Distributional consequences of including survivor costs in economic evaluations

Abstract

Medical interventions that increase life expectancy of patients result in additional consumption of non‐medical goods and services in ‘added life years’. This paper focuses on the distributional consequences across socio‐economic groups of including these costs in cost effectiveness analysis. In that context, it also highlights the role of remaining quality of life and household economies of scale. Data from a Dutch household spending survey was used to estimate non‐medical consumption and household size by age and educational attainment. Estimates of non‐medical consumption and household size were combined with life tables to estimate what the impact of including non‐medical survivor costs would be on the incremental cost effectiveness ratio (ICER) of preventing a death at a certain age. Results show that including non‐medical survivor costs increases estimated ICERs most strongly when interventions are targeted at the higher educated. Adjusting for household size (lower educated people less often live additional life years in multi‐person households) and quality of life (lower educated people on average spend added life years in poorer health) mitigates this difference. Ignoring costs of non‐medical consumption in economic evaluations implicitly favors interventions targeted at the higher educated and thus potentially amplifies socio‐economic inequalities in health.