Use of an angular transformation for ratio estimation in cost-effectiveness analysis

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Abstract
Economic evaluations of medical technologies involve a consideration of both costs and clinical benefits, and an increasing number of clinical studies include a specific objective of assessing cost‐effectiveness. These studies measure the trade‐off between costs and benefits using the cost‐effectiveness ratio (CE ratio), which is defined as the net incremental cost per unit of benefit provided by the candidate therapy. In this paper we review the statistical methods which have been proposed for estimating 95 per cent confidence intervals for cost‐effectiveness ratios. We show that the use of an angular transformation of the standardized ratio stabilizes the variance of the estimated CE ratio, and provides a clearer interpretation of study results. An estimate of the 95 per cent confidence interval for the CE ratio in the transformed scale is easily made using the jack‐knife or bootstrap. The available methods are compared using data from a long term study of mortality in patients with congestive heart failure. Copyright © 2000 John Wiley & Sons, Ltd.