—To develop consensus-based recommendations for the conduct of cost-effectiveness analysis (CEA). This article, the second in a 3-part series, describes the basis for recommendations constituting the reference case analysis, the set of practices developed to guide CEAs that inform societal resource allocation decisions, and the content of these recommendations.
—The Panel on Cost-Effectiveness in Health and Medicine, a nonfederal panel with expertise in CEA, clinical medicine, ethics, and health outcomes measurement, was convened by the US Public Health Service (PHS).
—The panel reviewed the theoretical foundations of CEA, current practices, and alternative methods used in analyses. Recommendations were developed on the basis of theory where possible, but tempered by ethical and pragmatic considerations, as well as the needs of users.
—The panel developed recommendations through 21/2 years of discussions. Comments on preliminary drafts prepared by panel working groups were solicited from federal government methodologists, health agency officials, and academic methodologists.
—The panel's methodological recommendations address (1) components belonging in the numerator and denominator of a cost-effectiveness (C/E) ratio; (2) measuring resource use in the numerator of a C/E ratio; (3) valuing health consequences in the denominator of a C/E ratio; (4) estimating effectiveness of interventions; (5) incorporating time preference and discounting; and (6) handling uncertainty. Recommendations are subject to the "rule of reason," balancing the burden engendered by a practice with its importance to a study. If researchers follow a standard set of methods in CEA, the quality and comparability of studies, and their ultimate utility, can be much improved.