Expected Value of Perfect information

Simply basing decisions on expected cost-effectiveness or, equivalently, net health or monetary benefit will ignore the question of whether the current evidence is a sufficient basis for adopting or reimbursing a health technology. It would fail to address the question of whether further research is needed to support such a decision in the future. The value of evidence or the health costs of uncertainty can be illustrated using a simple example as shown in Table 1. Each row represents a realization of uncertainty, that is, the net health benefit (commonly measured in quality-adjusted life years, or QALYs) that results when all the parameters that determine expected costs and effects each take one of their many possible values. These realizations may be generated by probabilistic sensitivity ...