Clinical effectiveness

The extent to which an intervention produces an overall health benefit, taking into account beneficial and adverse effects, in routine clinical practice. It is not the same as efficacy.

Clinical outcome

An outcome of major clinical importance that is defined on the basis of the disease being studied (e.g. fracture in osteoporosis, relapse rates).

Clinical significance

A conclusion that an intervention has an effect that is of practical meaning to patients and health care providers. Effects identified as statistically significant are not always clinically significant, because the effect is small or the outcome is not important.

Clinical trial

A carefully controlled and monitored research study on human subjects or patients evaluating one or more health interventions.  Each trial is designed to answer specific scientific questions.

Comparative effectiveness

The ability of one treatment, relative to another, to demonstrate clinical effectiveness.

Comparator

The standard intervention against which the intervention under appraisal is compared. The comparator can be no intervention, for example best supportive care.

CONSORT statement

CONSOlidated Reporting of clinical Trials: Recommendations for improving the reporting of randomised controlled trials in journals. A flow diagram and checklist allow readers to understand how to carry out a study and assess the validity of the results.

Cost

The value of opportunity forgone as a result of engaging resources in an activity.

Cost benefit analysis (CBA)

An economic evaluation comparing alternative interventions in which costs and outcomes are quantified using the same monetary units.

Cost consequences analysis

An economic evaluation in which the components of costs and consequences (health outcomes, adverse effects etc.) are measured and presented in their natural units, without any attempt to aggregate the outputs.

Cost minimisation analysis (CMA)

An economic evaluation comparing the costs of different interventions that are assumed to produce equivalent benefits.

Cost of illness analysis

A determination of the economic impact of a disease or health condition, including treatment costs.

Cost per QALY

A measure used in cost-utility-analysis, expressed as monetary cost per unit of outcome.

Cost utility analysis (CUA)

An economic evaluation in which costs are measured in monetary units and outcomes are measured in terms of their utility e.g. using the quality adjusted life year (QALY).

Cost-effective

A technology is considered cost effective for a specified indication if the incremental benefits of the technology versus its comparator justify its incremental costs and harms; value for money.

Cost effectiveness

How well a technology works in relation to how much it costs.

Cost-effectiveness acceptability curve (CEAC)

Graphical representation of the probability that an intervention is cost-effective at various willingness-to-pay thresholds.

Cost-effectiveness acceptability frontier (CEAF)

The CEAF plots the strategy with the highest expected cost-effectiveness (expected Net Monetary Benefit) as a function of the cost-effectiveness threshold.

Cost-effectiveness analysis (CEA)

An economic evaluation in which costs are measured in monetary units and outcomes are measured in nonmonetary units related to health e.g. as life years gained or clinical events avoided.

Cost-effectiveness plane

Graph plotting the difference in effect between the technology of interest and the comparator on the horizontal axis, and difference in costs on the vertical access.

Critical appraisal

The process of assessing and interpreting evidence by systematically considering its validity, results and relevance.

Decision analysis

A systematic approach to decision making under uncertainty.  This involves the modelling of the sequences or pathways of multiple possible strategies (e.g. of diagnosis and treatment for a particular clinical problem) to determine which is optimal.

Decision tree

A graphical framework for representing alternatives for use in decision analysis.

Deterministic sensitivity analysis (DSA)

A method of capturing the level of uncertainty in the results of decision analysis which varies variables one at a time (one-way sensitivity analysis) or two or more at a time (multi-way sensitivity analysis).

Diagnosis Related Group (DRG)

A patient classification scheme that provides a clinically meaningful way of relating the types of patients treated in a hospital to the resources required by the hospital.

Direct costs

The fixed and variable costs of all resources (goods, services, etc.) consumed in the provision of an intervention as well as any consequences of the intervention such as adverse effects or goods or services induced by the intervention – includes direct medical costs and direct nonmedical costs such as transportation or child care.

Direct medical costs

A medical cost that varies directly with the provision of a health care intervention (e.g. physician salaries).

