(Answered) Assume you want to determine the cost-effectiveness of a

Economics

Assume you want to determine the cost-effectiveness of a New Treatment for stage 4 breast cancer compared to the Old Treatment. You decide to use a one-year time frame. The New Treatment costs $60,000 per patient per year, and 80% of patients are alive at the end of one year. The Old Treatment costs $40,000 per patient per year, and 60% of patients are alive at the end of one year. Assume all relevant outcomes, costs, discounting, etc. are already included.

a) What is the cost-effectiveness of the New Treatment compared to the Old Treatment? Calculate the answer, expressed as cost per life-year gained. Show your work (as much as possible) and give the answer.

b) Next, assume you measure the health state preference (utility) of the patients receiving the two treatments, and you find that the utility is higher for the Old Treatment compared to the New Treatment. In this cost-utility analysis, would it ever be possible for the Old Treatment to be clearly cost-saving (i.e., gain more QALYs for a lower cost) when compared to the New Treatment? If so, how might this occur? If not, why is it not possible?

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