Balancing costs and benefits in cancer therapy and prevention.

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Annals of Oncology 19 (Supplement 7): vii313–vii319, 2008
doi:10.1093/annonc/mdn475
symposium article
Balancing costs and benefits in cancer therapy and
prevention
T. D. Szucs1& K. J. Dedes2
1Institute of Social-and Preventive Medicine, University of Zurich;2Division of Gynecology, Department of Obstetrics and Gynecology, University Hospital of Zurich,
Zurich, Switzerland
I am fine to sum up with an urgent appeal for adopting this or some
uniform system of publishing the statistical records of hospitals. If
they would be obtained they would show subscribers how their
money was being spent, what amount was really being done with
it, or whether the money was doing mischief than good.
Florence Nightingale, 1863
introduction
In an era of increasing cost containment in health care, it has
become extremely important to allocate resources as efficiently
as possible. This implies that formal health economic
considerations are taken into account. One field of increasing
importance is that of economic appraisal, which allows
quantifying the value for money of medical interventions. This
type of research is extremely useful in the field of supportive
care for cancer patients. In addition to economic
considerations, social, political and ethical issues will also have
to be addressed. Finally, the sum of these activities will enable
us to make better choices in health care and ensure that
sufficient resources are allocated to supportive cancer
treatment.
From a clinical economist’s point of view, cancer care
represents a great challenge. Many issues have evolved over
recent years, often yielding more questions than answers.
The complexity of the matter, the interdisciplinarity of the
approach and the emergence of an increasingly cost
conscious health care environment put cancer care in
a difficult realm.
Cancer patients have physical, social, spiritual and emotional
needs. They may suffer from severe physical symptoms, from
social isolation, spiritual abandonment and emotions such as
sadness and anxiety, or feelings of deception, helplessness,
anger and guilt. In some patients, the disease is rapidly
progressing and ultimately they die. Their demanding care
evokes intense feelings in health care providers, the more since
these incurable patients represent a challenge, which could be
condensed under the heading ‘the challenge of medical
omnipotence’.
The economic burden of cancer is tremendous. It is
estimated that approximately 10 million people worldwide
suffer from neoplasms. Radice and Redaelli estimate that this
figure will increase to 15 million people by the year 2020 [1].
The associated economic burden may well lie in the range
of €250–350 billion.
rationale and principles of health
economic research
In the past few years the discipline of economic evaluations has
experienced an extraordinary boom within the health care
sector [2]. Researchers from a wide range of disciplines have
developed new techniques to evaluate the impact of clinical
care and medical technology [3, 4]. Clinicians, pharmacists,
economists, epidemiologists and operations researchers have
contributed to the new field of economic evaluations to
study how different approaches to patient care influence the
resources consumed in clinical medicine [5].
Health economists start with a basic premise that while
desires and needs are infinite, resources are limited. They
therefore try to find the best way to allocate these resources
appropriately, to maximise the overall health of the population.
Economic assessment in health care has developed in response
to the needs of the administrators, third party payers and
politicians to understand the consequences of technological
change in health care [6]. In any case, previous decisions about
the use of health care technologies were based almost entirely
on the clinical safety, efficacy and quality of the products used.
But while numerous economic evaluations have been
reported, the quality of the research and, therefore, its validity
in decision-making, has been variable [7]. On the other hand,
as techniques become more sophisticated, there is a danger
that the esoteric nature of the studies may alienate the
decision-makers from the analysts [8]. So, decision-makers (as
well as scientific journal editors) are increasingly calling for
guidance about the principles and methods used, and for
help in interpreting studies, judging their quality and
determining their applicability to particular settings [9].
the benefits of economic evaluations
Economic evaluations in health care can bring benefits to
various target groups. Third party payers will be able to
formulate better policies and reach better decisions when
allocating funds or negotiating contracts with health care
providers. In addition, a better mix of health care services
symposium
article
ª The Author 2008. Published by Oxford University Press on behalf of the European Society for Medical Oncology.
