Anthony O'Hagan, John W. Stevens and Jacques Montmartin
Statistical Services Unit, University of Sheffield, Sheffield, England and Astra Charnwood, Loughborough, England
Publication details: PharmacoEconomics, 17, 339-349, 2000.
We consider Bayesian and frequentist inference methods for measures of incremental cost-effectiveness in data obtained via a clinical trial. The most useful measure is the C/E acceptability curve. Recent publications on Bayesian estimation have assumed a normal posterior distribution, which ignores uncertainty in estimated variances, and suggest unnecessarily complicated methods of computation. We present a simple Bayesian computation for the C/E acceptability curve and a simple frequentist analogue. Our approach takes account of errors in estimated variances, resulting in calculations based on t distributions rather than normals.
If inference is required about the C/E ratio, we argue that the standard frequentist procedures are flawed and present instead a Bayesian interval.