Medical Decision Making (MDM)
January/February 2011; 31 (1)
http://mdm.sagepub.com/content/current

Cost-Effectiveness Analysis: Methods
Steven M. Shechter
Treatment Evolution and New Standards of Care: Implications for Cost-Effectiveness Analysis
Med Decis Making January/February 2011 31: 35-42, first published on March 30, 2010 doi:10.1177/0272989X10364849

Abstract
Background. Traditional approaches to cost-effectiveness analysis have not considered the downstream possibility of a new standard of care coming out of the research and development pipeline. However, the treatment landscape for patients may change significantly over the course of their lifetimes.

Objective. To present a Markov modeling framework that incorporates the possibility of treatment evolution into the incremental cost-effectiveness ratio (ICER) that compares treatments available at the present time.

Design. Markov model evaluated by matrix algebra. Measurements. The author evaluates the difference between the new and traditional ICER calculations for patients with chronic diseases facing a lifetime of treatment. Results. The bias of the traditional ICER calculation may be substantial, with further testing revealing that it may be either positive or negative depending on the model parameters. The author also performs probabilistic sensitivity analyses with respect to the possible timing of a new treatment discovery and notes the increase in the magnitude of the bias when the new treatment is likely to appear sooner rather than later. Limitations. The modeling framework is intended as a proof of concept and therefore makes simplifying assumptions such as time stationarity of model parameters and consideration of a single new drug discovery.

Conclusions. For diseases with a more active research and development pipeline, the possibility of a new treatment paradigm may be at least as important to consider in sensitivity analysis as other parameters that are often considered.