JEF in the Media

By: Tienie Stander and Dino Celeste

Abstract: Health economic evaluation plays an important role in assisting policy makers, funders and implementers to make rational decisions to allocate scarce healthcare resources. Health economic evaluations are divided into two main areas, namely the macro level analysis and the micro level analysis. Macro level consists in evaluating healthcare investments including capital investments, disease prevention policy, disease eradication and treatment, whereas micro level consists in assessing new healthcare technologies such as diagnostic techniques or new medical treatment modalities.

For instance, most international healthcare donor funders would request an economic appraisal of the proposed policy implementation in order to be empowered to make investment decisions in a rational and fair way. Also, the pharmaceutical industry performs routinely pharmacoeconomics research for their new drugs in order to justify their pricing and reimbursement strategy towards healthcare funders (state or private healthcare insurers).

For macroeconomic evaluation, Cost-benefit analysis (CBA) is the main technique whereas microeconomic assessment is typically performed through cost-effectiveness and cost-utility analysis (CEA and CUA). Whether at macro or micro levels, the decisions to implement new policies or reimburse new technologies are competing with other needs and wants, giving rise to opportunity costs. Whereas CBA measures benefits in monetary terms, CEA and CUA measures benefits in natural units such as life-years gained or quality adjusted life-years gained.

The use of economic evaluation in support of rational healthcare resource allocation will become more important in the future as new and competing technologies increase. Decision makers and policy makers need to assert themselves that they are adequately informed and empowered to allocate scarce healthcare resources in a rational, fair and sustainable way.

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