COST EFFECTIVE ANALYSIS

COST EFFECTIVE ANALYSIS is a form of economic analysis that compares relative cost and health outcomes of one or more interventions. It provides information on cost impact and effect of an intervention compared to an alternative intervention, as this allows the decision-makers to consider whether an innovation is better than the status quo. The objective of CEA to determine if the outcome of an intervention justifies its cost. It helps to identify the opportunities that are relatively inexpensive but have the potential to reduce the burden of disease substantially. It involves the basic calculation of dividing the cost of intervention into monetary units by the expected health outcome measured in natural units such as a number of lives saved. Some studies use the years of life lost in natural units for measuring the effect of the interventions. DALY is a comprehensive measure of population health which compares different interventions against a common standard. While comparing with cost-benefit analysis of the main advantage of cost-effectiveness ratios is that they avoid some ethical dilemmas and analytical difficulties.
Example: CEA of metformin+dipeptidyl peptidase-4 inhibitors compared to metformin+ sulfonylurea for treatment of type 2 diabetes.   

- Maria James, Pharm.D Intern