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offered to the insured population can be put together. Health
care providers will benefit from economic evaluations by
optimising their mix of clinical strategies and choosing from
alternative services. Significantly, in the future clinicians
themselves will be urged to analyse the economic impact of
clinical strategies, in order to counterbalance prioritisation by
third party payers and health care administrators. Patients
themselves will have to bear more and more of the health care
bill, either through co-payments or by risk-adjusted insurance
premiums—and their choices will be based on the perceived
value of the services offered. So, analyses of patient preferences,
which include quality of life assessments, are an ever-growing
part of health economic research [10].
The results of economic evaluations can be displayed in the
2·2 matrix of Figure 1, which includes costs and consequences
on its axes.
the limitations of economic evaluations
Economic evaluations, however, will not solve all substantive
issues. It is vital to be aware that health care cannot be rationed
using a simple economic calculation. There are always moral
and ethical issues for society to take into consideration. There is
also a political danger associated with economic evaluations:
they may become the ‘fourth hurdle’ for registration of new
products. Regulators may not only review data about
a product’s efficacy, safety and quality, but also demand
economic efficiency. There are practical problems related to the
introduction of a statutory requirement for economic
appraisals. They may delay patient access to new technologies,
reduce the returns to innovators and push up costs. Analysis of
results may be challenged because there are no ‘gold standards’
for conducting economic trials and many regulatory bodies do
not (yet) have the expertise to review economic data properly.
Nonetheless, many countries are moving towards statutory
economic evaluations of new health care products [11, 12].
the major components of an economic
evaluation
All economic studies investigate the balance between inputs
(the consumption of resources) and outcomes (improvements
in the state of health of individuals and/or society).
inputs (costs)
Although the unit price of a drug or procedure is often a prime
factor in decision-making, economic outcomes research
provides a more comprehensive interpretation of cost. This is
accomplished by determining the overall cost of a given
diagnostic and therapeutic process from the initiation of
diagnosis until a final outcome is achieved. The various types of
costs can be grouped under the following categories: direct
medical costs, direct non-medical costs and indirect costs.
direct medical costs. The interpretation of what belongs in
each of these categories varies in the economic literature. Direct
medical costs are defined as those resources used by the
provider in the delivery of medical care. As an example, direct
medical costs for a hospital include:
? drugs
? laboratory tests
? medical supplies
? use of diagnostic equipment; e.g. magnetic resonance
imaging, computed tomography (CT) scans, X-rays
? medical staff time for personnel such as physicians, nurses,
pharmacists, physical therapists, laboratory technicians, etc.
? room and board: the cost of supplies, equipment, and
personnel required for routine patient-related services such as
food, laundry, and housekeeping
These are examples of costs that can be directly related to the
care of patients. Other costs of operating a hospital include
plant maintenance and repairs, utilities, telephone, accounting,
legal fees, insurance, taxes, real estate costs and interest
expenses. In general, most economic studies do not factor
general operating costs into the dollar value assigned to the cost
of resources expended for a given medicine.
Looking down the list of direct medical expenses, it is easy to
see why length of stay is an important cost factor to hospitals,
especially when payment is determined by diagnosis related
groups. Costs such as room and board are directly tied to the
length of stay, regardless of the reason. The cost of laboratory
tests, supplies and medical staff time vary with the medical
condition being treated, but are multiplied by the length of
stay.
Length of stay in hospital settings translates to number of
patient visits in managed care settings. Although the specific
items included under the category of direct medical costs will
be slightly different in managed care organizations, the same
principles of cost analysis apply. Drugs that achieve results
quickly and predictably not only benefit the patient, but also
benefit the provider by reducing the number of patient visits.
