Probability Distributions for Cost and Utility Parameters

Abstract

There are often greater uncertainties affecting the cost estimates in an analysis than other parameters. As a result, the appropriate characterisation of the uncertainty in cost parameters is important to provide decision makers with robust evidence that can withstand careful appraisal. Similarly, the utility parameter distribution should reflect the uncertainty around the expected value for the utility of the model health state for a homogenous patient population. Having considered the range of distributions that are most frequently used for characterising effectiveness parameters and the uncertainty regarding their true values in Chap. 6, in this chapter we consider the remaining two types of parameter required for cost effectiveness models: cost parameters and utility parameters.