Direct non-medical costs

A non-medical cost associated with provision of medical services (e.g. transportation of a patient to a hospital).

Discount rate

The interest rate used to discount or calculate future costs and benefits so as to arrive at their present values, e.g. 3%.

Discounting

The process used in economic analyses to convert future costs or benefits to present values using a discount rate. Discounting costs reflects societal preference for costs to be experienced in the future rather than the present, and for benefits to be realised in the present rather than at a later date.

Distribution

A mathematical function describing the variability of a variable.

Dominance

A strategy is dominated if it is less effective and has higher costs than an alternative strategy.

Economic evaluation

The comparison of alternative courses of action in terms of their costs and consequences, to inform and support the decision-making process.

Economic model

An explicit mathematical framework that is used to represent clinical decision problems. It incorporates evidence from a variety of sources so that the costs and health outcomes can be estimated.

Effectiveness

The evaluation of benefit or risk, in a standard clinical setting, using outcomes measuring issues of importance to patients.

Efficacy

The evaluation of benefit or risk in a defined population in controlled or ideal circumstances e.g. in a laboratory setting, under research conditions.

EVPI

Expected value of perfect information: describes the maximum amount a decision maker would be willing to pay in order to obtain perfect information, where perfect information would allow them to make a choice under certainty.

Extended dominance

In the comparison of mutually exclusive programmes, the situation where one option has a higher incremental cost effectiveness ratio than a more effective alternative.

Extrapolation

Refers to the application of results to a wider population. Means to infer, predict, extend or project the results beyond what was recorded, observed or experienced.

Health outcomes

The results or impact of any type of intervention on health, (e.g. a clinical procedure, health policy or program, etc.).

Health technology assessment (HTA)

The systematic evaluation of properties, effects, and/or impacts of health care technology. It may address the direct, intended consequences of technologies as well as their indirect, unintended consequences. Its main purpose is to inform technology-related policymaking in healthcare. HTA is conducted by interdisciplinary groups using explicit analytical frameworks drawing from a variety of methods.

Health-related quality of life (HRQoL, QOL)

Patient outcome measures that include physical, social, and emotional aspects that are relevant and important to an individual’s wellbeing.

Heterogeneity

In meta-analysis heterogeneity refers to variability or differences between studies e.g. due to different study designs, different statistical methods, differences in key characteristics of the participants, interventions or outcome measures.

Incremental cost effectiveness ratio (ICER)

The additional cost of an intervention as compared with the comparator, divided by the difference in effect or patient outcome between the interventions, e.g. additional cost per QALY.

Indirect costs

The cost of time lost from work (or leisure) and decreased productivity due to disease, disability, or death. In cost accounting, refers to costs that cannot be attributed to a particular activity but can be allocated across different activities; may be “fixed” regardless of activity intensity (e.g., building maintenance) or “variable” where their magnitude varies with activity (e.g., heating and lighting a building).

Intangible costs

The cost of pain and suffering resulting from a disease, condition, or intervention.

Mapping

A set of methods where one outcome measure (e.g. health related quality of life weights) are statistically predicted from one or more other measures.

Markov Model

A type of quantitative modelling that involves a specified set of mutually exclusive and exhaustive states (e.g. of a given health status), and for which there are transition probabilities of moving from one state to another (including remaining in the same state). Typically, states have a uniform time period, and transition probabilities remain constant over time.

Meta-analysis

Systematic methods that use statistical techniques for combining results from different studies to obtain a quantitative estimate of the overall effect of a particular intervention or variable on a defined outcome. This combination may produce a stronger conclusion than can be provided by any individual study.

Micro-costing

Costing approach based on detailed resources used by patient on item by item basis.

Net benefit

Benefit (in monetary units) minus total cost (in monetary units).

Type of sensitivity analysis in which probability distributions are specified for parameters (e.g., outcomes, costs, utilities) to capture the uncertainty around the true parameter value.  A Monte Carlo simulation is performed to generate a probability distribution of expected outcomes and costs.

