An explanation of the cost-effectiveness plane

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Introduction

The cost-effectiveness plane (CE plane) is an important tool used in cost-effectiveness analysis, and applied widely in the healthcare industry. It aims to clearly illustrate differences in costs and effects between different strategies, whether they comprise medical interventions, treatments, or even a combination of the two. By visually representing the relative value of strategies, the CE plane helps its viewer evaluate multiple stratgies and make more informed decisions.

History and uses

Although the CE plane was just developed in 1990 by Dr. William C. Black, cost-effectiveness analysis originated in the military sector and was introduced into healthcare in the mid-1960s. Today, cost-effectiveness analysis is a staple tool used in the pharmaceutical and medical device industries. As a consequence, it also forms the basis of many key studies presented in medical decision-making literature.

CE-Plane control in BaseCase Interactive

As decision makers – whether they be hospital administrators, health insurance funds, governments or physicians – require more accurate information before making purchase decisions, cost-effectiveness analysis is increasingly at the forefront. These analyses, however, are often highly complex. This means there is a crucial need for clear, intuitive visualization tools to support these analyses.

By using tools such as the CE plane, decision makers are better placed to immediately recognize the clinical and economic value of particular treatment strategies.

This potentially benefits all parties. While patients have better opportunities to access improved health outcomes, pharmaceutical and medical device manufacturers also have better opportunities to profit from providing these beneficial products.

How does it work?

In order to identify the intervention, or mix of interventions, and which offer is the best value for money, you may consider the incremental cost-effectiveness ratio (ICER). This ratio is calculated by dividing the incremental cost of new therapy by the incremental measure of benefit.

While this approach is often helpful, it is notable that, in truth, the ICER is not a single number but rather a distribution with uncertainty. One approach to explicitly consider the distribution is to perform a bootstrap analysis. This analysis generates confidence intervals around cost and effectiveness by sampling from a distribution of each. When considered concurrently and graphed on the CE plane, you can visualize how the ICER is distributed over a sample population.

The cost-effectiveness plane consists of a four-quadrant diagram where the X axis represents the incremental level of effectiveness of an outcome and the Y axis represents the additional total cost of implementing this outcome. For example, the further right you move on the X axis, the more effective the outcome.

Importantly, the X axis also allows less effective interventions to be represented on the left-hand side of the graph. Similarly, the further up you move on the Y axis, the more costly the outcome. Again, cost-saving interventions can be included, this time in the lower half of the graph.

When considering both parameters together, the CE plane allows you to determine the relative cost and relative effectiveness. The fact that the four quadrants can represent all combinations of possible outcomes is important, since bootstrap analyses will produce a cloud of results which may span multiple quadrants.

In fact, the spread of results can be an important aspect of the ICER to understand, since it is a measure the ICER’s degree of uncertainty. This is one reason why the CE plane is such a valuable visual tool, since it provides a quick visual snapshot of the distribution of the ICER and a summary of how cost and outcomes are likely to behave.

Each drug has an assumed daily cost seen in the first set of sliders, and each reduces the risk of heart failure by an assumed percentage as seen in the second set of slider. The third set of sliders affects the discounted costs and effects for all three drugs over a period of five years.

Wondering why we haven’t posted in a while?

Our blog has moved to a different location.
Visit http://blog.basecase.net to check out our latest blog posts.