. "3. Overview of the Analytic Approach." New Vaccine Development: Establishing Priorities: Volume II, Diseases of Importance in Developing Countries. Washington, DC: The National Academies Press, 1986.
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New Vaccine Development: Establishing Priorities, Volume II, Diseases of Importance in Developing Countries
respiratory infections, then future applications of this method might formally account for them in disease estimates.
The purpose of the committee’s effort was to provide U.S. government decision makers with a tool to help guide their investments in accelerated development of vaccines for use in developing countries. The approach adopted in this analysis is not necessarily the correct approach for other purposes (see Chapter 8, Table 8.1). It is hoped, however, that the methods outlined in this report and its companion volume (Institute of Medicine, 1985) may be useful to other groups, such as regional organizations or specific countries, in their efforts to establish priorities.
The basic strategy of the approach adopted by the committee is reductionist: each logical component of expected benefits and of expected expenditures is assessed separately; then the components are aggregated in a stepwise fashion for each disease-vaccine contender. The analysis distinguishes valued consequences, that is, benefits and costs, from the probabilistic events that contribute to the likelihood of their occurrence. All component estimates are identified so they may be examined, questioned, and altered, if necessary.
The net expected health system expenditures and the net expected health benefits are “annualized” and discounted to their present values. Annualized means that all benefits and expenditures are expressed as steady state (constant) streams, beginning immediately and extending indefinitely into the future. The procedure of discounting converts any benefit and cost streams that are delayed for some years to their equivalent annualized values starting now. Fixed expenditures (e.g., for vaccine development) are “amortized” to produce a constant annual equivalent value.
Discounting enhances the relative importance of effects realized after a short, as compared to a long, delay. The discount rate (r) used in the committee’s calculations reflects the preference for present over future consumption of resources. in the central analysis, the discount rate is set at 0.05. The effect of discounting is evaluated in the sensitivity analyses described in Chapter 9.
A comprehensive approach to comparing costs associated with achieving the health benefits from a vaccine would entail calculating the present value of the annualized equivalent of the net expected health system costs. This would include the cost of development, the cost of the vaccination program, and the cost of adverse side effects, less the cost of medical treatment averted. it may be expressed as