Odds ratio (OR)

A measure of treatment effect that compares the probability of a type of outcome in the treatment group with the outcome of a control group, i.e. [Pt ÷ (1 – Pt)] [Pc ÷ (1 – Pc)].

Opportunity Cost

The amount that could be spent on alternative healthcare strategies if the health technology in question was not used.

Perspective

Viewpoint from which an economic evaluation is conducted e.g. healthcare payer, society, individual.

Pharmacoeconomics

Pharmacoeconomics is the scientific discipline that evaluates the clinical, economic and humanistic aspects of pharmaceutical products to provide health care decision makers, providers and patients with valuable information for optimal outcomes and the allocation of health care resources. Pharmacoeconomics incorporates health economics, clinical evaluations, risk analysis, technology assessment, and health-related quality of life, epidemiology, decision sciences and health services research.

Probabilistic sensitivity analysis (PSA)

Type of sensitivity analysis in which probability distributions are specified for parameters (e.g., outcomes, costs, utilities) to capture the uncertainty around the true parameter value.  A Monte Carlo simulation is performed to generate a probability distribution of expected outcomes and costs.

Probability distribution

Portrays the relative likelihood that a range of values is the true value of a treatment effect (or other outcome or result). This distribution may follow the form of a particular function, e.g., a normal, chi square, binomial, or Poisson distribution. An estimate of the most likely true value of the treatment effect is the value at the highest point of the distribution. The area under the curve between any two points along the range gives the probability that the true value of the treatment effect lies between those two points. Thus, a probability distribution can be used to determine an interval that has a designated probability (e.g. 95%) of including the true value of the treatment effect.

Productivity costs

The costs associated with lost or impaired ability to work because of morbidity or death.

Quality-adjusted life year (QALY)

A health outcome measure that adjusts years of life subsequent to an intervention by the quality of life during those years.

Relative risk (RR)

The ratio of (statistical) risk in the intervention group to the risk in the control group. A RR of one indicates no difference between comparison groups. For undesirable outcomes an RR that is less than one indicates that the intervention was effective in reducing the risk of that outcome.

Sensitivity analysis

A means of exploring the robustness of a mathematical model or analysis to determine how and whether changes in uncertain model inputs affect main results and conclusions of analysis.

Statistical significance

A conclusion that an intervention has a true effect, based upon observed differences in outcomes between the treatment and control groups that are sufficiently large so that these differences are unlikely to have occurred due to chance, as determined by a statistical test. Statistical significance indicates the probability that the observed difference was due to chance if the null hypothesis is true; it does not provide information about the magnitude of a treatment effect.

Systematic review

A form of structure literature review that addresses a question that is formulated to be answered by analysis of evidence, and involves objective means of searching the literature, applying predetermined inclusion and exclusion criteria to this literature, critically appraising the relevant literature, and extraction and synthesis of data from evidence base to formulate findings.

Technology

In pharmacoeconomic evaluation, ‘technology’ is used to mean a drug or other treatment that is being assessed.

Time Horizon

Period of time over which costs and outcomes are measured in economic evaluation.

Transition Probability

The probability that the health of a patient changes from one health state to another health state within a given period.

Uncertainty

A state in which the true value of a parameter or the structure of a process is unknown.

Utility

A measure of preference for a specific health outcome, obtained by methods that involve uncertainty (e.g., standard gamble approach).  Utilities are usually expressed on a cardinal scale of zero to one (e.g. death typically has a utility value of zero and a full healthy life has a value of one) and are used as health-related quality of life weights to calculate QALYs.

Value-of-information (VOI)

Value-of-information techniques assess the expected costs of uncertainty surrounding a decision made on the basis of current information, in order to determine whether further research should be conducted and how this should be designed.

Willingness-to-pay (WTP)

Evaluation method used to determine the maximum amount of money an individual is willing to pay for a particular outcome or benefit (e.g. to receive a health care service).  This method is often used in cost-benefit analysis to quantify outcome in monetary terms.