Every patient visit incurs provider resource costs, which may
not be reimbursed by a third-party payer. Interventions that
minimize patient visits are clearly a cost saving for the health
care organization.
direct non-medical costs. Economic literature generally defines
direct non-medical costs as out-of-pocket expenses paid by the
patient for items outside the health care sector. This category
includes such costs as:
? travel to and from the hospital, clinic, or doctor’s office
? travel and lodging for family members who live elsewhere
Evaluate
ACCEPT
(Dominant)
Reject
Evaluate
Higher costsLower costs
Outcome
Figure 1. The four possible outcomes of an economic evaluation
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? domestic help or home nursing services
? insurance co-payments and premiums
? treatment not covered by third-party payers
Although these costs are generally classified as ‘non-medical’, to
the patient they are real and often substantial costs of medical
care. What makes them ‘non-medical’ is that they are not costs
incurred by the health care provider, and are somewhat difficult
to measure. For example:
? A patient’s inability to afford competent follow-up care at
home may result in poor compliance with drug therapies and
eventual treatment failure. This may lead to additional
hospital stays or office visits, which affect the provider’s
bottom line.
? A patient’s inability to bear the unreimbursed cost of
medications may also lead to poor compliance and costly
complications.
? High transportation costs may lead to missed appointments
for necessary follow-up visits, which can result in
deterioration of a patient’s medical condition and increased
treatment costs for the provider.
Even though these costs may not be directly incurred by the
provider, they can be used in specific situations by making the
provider aware of their potential economic impact. It may also
be possible to use these costs to encourage payers (e.g.,
employers, insurance companies) to discuss the use of a more
cost-effective test with the health care provider.
indirect costs. One definition of indirect costs (also called
‘intangible costs’ by some economic analysts) is the overall
economic impact of illness on the patient’s life. These include:
? loss of earnings due to temporary, partial, or permanent
disability
? unpaid assistance by family members in providing home
health care
? lossofincometofamilymemberswhoforfeitpaidemployment
in order to remain at home and care for the patient
Like direct non-medical costs, indirect costs are real to the
patient, but abstract to the provider, although they may impact
the provider’s direct medical costs. For example, patients who
cannot earn income may not be able to pay their
bills—including medical bills. Economic hardship may result in
poor compliance with drug therapies as patients reduce doses
or fail to refill prescriptions in order to save money. The
medical provider may have to bear the additional costs of
managing complications. Economic hardship may also result in
missed follow-up appointments leading to the same types of
problems for providers as described previously with direct non-
medical costs.
consequences and outcomes. Final states or outcomes can be
negative (sometimes referred to as the ‘five D’s’):
? death
? disability (patient is permanently disabled and unable to
return to work or school, perform household chores, etc.)
? discomfort (patient is in constant state of moderate to high
level of pain)
? dissatisfaction (patient is not satisfied with the course of
treatment or services provided)
? disease (patient’s condition is not being controlled resulting
in frequent relapses, rehospitalization and expenditure of
additional resources).
There are also positive outcomes:
? patient is cured
? patient is able to resume normal functions
? improved or satisfactory quality of life
? patient’s medical condition is successfully managed or
stabilized by continued drug therapy.
The use of outcomes research represents an important advance
in medical economic analysis because of the relationship
between the final state, or result, of diagnosis and therapy
and overall cost-effectiveness. If one can demonstrate that
a product or intervention will achieve cost-effective positive
outcomes, one will increase the chances of diffusing the
technology within health care.
important economic concepts
average, marginal and joint costs
Most decisions in health care are not concerned with whether
or not a service should be provided, or whether or not
a particular procedure should be undertaken, but with how
much of the service should be provided. That is, should existing
levels of provision be expanded or contracted? For example,
should the existing provision of day care for people with mental
illness be expanded and, if so, by how much? What family
planning services should be made available? How many patients
presenting with head injuries should have CT scans? All these
decisions require that attention should be focused on marginal
costs—that is, the change in total costs resulting from
a marginal change in activity.
In the short run there is often an important difference
between the marginal costs of an activity and its average cost,
where the average cost is defined as the total costs divided by
the total number of units of output. Another context in which
the distinction between average and marginal costs is important
is in relation to duration of hospital stay of inpatients. Many
new procedures have reduced the amount of time necessary for
a patient to remain in hospital and thereby yield cost savings.
When valuing these savings, however, it is important to keep in
mind that using average costs/day will generally overstate the
savings as the later days of a stay usually cost less than the
earlier ones. It is the marginal costs/day that is the relevant
measure.
