Introduction

Economic evaluation compares costs and consequences of alternative health care treatments or programs (Drummond et al. 2005). In one form of economic evaluation, cost-benefit analysis, all costs and consequences are valued in monetary terms. However, in health care it is much more common to use cost-effectiveness analysis, where the difference in cost between alternatives is compared with the difference in outcomes measured in units such as life years gained or quality-adjusted life years (QALYs) gained.

Since Australia led the way in 1992, economic evaluation has become a formal component of reimbursement decisions, or the development of national guidance for health technologies, in more than 10 other jurisdictions. These include eight countries of the European Union (Belgium, Finland, Hungary, Ireland, the Netherlands, Portugal, Sweden, and the United Kingdom), plus Canada, New Zealand, and Norway.

The precise role of economic evaluation varies among countries. In the vast majority of jurisdictions the role is confined to decisions about pharmaceuticals only, although the National Institute for Health and Clinical Excellence (NICE) in the United Kingdom also considers devices, medical procedures, and public health interventions. Even among those countries considering only pharmaceuticals, there are variations in policy. In some, all new pharmaceuticals are considered, whereas in others only those drugs having a premium price, or likely to have a major impact on the health care system, are evaluated.

The extent of regulatory control also varies.