Table of Contents
The CDC Division of HIV/AIDS Prevention is pleased to provide a basic guide to the cost-effectiveness analysis of prevention interventions for HIV infection and AIDS. The purpose of this guide is to help prevention program staff and planners become more familiar with potential uses of economic evaluation.
This guide consists of two sections. The first section introduces the basic concept of cost-effectiveness analysis. The second section provides the sources of basic model inputs commonly used in the literature. Significant publications in the field and other related sources are also provided at the end.
Overview of Cost-Effectiveness Analysis
What Is Cost-Effectiveness Analysis?
Cost-effectiveness analysis (CEA) is a type of economic analysis where both the cost and the outcome (impact, result, effect, benefit, health gain ...) of an intervention are evaluated and then expressed in the form of a cost-effectiveness ratio. The numerator of the cost-effectiveness (CE) ratio represents the cost of the intervention associated with one unit of "outcome". The denominator is the unit of outcome. It can be expressed using many types of measures including: years of life gained, quality-adjusted life years gained (QALYs), new diagnoses, infections averted, and deaths averted. CEA is usually conducted on interventions that are known to be effective.
The CE ratio is a fraction used to compare the relative costs and outcomes of two or more interventions. In Example 1, the outcome measure chosen is "new HIV diagnoses" and the CE ratio of the programs evaluated is expressed in terms of "cost per new HIV diagnosis". The CE ratio of Program A is $41,667 per new HIV diagnosis. This ratio does not reveal the cost of implementing the program nor the number of new HIV diagnoses detected by the program. However, when comparing the CE ratio of Program A to that of Program B, we can say that Program B is more cost-effective than Program A when CE is measured in terms of "cost per new HIV diagnosis," because at $7,400 per new HIV diagnosis, Program B is less costly for the same outcome.
||[a] Annual Program Cost
||[b] Annual Number of New HIV Diagnoses Detected by Program
||CE Ratio: Cost per New HIV Diagnosis ([a]/[b])
||$41,667 / new HIV diagnosis
||$7,400 / new HIV diagnosis
Cost per new HIV diagnosis
HIV interventions, such as screening and partner services, are intended to identify HIV-positive persons who are unaware of their infection. When evaluating several such programs in CE analysis, the outcome "new HIV diagnoses" is often used to enable a comparison across these programs; so the CE ratio is expressed in terms of cost per new HIV diagnosis.
Cost per infection averted (IA)
HIV prevention interventions such as syringe exchange programs, counseling for at-risk youth or post-exposure prophylaxis are intended to prevent (avert) infection in HIV-negative persons. Such programs can be evaluated to determine the number of infections prevented that would have otherwise occurred had the intervention not been provided. When evaluating several such programs in CE analysis, the outcome "HIV infections averted" is often used to enable a comparison across these programs; so the CE ratio can be expressed in terms of cost per infection averted.
The lifetime treatment cost of an HIV infection can be used as a conservative threshold value for the cost of averting one infection. Currently, the lifetime treatment cost of an HIV infection is estimated at $379,668 (in 2010 dollars), therefore a prevention intervention is deemed cost-saving if its CE ratio is less than $379,668 per infection averted.
As an outcome, the number of HIV infections averted due to a program can be evaluated using different mathematical techniques that vary in complexity and the amount of data or number of assumptions required. Attention should be paid to the timeframe of the intervention effect considered in the evaluation. For example, if the timeframe is one year, then the cost may have to be incurred annually in order to continue to avert the HIV infections.
Cost per life year (LY) gained
HIV treatment interventions, including retention in care and treatment adherence, are in part intended to extend the lives of HIV-positive persons. Such programs can be evaluated to determine the number of additional life years gained (or saved) that otherwise would have been lost to premature death. When evaluating these types of programs in CE analysis, the outcome "life years" often is used to compare them; so the CE ratio can be expressed in terms of cost per life year gained.
Cost per quality-adjusted life year (QALY) gained
As an outcome, life years do not reflect any of the positive or negative effects on the quality of life of the patients receiving an intervention. For example, drug treatment A may provide an additional 2 years of life dominated by hospitalization while drug treatment B may provide an additional 1 year of life without any significant ill effects.
A quality-adjusted life year (QALY) is an outcome measure that considers both the quality and the quantity of life lived. The QALY is based on the number of years of life added by the intervention. Each year in perfect health is assigned the value of 1.0. Each year of less-than-perfect health is assigned a value less than 1.0 down to a value of 0.0 for death. If the extra years would not be lived in full health, for example if the patient would lose a limb, be blind or suffer from worse mental health, then the extra life-years may be given a value of less than 1 to account for this.
HIV interventions intended to improve and/or extend the lives of HIV positive persons can be evaluated to determine the number of additional QALYs gained (or saved) that would have otherwise been lost. When evaluating several such programs in CE analysis, the CE ratio can be expressed in terms of cost per QALY gained.
Most outcome measures, including infections averted, life years gained and new HIV diagnoses, can be translated into QALYs, thereby providing a consistent measure of comparison across many different types of intervention programs.
A cost-effectiveness ratio of $50,000 to $100,000 per QALY gained has been long cited in the literature as a conservative threshold for a cost-effective intervention. Traditionally, if an intervention was estimated to cost less than $50,000 to $100,000 per QALY gained, it would be considered cost-effective. However, recent studies have argued that this benchmark is likely too low since the threshold has not been reassessed over time.1 To reflect the advances of modern health care, Braithwaite et al reevaluated the threshold and estimated the plausible range for a cost-effectiveness decision rule to be between $109,000 and $297,000 per QALY saved (in 2003 dollars; $143,000-$388,000 in 2010 dollars).2
What Does "Cost-Saving" Mean?
When two or more programs are being compared (intervention vs. comparator), the intervention is labeled as "cost-saving" when both the net outcome of the intervention is greater than or equal to that of the comparator and the cost of the intervention is less than the cost of the comparator. A program can only be deemed cost-saving when it is compared to an alternative. The alternative is typically the status quo or the current standard of care.
In Example 2, Program A is both cheaper and more beneficial than the current standard of care and is therefore a cost-saving alternative. CE ratios cannot be negative.
||[a] Annual Program Cost
||[b] Annual Number of QALYs Gained
||CE Ratio: Cost per QALY Gained ([a]/[b])
|Program A (intervention)
||$15,000 / QALY gained
|Standard of care (comparator)
||$25,000 / QALY gained
If the costs of Program A and the Standard of care are borne by the same institution, then the savings will be reaped by that institution. Often, however, the costs of HIV interventions are borne by many distinct entities, including government, health care systems and individuals, and the savings are not realized by any single entity. In addition, the savings may occur over many years.
How to Interpret a CD Ratio?
At $100,000 per QALY (or at higher thresholds), a program may be considered cost-effective. However, this ratio contains a numerator and a denominator and thus no interpretation can be made as to the annual cost of this program.
||[a] Annual Program Cost
||[b] Number of Persons Served by Program
||[c] Sum of QALYs Gained by Program
||Cost per Person Served ([a]/[b])
||Cost per QALY Gained ([a]/[c])
In Example 3, both programs A and B have the same measure of cost-effectiveness in terms of cost per QALY gained, however, Program B is more costly to implement than A. Investment in Program B may nonetheless be justified depending on budgetary constraints and the ability to implement for the program in the population and setting considered.
If A and B are complementary rather than alternative programs, then they can both be implemented. Implementing Program A and/or B in a particular population and setting requires an evaluation of the number of persons that potentially could be served by the intervention and the resulting overall costs.