Another problem of cost measurement arises in connection
with joint costs. Often a single production process can result in
multiple outputs. For example, a single chemical analysis of
a blood sample can diagnose the presence of many diseases.
How should the cost be allocated to each diagnosis? Similarly,
within a hospital setting, there are many common services (like
medical records, radiology, operating theatres, laundry,
catering and cleaning) that contribute to a number of
specialties. Economic evaluation requires some method for
allocating the joint costs of these services to individual
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programs or procedures. There are several methods that may be
usedtodothis.Mostofthemusesomephysicalunitofutilization,
such as the number of laboratory tests, hours of operating
theatre use, or square meters of ward space, to apportion total
laboratory, operating theatre and ward cleaning costs.
adjusting for differences in timing: discounting
The current (operating) costs associated with most procedures
can be expected to extend over a number of years into the
future, but their time profiles may differ. In the case of many
preventive procedures, such as treatment for hypertension,
costs will be incurred regularly over a number of years. The
alternative of no preventive treatment may well incur zero
expenditure in the early years but incur the costs of surgery
earlier than would otherwise have been the case. Discounting
offers a means of standardizing different cost time profiles so
that total costs can be compared.
Discounting is based on the assumption that costs incurred
in the immediate future are of greater importance than costs
incurred in the distant future. This is because earlier access to
finance would permit investment at a positive rate of interest,
thereby yielding a larger sum in the future (there is an
opportunity cost) or because people and society attach more
importance to current opportunities than to future ones
(positive time preference).
For these reasons, economic evaluation weights costs by
a discount rate, according to the year in which they accrue,
before adding them up and expressing total costs in present
value terms (values in the current year).
In essence, discounting is the reverse application of the more
familiar compound interest formula—instead of sums being
calculated forwards, they are discounted backwards.
Fortunately, the application of discounting does not require
close familiarity with the formula as many finance and
accounting textbooks include discount tables. These indicate
the present values of the pound at different discount rates.
empirical assessment of costs and
benefits
Table 1 displays the main types of economic evaluations.
cost-minimisation analyses
Cost-minimisation analysis is concerned with comparing the
costs of different treatment modes that produce the same result.
For example, this form of analysis could be used to compare the
cost of two programs that involve minor surgery for adults.
Both have the same outcome in terms of the surgical procedure,
but the first program might require the patient to stay
overnight at the hospital, and the second might be done
through day surgery without requiring hospitalization. Given
these two alternatives, the search would be for the least costly
treatment. While we might be interested in the extent to which
day care surgery shifts costs from the institution to the patient,
the main efficiency comparison would be on a cost per surgical
procedure basis.
As far as pharmaceuticals are concerned, this type of study is
used most frequently when a new drug is introduced into
a therapeutic class that includes close competitors and where
no measurable therapeutic effect between them has been
documented.
When the cost of two interventions is being compared, cost-
minimisation analysis often assumes that they lead to the
identical health outcome. Studies of this nature should report
evidence to support the contention that outcome differences
are non-existent or trivial in nature. In most cases, however, the
issues are more than that of cost alone. It is rarely the case
where two therapies having the same indication produce
identical health outcomes in every respect.
cost-effectiveness analyses
Cost-effectiveness studies measure changes in the cost of all
relevant treatment alternatives, but measure the differences in
outcomes in some natural unit such as actual lives saved, years
of lives saved or children immunised. Cost-effectiveness
analyses can be applied equally to cases where the outcome is in
terms of quality of life. It is useful in comparing alternative
therapies that have the same outcome units (e.g., years of life
expectancy or of lives saved) but the treatments do not have the
same effectiveness (i.e., one drug may lead to greater life
expectancy). The measure compared is the cost of therapy
divided by the units of effectiveness and, hence, a lower number
signifies a more cost-effective outcome.
