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COSTEFFECTIVENESS ANALYSES IN HEALTH A Practical Approach Second Edition PETER MUENNIG ffirs.indd iii 8/31/07 12:08:22 PM ffirs.indd ii 8/31/07 12:08:22 PM COSTEFFECTIVENESS ANALYSES IN HEALTH ffirs.indd i 8/31/07 12:08:20 PM ffirs.indd ii 8/31/07 12:08:22 PM COSTEFFECTIVENESS ANALYSES IN HEALTH A Practical Approach Second Edition PETER MUENNIG ffirs.indd iii 8/31/07 12:08:22 PM Copyright © 2008 by John Wiley & Sons, Inc. All rights reserved. Published by Jossey-Bass A Wiley Imprint 989 Market Street, San Francisco, CA 94103-1741—www.josseybass.com No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, 978-750-8400, fax 978-646-8600, or on the Web at www.copyright.com. Requests to the publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, 201-748-6011, fax 201-748-6008, or online at www.wiley.com/go/permissions. Readers should be aware that Internet Web sites offered as citations and/or sources for further information may have changed or disappeared between the time this was written and when it is read. Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor author shall be liable for any loss of profit or any other commercial damages, including but not limited to special, incidental, consequential, or other damages. Jossey-Bass books and products are available through most bookstores. To contact Jossey-Bass directly call our Customer Care Department within the U.S. at 800-956-7739, outside the U.S. at 317-572-3986, or fax 317-572-4002. Jossey-Bass also publishes its books in a variety of electronic formats. Some content that appears in print may not be available in electronic books. Library of Congress Cataloging-in-Publication Data Muennig, Peter. Cost-effectiveness analyses in health : a practical approach / Peter Muennig. — 2nd ed. p. ; cm. Includes bibliographical references and index. ISBN-13: 978-0-7879-9556-0 (cloth) 1. Medical care—United States—Cost effectiveness. 2. Medical care, Cost of—United States. I. Title. [DNLM: 1. Cost-Benefit Analysis—methods. 2. Health Care Costs. 3. Quality of Life. W 74 M948c 2008] RA410.5.M84 2008 338.4'33621—dc22 2007026832 Printed in the United States of America SECOND EDITION HB Printing ffirs.indd iv 10 9 8 7 6 5 4 3 2 1 8/31/07 12:08:23 PM CONTENTS List of Tables, Figures, and Exhibits ix Preface xiii The Author xvi CHAPTER ONE: INTRODUCTION TO COST-EFFECTIVENESS Overview Why Cost-Effectiveness Is Useful Elements of Cost-Effectiveness Analysis The Cost-Effectiveness Ratio Why Conduct Cost-Effectiveness Analysis? The Reference Case Analysis Cost-Effectiveness Analysis and Policy 1 1 3 4 8 9 12 14 CHAPTER TWO: PRINCIP