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Table 6 Recommendations for the Preventive Health CBA Framework and associated rationale

From: A cost–benefit analysis framework for preventive health interventions to aid decision-making in Australian governments

CBA component Key recommendation [rationale]
When to conduct a CBA Investments over A$ 10 million [ii; iv]
For investments less than A$ 10 million, CBA should be commensurate with the size of investment and built into the decision-making process [iv; v]
Perspective and referent group Primary analysis using a societal perspective [i—clear concept of benefit; ii]
Health sector perspective for additional analyses [iii]
State-based community referent group [iv; v]
Comparator/base case Defined as the status quo [i—comparative analysis; ii; iii]
Comparator referred to as the base case [ii]
Options for appraisal Number of options commensurate with the size of the investment [i—comparative analysis; iv]
Options underpinned by government health strategy [v]
MCA to establish short tractable list of options for detailed CBA. The MCA should use criteria commonly used in preventive health decision-making [ii; iv]
Time horizon Up to 30 years based on the nature of the intervention [ii] and lifetime/100 years if 30 years unlikely to capture all important impacts [i—capture the full economic life of project; iii]. The most appropriate time horizon with justification should be used for the primary analysis, with the other used in sensitivity analyses
Social discount rate Base case 3% [i; iii]
Sensitivity analyses using 0%, 5%, 7% and 10% [ii; v]
Costs and benefits All impacts consistent with societal perspective identified, including healthcare costs borne by all payers (including federal government) [i—clear concept of benefit, opportunity cost; iii; iv]. Important impacts measured and valued [iv]. This should be commensurate with the size of investment
Report proportion of healthcare cost/cost savings that will accrue to state government compared to other funders [ii; v]
Develop logic models to identify potential impacts across all sectors [i—opportunity cost]
Quantify and value significant impacts across all sectors and report these by sector [iii]
Quantify health impacts using health-related quality-of-life measures (QALY or DALY) [iii]
Value DALY/QALY using VSLY (A$ 303,531, in 2017 values). This value should be consistent across all CBAs across all jurisdictions [ii]
Productivity impacts excluded in primary analysis [iii; iv]
Sensitivity analyses:
 VSLY values: A$ 315,732 and A$ 88,136 (in 2017 values). A range of values should be tested when using a health sector perspective
 VSLY to value life-years (LY) rather than DALYs/QALYs
 Include indirect productivity impacts on employers using the FCA and gender-free wage rates
Decision rules NPV and BCR. BCR basis of decision-making when intervention rankings differ between the two [ii]
All impacts resulting from an intervention should be accounted for on the benefits side of the equation when calculating BCR [ii]
Sensitivity analyses One-way, scenario and probabilistic sensitivity analyses undertaken to assess the variability in the results [ii; iii; v]
All input parameters and assumptions should be documented with mean values, distributions and the sources [v]
Avoid the terms “uncertainty analysis” and “risk analysis”
Distributional impacts and other considerations Primary analyses should not include equity or other impacts in the technical CBA results [ii]
Full description of equity and distributional impacts with quantification of impacts across subgroups where appropriate [v]
Full description of other important considerations related to preventive health interventions reported qualitatively and quantitatively [v]
Reporting Full description of options for appraisal and the assumptions and inputs used in the analysis [v]
Results disaggregated by sector and reported by method of measurement [iii; v]
Full documentation and interpretation of primary analysis, sensitivity analyses and distributional impacts [v]
  1. Rationales: (i) economic theory, (ii) consistency of CBA across different state government departments, (iii) consistency with other health intervention evaluations and the ease of moving from a CBA to a more conventional CEA/CUA framework used for health interventions, (iv) the practicalities of application by busy government bureaucrats, and (v) the needs of the end user
  2. A$ Australian dollars, BCR benefit–cost ratio, CBA cost–benefit analysis, CUA cost-utility analysis, DALY disability-adjusted life-year, FCA friction cost approach, MCA multi-criteria analysis, NPV net present value, NSW New South Wales, PBAC Pharmaceutical Benefits Advisory Committee, QALY quality-adjusted life-year, VSL value of a statistical life, VSLY value of a statistical life-year