Table 1. Overview on the main types of pharmacoeconomic evaluations
Type of studyIntervention costs ConsequencesMeasurement of
consequences
Compares alternativesAssumes equivalent
effectiveness
Cost-benefit
analysis
Cost-effectiveness
analysis
Monetary value of
resources consumed
Monetary value of
resources consumed
Monetary value of
outcomes
Effects on health
EconomicNot necessarily, although
comparisons are implicit
Yes
No
Lives savedNo
Cases treated
Years of life saved
Quality-adjusted
life-years
Economic
Economic
Cost-utility
analysis
Monetary value of
resources consumed
1. Utility of health
effects
2. Indirect costs
3. Subsequent use
of resources
Yes No
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This type of study has the advantage that it does not require
the conversion of health outcomes to monetary units and
thereby avoids equal benefit and other difficult issues of the
valuation of benefits. It has the disadvantage of not permitting
comparison across programs that have different endpoints. In
other words, a drug whose function is aimed at reducing infant
mortality rates cannot be compared with a drug designed to
improve functional status of senior citizens. Moreover, it
cannot compare outcomes measured in clinical units with
quality of life measures.
cost-utility analyses
Cost-utility analysis compares the added costs of therapy with
the number of quality-adjusted life years (QALY) gained. The
quality adjustment weight is a utility value, which can be
measured as part of clinical trials or independently. The
advantage of cost-utility analysis is that therapies which
produce different or multiple results can be compared.
The QALY, which has been the standard measure of benefit
thus far, is arrived at in each case by adjusting the length of
time affected through the health outcome by the utility value
(on a scale of 0 to 1) of the resulting health status. Many
analysts are more comfortable with this measure of the
consequence of medical care than with the use of money as the
measure of benefits. A recent addition to the field is the
healthy-years equivalents which attempt to overcome problems
associated with the QALY methodology. Table 2 gives an
overview of utility values in the case of breast cancer.
Cost-utility analysis is an improvement over cost-
effectiveness analysis because it can measure the effects of
multiple outcomes (such as the impact of drugs on both
morbidity and mortality or the impact on both pain and
physical functional status).
cost-benefit analyses
As applied to health care, cost-benefit analysis measures all
costs and benefits of competing therapies in terms of monetary
units. Generally, a ratio of the discounted value of benefits to
costs (the present value of both) is calculated for each
competing therapy. The ratios for each of the competing
therapies and for competing programs (e.g., intensive care unit
versus new diagnostic equipment) can be readily compared.
Cost-benefit analysis has the shortcoming of requiring the
assignment of a dollar value to life and to health improvements
including quality of life variables. This presents equal benefit
issues as well as substantial measurement problems. For these
reasons cost-benefit analysis has not been widely used in recent
years for evaluating health technologies.
using economic analyses in decision
making
Just conducting economic research is often not enough.
What has to be done is to increase the impact of
such evaluations. A lot of economic data has already been
compiled but is not being used properly. So the future lies also
in using results and increasing the impact of those evaluations
[13]. One means is, for example, to involve decision makers in
the planning of such studies. In the past manufacturers have
produced data and tried to convince decision makers,
instead of working together with decision makers beforehand.
It should always be noted that economic analysis and
economic data will only represent one part of the information
required for the decision process. The next step is to make
decision makers aware of the usefulness of an economic
evaluation.
The next point is to make the study aware in the community
by all means of publication and communication, preferably
through the channels that reach decision makers. This means
that methodologies have to be reviewed in terms of their
credibility, financial costs and the time to complete.
Classifications such as those used in the Cochrane
Collaboration, for example, may also be suitable for analyzing
and rating the sources for economic evaluations [14]. Table 3
lists a rank order of methodologies for assessing the credibility.
In those cases where economic studies cannot be combined
with randomized controlled studies, modelling techniques have
to be employed. However, good modeling practice should be
envisaged [15]. Checklists have been developed in order to
facilitate the appraisal of the quality of economic analyses and
assist in minimizing possible bias [16, 17]. These criteria are
also being increasingly used in the peer review process by many
biomedical journals [18] and discussed accordingly [19]. In
many countries, such as Canada and Australia, economic
appraisal is a prerequisite for acceptance of a new
pharmaceutical product to be considered reimbursable [20, 21].
