Alan Haycox

Director of Liverpool Health Economics and Reader in Health Economics at the University of Liverpool

Author of: What is health economics? and What is cost-minimisation analysis?

Alan is an internationally recognised Health Economist, expert advisor to the NHS, the pharmaceutical industry and a number of regulatory and funding authorities. Previously he was employed as Regional Health Economist in the North West Regional Health Authority, assisting in the prioritisation of healthcare provision to the population of the North West. He is a member of the National Institute for Health and Care Excellence (NICE) Technology Appraisals Committee and he is a founder of the Liverpool Technology Assessment Review (TAR) and Liverpool Health Economics (LHE). He specialises in pharmacoeconomic evaluation and has worked with an extensive range of pharmaceutical companies, guiding the economic evaluation of the new pharmaceutical products. His work is widely published and he is also a reviewer for a range of high profile journals.

www.liverpoolhealtheconomics.org

Summary: What is health economics?

  • Economics is the science of scarcity and prioritisation. The application of health economics reflects a universal desire to obtain maximum value for money by ensuring not only the clinical effectiveness, but also the cost-effectiveness of healthcare provision.
  • Achieving ‘value for money’ implies either a desire to achieve a predetermined objective at least cost or a desire to maximise the benefit to the population of patients served from a limited amount of resources. This requires services to be evaluated for ‘cost-effectiveness’.
  • An associated concept is that of efficiency, which measures how well resources are used in order to achieve a desired outcome.
  • Opportunity cost represents an invaluable mode of thought in health economics, as it makes clear the explicit trade-offs that underlie resource use in the health services. The true cost of using scarce healthcare resources in one manner is their unavailability to fund alternative beneficial services.
  • All economic evaluations have a common structure that involves explicit measurement of inputs (‘costs’) and outcomes (‘benefits’).
  • Health economics can help to inform and improve decision-making through the systematic and objective application of ‘applied common sense’.
  • Such ‘applied common sense’, which symmetrically balances costs and benefits, represents a valuable mode of thinking for decision-makers, irrespective of whether a formal economic evaluation is undertaken.

Summary: What is cost-minimisation analysis?

  • Achieving ‘value for money’ implies either a desire to achieve a predetermined objective at least cost or a desire to maximise the benefit to the population of patients served from a limited amount of resources. Cost-minimisation analysis (CMA) relates to the first of these objectives.
  • Assumptions of clinical equivalence in CMA should only be made if claims of equivalence can be supported by clinical evidence; that is, where measured outcomes have been shown to be equivalent; where this is not possible, a CMA should not be conducted.
  • What are the main arguments deployed against the use of this technique of economic evaluation?
  • What steps can be taken to improve the quality and appropriateness of CMAs and in what circumstances is it appropriate to use CMA as a methodology in the economic evaluation of healthcare technologies?
  • To what extent should healthcare professionals rely on CMAs to inform their decision-making?
  • How do we measure ‘clinical equivalence’ and what are the implications of potential sources of misinterpretation of clinical data within the framework of CMA?
  • How can we enhance the reputation and value of CMA as a method of health economic analysis to inform healthcare decision-making?
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