The essential components used to calculate the cost-effectiveness ratio for each candidate vaccine are the costs of vaccine development, the costs of administering the vaccine to the target population, the reduction in the cost of care expected with the use of the vaccine, and the expected gain in health benefits. The basic calculation can be represented by the following equation:

*CE*_{V}*=(C*_{D}*+C*_{I}*−C*_{C}*)/Q,* (1)

where *CE*_{V} is the cost-effectiveness ratio for case *V,* which is the analysis for a specific combination of health condition or pathogen, vaccine type, and target population; *C*_{D} is the cost of vaccine development; *C*_{I} is the annual cost of immunizing the target population; *C*_{C} is the annualized costs of care averted by use of the vaccine; and *Q* is the annualized health benefit from use of the vaccine.

Each of the components of this basic equation must be discounted to account for the time lag between the present and when the cost or health benefit will be realized. The anticipated health benefits and changes in the cost of care must also be reduced to reflect the estimated limits to the efficacy and use of the vaccine. The costs of immunization are also reduced to reflect less than universal use of the vaccine. This more complete characterization of the model can be represented as follows:

*CE*_{V}=[[*rC*_{D}+{[*C*_{I}*/*(1+*r*)^{T(use)}] • *U*} −{[*C*_{c}*/*(1*+r*)^{T(use) + T(lag)}] • *Eff* • *U*}]]/

{[*Q/*(1+*r*)^{T(use)+T(lag)}] • *Eff* • *U*}, (2)

where r is the discount rate; *T(use)* is the time until steady-state vaccine use, which includes the time until licensure plus the time to adoption at the assumed rate of use; *U* is the assumed rate at which the target population will use the vaccine; *T(lag)* is the time between the use of the vaccine and the realization of health benefits; and *Eff* is the assumed efficacy of the vaccine. *CE*_{V}*, C*_{D}*, C*_{I}*, C*_{c}*,* and *Q* are as defined above for Equation 1. Each of the components of the analysis is reviewed in more detail in subsequent sections of this chapter.

The elements of Equation 2 were operationalized through a multipage spreadsheet template developed with the Excel spreadsheet package, version 5