Question

You have the following table of costs and benefits for alternative treatments

Treatment #	Cost	Effectiveness (life years gained)
1	100000	5
2	200000	3
3	400000	10
4	500000	20

A.        Which treatment(s) if any, is strongly dominated?

B.        Which treatment(s) if any is weakly dominated?

C.        Calculate incremental cost effectiveness ratios.

D.        Assuming that a life year is considered to be worth up to 100000, which interventions would you choose, in the absence of budgetary constraints?

E.         How might budgetary constraints affect your decision on which interventions to choose?

Answer 1

A Treatment 1 is strongly dominated. Incremental cost per annum is 100000/5 = 20000 per year lowest of all other options.

B Treatment 2 is weakly dominated 200000/3 = 66,667 per year highest cost per year of all options.

C Incremental cost effectiveness ratios cannot be calculated here as potential savings/revenue increase is not provided.

D Option 4 as highest life means highest value. 20 years x 100000 = 20,00,000. Subtract 500000 from it you get 1500000. None of the other options will reach this level even in terms of revenue.  

E Since the lowest cost option is the most dominating one, budgetary considerations have no bearing on recommended option i.e. option 1.