Alicia Saville

Modelling for Cost-Effectiveness Analysis

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Alicia Saville, (2022, November 5). Modelling for Cost-Effectiveness Analysis. Psychreg on Organisational Psychology. https://www.psychreg.org/modelling-cost-effectiveness-analysis/
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A cost-benefit analysis (CEA) is an economic study that is mandatory in the US. and many European countries before a new drug or medical device can be produced. Also, based on CEA data, the responsible authorities decide whether to grant them market access. Modern digital technologies make it possible to create cost-effectiveness models (CEM), which are used to analyze and process the results. Let’s take a closer look at what modelling is for cost-effectiveness analysis.

Why cost-effectiveness analysis is needed

CEA allows you to estimate the costs and consequences as well as the value for money of treating diseases with certain medications, emphasising clinical outcomes that prove the effectiveness of the treatment. It also allows you to compare the results with the effectiveness of other drugs already on the market.

Cost-effectiveness analysis helps manufacturers determine a product’s value and calculate the optimal cost. Also, the analysis results are used in negotiating the licensing of the product and its access to the market. Finally, for payers, healthcare providers, and healthcare decision-makers, this analysis provides them with an assessment of alternative treatment options for specific diseases.

Modelling for cost-effectiveness analysis

A cost-effectiveness model (CEM) is a mathematical framework for calculating and analysing cost-effectiveness.

The primary purpose of a CEM is to synthesize information that allows you to measure the effect of a healthcare intervention and compare it to the cost to the patient of the proposed treatment protocol. Such information includes:

  • Clinical indicators during the natural course of the disease
  • Clinical indicators and outcomes after treatment
  • Patient’s quality of life and life expectancy after completion of treatment
  • Asymptomatic days
  • Cost of treatment

The data obtained from the analysis allows us to assess whether the proposed product or treatment protocol is cost-effective in terms of the investment ratio to the outcome and to compare it with the effects and costs of alternative drugs.

A model for cost-effectiveness analysis must meet several requirements:

  • Give accurate predictions.
  • Allow for substantial variation in factors affecting treatment costs and effectiveness.
  • Include all possible costs and effects of treatment.

All this is taken into account by developers when modelling cost-effectiveness in health care.

Digital cost-effectiveness models

Today’s technology makes it possible to create easy-to-use programs for PCs and mobile devices that are effective tools for making informed healthcare decisions. The development of such CEMs involves economists, medical professionals, graphic designers, analysts and other subspecialists. As a result, the customer receives:

  • Robust CEM that includes all the data needed for analysis;
  • Access to the data from various devices;
  • Visual results in the form of compact tables, graphs and charts.

But the main advantage is using the digital economic model for the product’s entire life cycle. This allows you to monitor its profitability and make adjustments as needed.


Alicia Saville did her degree in psychology at the University of Hertfordshire. She is interested in mental health, wellness, and lifestyle.


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