Box 4–1. The entire process is reviewed in greater detail in Chapter 5 and summarized in Box 5–1.


A substantial literature exists on the theory and practice of quantifying health status and the burden of illness. Key issues include defining the domains of health status, developing instruments to measure health status, determining preferences for health states, and applying health status measures to quality of life adjustments. Some sources that readers may wish to consult include Bergner et al., 1981; Drummond et al., 1987; Kaplan and Anderson, 1988; Ware and Sherbourne, 1992; Patrick and Erickson, 1993; McDowell and Newell, 1996; IOM, 1998.

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