Covariate Adjustment and Subgroup Analysis in Cost-Effectiveness Evaluations

Health Economics, Vol. 14, pp. 1217-1229, 2005

iHEA 2007 6th World Congress: Explorations in Health Economics Paper

Posted: 23 Jun 2007

See all articles by Richard Nixon

Richard Nixon

Novartis AG

Simon G. Thompson

UK Medical Research Council - Biostatistics Unit

Abstract

Overall assessments of cost-effectiveness are now commonplace in informing medical policy decision making. Analyses may be biased by case-mix differences, and it is important to attempt to adjust the inference for this especially if the evaluation is conducted in the context of an observation study. It is also often important also to investigate how cost-effectiveness varies between patient subgroups. Yet such analyses are rarely undertaken, because appropriate methods have not been sufficiently developed.

We propose a coherent set of methods to extend cost-effectiveness analyses to adjust for baseline covariates and to investigate differences between subgroups. Baseline adjustment is a common method to adjust for bias in observational data, and also to improve the precision and adjust for baseline imbalance in randomized studies. Subgroup adjustment is performed by including a covariate/treatment group interaction in the model. These methods consider costs and effects jointly, and allow for the typically skewed distribution of cost data. The results are presented as inferences on the cost-effectiveness plane, and as cost-effectiveness acceptability curves.

In applying these methods to a randomized trial of case-management of psychotic patients, we show that overall cost-effectiveness can be affected by ignoring the skewness of cost data, but that it may be difficult to gain substantial precision by adjusting for baseline covariates. Analyses of overall cost-effectiveness can mask important subgroup differences

The methods developed allow a flexible choice for the distributions used for cost data, and have a wide range of applicability - to both randomized trials and observational studies.

Keywords: subgroups, cost-effectiveness

JEL Classification: C13

Suggested Citation

Nixon, Richard and Thompson, Simon G., Covariate Adjustment and Subgroup Analysis in Cost-Effectiveness Evaluations. Health Economics, Vol. 14, pp. 1217-1229, 2005, iHEA 2007 6th World Congress: Explorations in Health Economics Paper, Available at SSRN: https://ssrn.com/abstract=995983

Richard Nixon (Contact Author)

Novartis AG ( email )

Basel, CH-4002
Switzerland

Simon G. Thompson

UK Medical Research Council - Biostatistics Unit ( email )

Robinson Way
Cambridge, CB2 0SR
United Kingdom

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