Listed in Issue 32


LANGLEY and BHATTACHARYYA, Center for Pharmaceutical Economics, College of Pharmacy, University of Arizona, Tucson USA discuss the problem of increasing costs (and decreasing returns) in the treatment of patients within health care systems.



The implications of such a situation are studied for: 1) allocation of patients to alternative drug therapies 2) the proportions of patients treated within the disease area to total patient population as a function of equilibrium conditions for maximised health care outcomes, given alternative assumptions regarding the existence of budget constraints upon resources allocated to the disease area. The authors state that the reason for considering these issues is that such a model and its driving assumptions are in marked contrast to those underlying the traditional approach to cost-effectiveness modelling.


In traditional cost-effectiveness analysis, there is an assumption that costs and outcomes exhibit constant returns to scale and that the process of patient selection and characteristics of the treating population do not need to be taken into account. This analysis shows that once the assumption of constant returns is abandoned, any assessment of the net impact of therapeutic interventions may be made only within an equilibrium, or comparative static, framework subject to budget constraints in which cost functions which drive patterns of switching between therapies are specified. Under such conditions, the traditional, clinical-trial-based notion of cost-effectiveness loses all meaning .



Langley PC and Bhattacharyya SK. Treatment costs,equilibrium, and the allocation of patients to therapy alternatives. Clin Ther. 19(4): 830-6. Jul-Aug 1997.

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