How does cost-effectiveness analysis inform health care decisions?

Abstract

Cost-effectiveness analysis (CEA) provides a formal assessment of trade-offs involving benefits, harms, and costs inherent in alternative options. CEA has been increasingly used to inform public and private organizations' reimbursement decisions, benefit designs, and price negotiations worldwide. Despite the lack of centralized efforts to promote CEA in the United States, the demand for CEA is growing. This article briefly reviews the history of CEA in the United States, highlights advances in practice guidelines, and discusses CEA's ethical challenges. It also offers a way forward to inform health care decisions.