In one sense, cost is just another potentially important outcome—like mortality, morbidity, and quality of life—associated with alternative ways of managing patients. In addition to these clinical outcomes, an intervention may increase costs or decrease costs. However, costs differ from other outcomes in several ways (box).1
In what way do costs differ from other health outcomes?
- Patients receive health benefits and bear the burden of adverse health outcomes, but healthcare costs are typically shared by society as a whole (as represented by the government), employers, and patients
- Attitudes differ as to whether costs should influence a doctor’s decision about treating individual patients
- Healthcare costs may vary widely among and even within jurisdictions and quickly change over time
- What societies can purchase if they forego use of healthcare resources (opportunity cost) varies widely between countries. A year’s supply of an expensive drug may pay a nurse’s salary in the US and 30 nurses’ salaries in China
- When healthcare expenditures demand foregoing expenditures elsewhere, attitudes differ as to whether the health system, public expenditures, or society as a whole should bear the burden
- Matters relating to resource use are highly political and may result in conflict of interest for a guideline panel (for example, panellists may have an association with industry or government)
Firstly, for most outcomes other than costs, it is clear who gains the advantages and has to live with the disadvantages—the patient and, secondarily, his or her family. This is not true of all outcomes. Consider vaccinations, in which the entire community benefits from the herd effect, or widespread use of antibiotics that may have downstream adverse consequences of drug resistance. It is costs, however, where the matter of who pays and who gains is most prominent. Healthcare costs are often borne by society as a whole, or in a complex arrangement that involves the patient, an employer, and an insurer. Even within a society, who bears the cost may differ depending on the patient’s age (for example, under or over 65) or situation (for example, whether the patient is receiving social assistance).
- Costs differ from other healthcare outcomes—costs are shared by patients, employers, and society, and opinions differ as to who should bear the burden; some people think costs should not influence doctors’ decisions; costs differ across and within jurisdictions
- A balance sheet should inform judgments about whether the net benefits are worth the incremental costs
- Evidence profiles should always present resource use, not just monetary values
- A guideline panel may legitimately choose to omit costs as a consideration
- Formal economic modelling may—or may not—be helpful
Secondly, depending on who bears the cost, opinions on the extent that costs should influence the decision differ. If costs are borne by a third party payer (the government or another third party payer) some people would argue that the doctor’s responsibility to the patient means that costs should not influence the decision. On the other hand, a clinicians’ responsibility when caring for a patient is discharged in a broader context—resources that are used for an intervention cannot be used for something else and can prevent the health system from best meeting the needs of those it serves.
Thirdly, costs tend to vary widely across jurisdictions. Costs of drugs are largely unrelated to the costs of producing them but more to marketing decisions and national policies. Most medicines under patent, for example, cost around twice as much in the United States as in Canada. Furthermore, costs may vary widely even within jurisdictions. Hospitals or health maintenance organisations may, for instance, negotiate special arrangements with drug companies for prices substantially lower than are available to patients or other providers. In addition, costs can vary widely over time (for example, when a drug comes off patent).
Even when resource use remains the same, the resource implications may vary widely across jurisdictions. A year’s supply of a very expensive drug may pay a nurse’s salary in the US, six nurses’ salaries in Poland, and 30 nurses’ salaries in China. Thus, what can be bought with the resources saved if a certain drug is not purchased (the “opportunity cost”)—and the health benefits achieved with those funds—will differ greatly.2
Lastly, people may have different ideas about which “envelope” opportunity costs fall into. A hospital pharmacy with a fixed budget considering purchase of an expensive new drug will have a clear idea of what that purchase will mean in terms of other drugs the pharmacy cannot afford. In broader settings the opportunity costs will be less clear. For instance, funding a new drug or programme will constrain resources for other public health expenditures, but will refraining from that purchase really mean the equivalent resources are available for our healthcare system? People often assume the envelope from which health care costs must come is public health spending, but might refraining from tax reductions or reducing military expenditure be legitimate alternatives for making an effective but expensive drug widely available?
All of the points mentioned up to now make the consideration of resource allocation a far more political issue than consideration of other outcomes. Whether the panel does or does not explicitly consider matters related to resource allocation, those politics may bear on a guideline panel’s function through conflict of interest. Conflicts may arise through the association of panel members with commercial entities, the government, or other third party payers.