This analysis is a method of considering the advantages and disadvantages of alternative health care technologies. The scope of the advantages and disadvantages considered in an analysis depends on the perspective taken. Cost‐benefit analysis differs from other forms of economic analysis, like cost‐effectiveness analysis, mainly in putting monetary values on outcomes.

For example, the costs of an insulin injection may include the costs of the drug, the needle, the nursing time, the monitoring tests and the patient’s time. The outcomes (both positive and negative) are also given in terms of money. For example, one outcome may be the savings in potential costs to manage severe diabetes, including kidney failure, circulation and cardiovascular complications, foot problems, and time in hospital. The outcomes might also include the patient’s contribution at work, lack of social welfare costs, and increased cost of healthy foods.

The more challenging part of cost‐benefit analysis is that it assigns money values to outcomes such as better health or improved access. For example, the outcomes might include a monetary value of the expected health gain measured though willingness to pay. The costs and benefits of a comparator treatment are also worked out. For example, the cost of insulin taken by mouth includes the higher cost of the drug, but no cost for needles, and increased cost for more monitoring tests, but no cost for nursing time to make sure patients take it as prescribed. The outcomes of the treatment being compared are expressed as money. For example, insulin taken by mouth saves the cost of being in hospital and long‐term organ failure because more patients take it as prescribed. Also included in the outcomes may be the cost of drugs to treat adverse effects such as stomach problems.

The difference in costs and the difference in benefits of the two treatments can be directly compared. For example, the total cost of insulin taken by mouth may be more than the total cost of insulin given by needle, but the total savings due to increased benefits may result in total lower costs to the system. HTAI

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