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PRINTED FROM the OXFORD RESEARCH ENCYCLOPEDIA, ECONOMICS AND FINANCE (oxfordre.com/economics). (c) Oxford University Press USA, 2020. All Rights Reserved. Personal use only; commercial use is strictly prohibited (for details see Privacy Policy and Legal Notice).

date: 28 September 2020

Summary and Keywords

The evidence produced by healthcare economic evaluation studies is a key component of any Health Technology Assessment (HTA) process designed to inform resource allocation decisions in a budget-limited context. To improve the quality (and harmonize the generation process) of such evidence, many HTA agencies have established methodological guidelines describing the normative framework inspiring their decision-making process. The information requirements that economic evaluation analyses for HTA must satisfy typically involve the use of complex quantitative syntheses of multiple available datasets, handling mixtures of aggregate and patient-level information, and the use of sophisticated statistical models for the analysis of non-Normal data (e.g., time-to-event, quality of life and costs). Much of the recent methodological research in economic evaluation for healthcare has developed in response to these needs, in terms of sound statistical decision-theoretic foundations, and is increasingly being formulated within a Bayesian paradigm. The rationale for this preference lies in the fact that by taking a probabilistic approach, based on decision rules and available information, a Bayesian economic evaluation study can explicitly account for relevant sources of uncertainty in the decision process and produce information to identify an “optimal” course of actions. Moreover, the Bayesian approach naturally allows the incorporation of an element of judgment or evidence from different sources (e.g., expert opinion or multiple studies) into the analysis. This is particularly important when, as often occurs in economic evaluation for HTA, the evidence base is sparse and requires some inevitable mathematical modeling to bridge the gaps in the available data. The availability of free and open source software in the last two decades has greatly reduced the computational costs and facilitated the application of Bayesian methods and has the potential to improve the work of modelers and regulators alike, thus advancing the fields of economic evaluation of healthcare interventions. This chapter provides an overview of the areas where Bayesian methods have contributed to the address the methodological needs that stem from the normative framework adopted by a number of HTA agencies.

Keywords: health economics, Bayesian statistics, cost-effectiveness analysis, health technology assessment, probabilistic sensitivity analysis, decision analytic models, individual level data, aggregated level data

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