Estimating Cost Effectiveness Thresholds for Canadian Provinces

13 September 2018
Edmonton, Alberta

The economic evaluation of health care interventions including new health technologies such as branded pharmaceuticals requires an assessment of whether the improvement in health outcomes they offer exceeds the improvement in health that would have been possible if the additional resources required had, instead, been made available for other health care activities. Therefore, some assessment of these health opportunity costs is required which indicates the maximum that health care systems can afford to pay for the benefits offered by new drugs protected by patent. How existing estimates of the effect of changes in health expenditure on mortality, as well as survival and morbidity, can be used to provide some initial assessment of a cost-effectiveness threshold that reflects likely health opportunity costs across the different provinces of Canada is outlined. The range of possible estimates based on existing work are discussed and some suggestions are made of how further research could provide estimates that more closely reflect evidence of the health effects of health care expenditure in the Canadian provinces.

Based on the balance of the evidence currently available some recommendations can be made. There is a wide range of potential cost per DALY averted estimates for Canada ($20,000 to $100,000 per DALY averted), with the lower estimates associated with more recent work using within country rather than country level data. Therefore, it is the lower end of this range that might be regarded as most plausible, so a cost per DALY threshold is likely to be less than $50,000 for Canada as a whole. A measure of heath benefit more appropriate to Canada would be QALY gained which are likely to be similar or lower than a cost per DALY averted threshold. This is also consistent with the range of implied cost per QALY gained for Canada based on the type of analysis which has been adopted in Norway while further research using within country data are explored. Using this approach would provide a cost per QALY threshold for Canada of $28,089. Therefore, taking all this evidence together suggests that a cost per QALY threshold of $30,000 per QALY would be a reasonable assessment of the health effects of changes in health expenditure for Canada as a whole and is likely to be similar across most provinces.

Estimating Cost Effectiveness Thresholds for Canadian Provinces


Karl Claxton Profile PictureKarl Claxton is a Professor in the Department of Economics and Related Studies at the University of York. He is also a Senior Research Fellow in the Centre for Health Economics, University of York. His research interests encompass the economic evaluation of health care technologies.

The Network of Alberta Health Economists and the NOAHE Health Economics and Technology Assessment Rounds are supported financially and in-kind by Alberta Health, through the Health Funding and Economics Capacity (HFEC) Grant. Please note that the views expressed in this series and other deliverables associated with NOAHE are not necessarily representative of any particular organization involved.