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nation strategy that targets 500,000 high-risk infants leads to a cost per QALY gained of $6,000 (Case 5). This change can be attributed entirely to the reduction in the cost of the delivery program. The number of vaccinees and, therefore, the delivery costs in Case 5 are one-eighth those in Case 1.

Another vaccine program component of great interest to readers of the report is the cost of the vaccine itself. If the cost per dose of the vaccine is assumed to be twice the cost estimated for Case 1, the program costs almost double to $110 million versus $60 million in Case 1 (the $10 added per dose for administration of the vaccine does not change) and the cost per QALY saved increases from approximately $125,000 to approximately $240,000 (Case 6).

Disease Severity

Several other scenarios are instructive. Consider Case 7, which differs from Case 1 only in that there are no deaths. If the disease X-7 results in the mild and moderate illnesses described for Case 1, the cost per QALY gained with a vaccine is well in excess of $3 million. The program costs and costs of care are the same as those for Case 1, but only a small number of QALYs are gained when no deaths result. If, however, disease X-8 has a 100-fold higher incidence than X-7, then a vaccine X-8 strategy becomes cost saving. The number of QALYs saved with a vaccine strategy increase by 100 fold. Vaccine delivery and development costs remain the same, and the health care costs increase 100 fold. The net cost of a vaccine strategy changes from a cost of over $400 million to a savings of almost $4 billion.

Another instructive example is the role that long-term disability plays in cost-effectiveness applications. If instead of the mild/moderate disease and CFR of 1% associated with disease X-1, there is severe disease and a 1% rate of long-term, serious sequelae (instead of a 1% CFR), the cost per QALY gained by vaccination is $80,000 (Case 9). In this scenario, use of the vaccine results in a moderate gain in QALYs and a substantial savings in the costs of care.

Discounting

As discussed in the beginning of this chapter, the committee followed the recommendations of the Panel on Cost-Effectiveness in Health and Medicine and applied a 3% discount rate for both costs and health benefits. Because discounting is a difficult concept for some readers, the committee has modified Case 1 to show the effects of discounting for costs only and of discounting for neither costs nor health benefits. The numbers of QALYs to be gained under Case 1 increase significantly absent discounting for health benefits: from approximately 3,300 QALYs (with a 3% discount rate applied) to 25,500 QALYs with no discounting. This approximately 8-fold difference in the denominator of the cost-effectiveness ratio leads to a proportional decrease in the cost per



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