Another important question is whether preventive health
care is a more economically attractive investment than curative
technologies. Recently, Cohen et al. [22] analyzed the Tufts
New England Medical Center Cost-Effectiveness Analysis
Registry (www.tufts-nemc.org/cearegistry). They discovered
that the distributions of cost-effectiveness ratios for preventive
measures and treatments are very similar. Figure 2 shows the
distribution of cost-effectiveness ratios for preventive measures
and treatments for existing conditions.
challenges for the future
Further health economic studies will have to fulfil certain
needs. These will likely be (i) the establishment of the drugs
Table 2. Utility values exemplified for the case of metastasizing breast
cancer [23]
Health state Utility
Partial response
Stable disease
Before commencement of second line treatment
Partial response plus severe neuropathy
Progressive disease
Sepsis
Terminal disease
0.81
0.62
0.59
0.53
0.41
0.20
0.16
Rx, .
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effectiveness under real (every day) conditions as opposed to
clinical trial conditions, (ii) the determination of the real value
of production losses and their proper measurement, (iii)
improved conditions for implementing new programmes and
(iv) cost estimates for more ambitious programmes.
Furthermore, the adaptation of economic studies across
countries will not be an easy task. Problem areas in this respect
may be the choice of the perspective of the economic study,
local practice patterns and the customer structure for drug
purchasing decisions. Also, patient preferences as well as the
different sociodemographic structure, price levels and
effectiveness will have to be taken into consideration.
Figure 2.
Medical Center Cost-Effectiveness Registry). QALY denotes quality-adjusted life-year.
Distribution of cost-effectiveness ratios for preventive measures and treatments for existing conditions (data are from the Tufts–New England
Table 3. League table for various medical interventions in oncology
Intervention Costs/life year US$ Author
Surgery in 70-year-old men with a new diagnosis of prostate cancer,
compared with watchful waiting
Routine cost-effectiveness analyses monitoring of colon cancer
Allogenous bone marrow transplantation for relapse of M. Hodgkin
Bone marrow transplant and high dose (versus standard dose)
chemotherapy for breast cancer
Bevacizumab in the first-line treatment of metastatic colorectal cancer
versus irinotecan plus 5-fluorouracil
Allogenous bone marrow transplantation in metastatic breast cancer
Chemotherapy of acute non-lymphocytic leukemia
Quality-controlled mammography screening in 40-year-old women
Adjuvant CMF in breast cancer, 75-year-old women
Trastuzumab in the adjuvant treatment of early breast cancer
Intensive tobacco use prevention program in 7th and 8th graders
Post-surgical chemotherapy for women with breast cancer age 60
Post-surgical chemotherapy for premenopausal women with breast cancer
Interferon alpha-2b in hairy cell leukemia
Taxol as first-line chemotherapy of ovarian cancer (six European countries)
Adjuvant CMF in breast cancer, 45-year-old women
Tamoxifen in advanced breast cancer
One-time colonoscopy screening for colorectal cancer in men 60–64 years of age
Increases costs and
worsens health
31 000–6 600 000
421 000
129 179
Basu, 2005 [24]]
Kievit, 1990 [25]]
Desch, 1992 [26]]
Hillner, 1992 [27]]
124 000Tappenden, 2007 [28]
115 800
80 300
73 018
44 000
27 000
23 000
22 105
18 107
13 800
6400–11 400
4900
810
Cost-saving
Hillner, 1992 [27]
Welch, 1989 [29]
Neeser, 2007 [30]
Desch, 1993 [30]
Dedes, 2007 [31]]
Venditti, 2003 [32]]
Hillner, 1991 [33]
Hillner, 1991 [33]
Ozer, 1989 [34]
Berger, 1989 [35]
Hillner, 1992 [27]
Rees, 1985 [36]
Ness, 2000 [37]]
CMF, cyclophosphamide, methotrexate, fluorouracil.
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disclosures
No significant relationships
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Annals of Oncology
symposium article
Volume 19|Supplement 7|September 2008doi:10.1093/annonc/mdn475 | vii319
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