Cost–utility Analysis

A type of financial study called cost-utility analysis (CUA) is used to direct purchasing choices. This study is most commonly used in pharmacoeconomics, particularly in health technology assessment (HTA).

A health-related intervention’s cost is compared to its benefit in terms of the years the payee would live in good health, known as the cost-utility ratio, or CUA, in the field of health economics. Since the two concepts are frequently employed in opposition to one another, it may be said that it is a specific case of cost-effectiveness analysis. Money units are used to measure cost. Advantage must be represented in a fashion that gives health conditions deemed less desirable than perfect health a numerical value. The benefits do not need to be quantified, in contrast to cost-benefit analysis. It is often represented as quality-adjusted life years in HTAs (QALYs). The difference in costs and benefits between two interventions is measured as the incremental cost-effectiveness ratio (ICER). In a straightforward example, where C0 and E0 stand for the expenditure and benefit, respectively, resulting from taking no health intervention action, the ICER may be expressed as (C1 – C0)/(E1 – E0). C1 and E1 stand for the cost and benefit of doing a particular action. Therefore, if the cost and benefit are $130,000 and 2.5 QALYs, the value per QALY would be $30,000. Policymakers and hospital administrators frequently utilize these metrics to decide relative priority when evaluating medications for an illness. The close patient or general population utility of a drug or pharmacy economic intervention is calculated by CUA, which is an essential point to notice.

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