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Net Monetary Benefit

Generally, cost-effectiveness analysis expresses the outcome in the cost-effectiveness ratio. This ratio relates the difference in costs of two alternative healthcare interventions to their difference in health effects. Two alternatives may, for example, be two types of pharmacotherapies— that is, a new drug being compared with the old standard treatment. The difference in health effects may be expressed in life years gained, quality-adjusted life years (QALYs) gained, disability-adjusted life years (DALYs) averted, and so on. In a formula, the cost-effectiveness ratio (R) may be written down as

with ΔC the difference in costs and ΔE the difference in health effects.

Obviously, R represents a ratio, limiting its usefulness for understanding the relative sizes of the differences in costs and effects. For example, the ratio does not ...

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