Economic evaluation of medicines

Abstract

In Australia the government must balance access to new drugs against the cost to the Pharmaceutical Benefits Scheme. Economic evaluations can be used to ensure health resources are allocated efficiently, maximising patient outcomes for every dollar spent. There are several methods available to assess the efficiency of funding decisions in health care. Examples are cost-effectiveness, cost-utility, cost-minimisation and cost-benefit. The Incremental Cost Effectiveness Ratio is a statistic used to summarise the cost-effectiveness of a new medicine relative to a comparator. It allows the decision maker to compare one treatment to another, thereby quantifying the opportunity cost of decisions.