The Interpretation of results of economic evaluation: explicating the value of health

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Abstract
Theoretically it can be proven that an optimal allocation of resources within a constrained budget can be reached by considering cost‐effectiveness ratios (CERs). In this paper, the complex priority setting process regarding compatible and incompatible alternatives of medical interventions is clarified. Priority setting in the context of compatible alternatives may refer to the selection of more than one, possibly all, alternatives. Inherent to a set of incompatible alternatives is that only one alternative can be selected. This latter situation frequently occurs in health care. The value that society attaches to a unit of effectiveness (e.g. a QALY) has an important impact on the priority ranking of medical interventions. By explicating this value and by using the ‘net‐value’ approach, a graphical framework is presented that allows decision‐makers a better understanding on the impact of particular levels of these values on their optimal policy choices. For illustrative purposes, it is shown that by the erroneous application of decision rules, some recent papers have provided sub‐optimal recommendations for health care policy. © 1997 John Wiley & Sons, Ltd.

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