Chapter 345 - The Moral Imperative Towards Cost-Effectiveness[5]

Another reason people might be initially suspicious of prioritisation based on cost-effectiveness is through confusing it with cost-benefit analysis (CBA). The latter is an economic method for prioritisation which involves determining the benefits for each person in terms of how many dollars they would be willing to pay, adding these up, and then dividing by the total costs in order to produce a benefit-cost ratio in units of dollars per dollar. This method is ethically suspect as it considers benefits to wealthy people (or groups) to be worth more than comparable benefits to poorer people (or groups) since the wealthy are willing to pay more for a given benefit.

However, the cost-effectiveness I have discussed in this note is very different, and is a type of analysis known as cost-effectiveness analysis (CEA). This doesn't convert benefits into dollars, but just provides a raw measure of the benefits in units such as DALYs per dollar, or lives saved per dollar. Thus the wealth of the recipients is not an input to the analysis and it doesn't discriminate towards interventions that favour the wealthy.

People might remain suspicious of cost-effectiveness since it makes a connection between dollars and health (or even life itself). Making trade-offs between so-called sacred values such as life with non-sacred values such as money strikes many people as morally problematic. However, no such trade-off is made in cost-effectiveness analysis. Instead there is a budget constraint of some fixed number of dollars. The cost-effectiveness ratios help one to see how much benefit could be causally produced if this money were spent on different interventions — for example, saving one thousand lives or saving ten thousand lives. The only comparison that is made is between these benefits. Whether or not it is worth spending the budget to save ten thousand lives is not part of the analysis.

Conclusions

In many cases ignoring cost-effectiveness in global health means losing almost all the value that we could create. Thus there is a moral imperative to fund the most costeffective interventions. This doesn't simply mean implementing the current interventions in the most cost-effective way possible, for the improvements that can be gained within a single intervention are quite small in comparison. It also doesn't just mean doing retrospective measures of the cost-effectiveness of the interventions you fund as part of programme evaluation. Instead, it means actively searching the landscape of interventions that you are allowed to fund and diverting the bulk of the funds to the very best interventions. Ideally it also means expanding the domain of interventions under consideration to include all those which have been analysed.

The main effect of understanding the moral imperative towards cost-effectiveness is spending our budgets so as to produce greater health benefits, saving many more lives and preventing or treating more disabling conditions. However, it also shows a very interesting fact about global health funding. If we can save one thousand lives with one intervention and ten thousand with another at an equal price, then merely moving our funding from the first to the second saves nine thousand lives. Thus merely moving funding from one intervention to a more cost-effective one can produce almost as much benefit as adding an equal amount of additional funding.

This is unintuitive since it isn't the case when one option is merely 10% or 30% better than another. However, when one option is 10 times or 100 times better, as is often the case in global health, redirecting funding is so important that it is almost as good as adding new funding directly towards the superior intervention. In times of global austerity and shrinking budgets, it is good to know how much more can be done within existing ones.