© Copyright 2000 Physicians Postgraduate Press, Inc. One personal copy may be printed 54 J Clin Psychiatry 1999;60 (suppl 3) Willard G. Manning, Jr. he part of a cost-effectiveness study devoted to cost would, one might expect, consist of a set of straight- Panel on Cost-Effectiveness in Health and Medicine Recommendations: Identifying Costs Willard G. Manning, Jr., Ph.D. The assignment of costs in a cost-effectiveness analysis is a complex and disputed issue. The Panel on Cost-Effectiveness in Health and Medicine was convened to discuss standards that could be applied across a range of areas of cost-effectiveness. Additionally, the Panel had a mandate to resolve some con- troversial issues about the practice of cost-effectiveness that created difficulty in making comparisons across studies. The Panel proposed these guidelines: (1) Do at least some of the analysis from a social perspective; (2) Assign values to resources that reflect their opportunity costs; (3) Avoid zero counting of resources; (4) Avoid double counting of resources; (5) Make analyses only as exacting as necessary in a study. Difficulties in data collection were discussed. Among other questions considered by the panel were how to assign a value to the patient’s time and which productivity costs to include in a cost-effectiveness analysis. With tools and suggestions from the Panel on Cost-Effectiveness in Health and Medicine, the cost analyst can report costs accurately and provide accurate comparisons of cost performance across states, trial modalities, or diseases. (J Clin Psychiatry 1999;60[suppl 3]:54–56) From the Department of Health Studies, University of Chicago, Chicago, Ill. Presented at the closed symposium “Pharmacoeconomic Factors Related to the Treatment of Schizophrenia” held on April 8, 1998, in Chicago, Illinois, and supported by an unrestricted educational grant from Janssen Pharmaceutica and Janssen Research Foundation. Reprint requests to: Willard G. Manning, Jr., Ph.D., Department of Health Studies–MC 2007, University of Chicago, 5841 S. Maryland Ave., Chicago, IL 60637. T forward calculations. If so, one would no doubt be sur- prised to find how complex and disputed the issues that arise out of cost considerations truly are and how difficult data retrieval can be. The Panel on Cost-Effectiveness in Health and Medicine 1-4 was convened to discuss standards that could be applied across a range of areas of cost- effectiveness. Additionally, the Panel had a mandate to re- solve some controversial issues about the practice of cost- effectiveness analysis that created difficulty in making comparisons across studies. Five guiding principles came out of the analysis on the cost side: First, do at least some of the analysis from a so- cietal perspective. The social perspective, which considers everyone affected by the intervention and considers all health benefits and costs that arise from it, 3 is a natural way to make studies comparable—across states, trial modalities, or diseases. A social perspective also seems the appropri- ate one for a governmental body to adopt, as it “represents the public interest rather than that of any group.” 3(p1174) Sec- ond, the values placed on resources should reflect their op- portunity costs, i.e., the value the resources might have pro- duced had they been spent on the best available alternative use. 2 Third, avoid zero counting, which might lead either to underperformance of some forms of treatment whose ben- efits would also be left out or to ignoring costs that would make some treatments appear to be less expensive than they actually are. Fourth, avoid double counting, for similar rea- sons; for example, do not include monetary values for lost life-years in the numerator of a cost-effectiveness ratio. 2 Fifth, make the analyses only as exacting as necessary. The most stringent analyses are extremely expensive. Often the gains from carrying them to the highest standard are mini- mal in the analysis and do not change the result. A rule of reason would suggest that, in some cases, studies can be less diligent about some elements. A cost-effectiveness ratio is a tool for comparing treatments, which can be used to as- sess the cost-effectiveness of treatments across diseases. In creating a cost-effectiveness ratio, the numerator— expressed in dollars—is the value of all of the inputs that go into the process and the denominator—expressed in quality-adjusted life-years (QALYs)—is a measure of out- comes. Everything expressed in dollar terms goes into the numerator. Health improvement or decrements—every- thing not expressed in dollar terms—goes into the denomi- nator. The QALY is a measure reached by combining the length of time certain health states persist in a patient with the quality of that time. 3 The Panel faced many controversies. One issue con- cerned which productivity costs, if any, to include in the