THERAPY EVALUATION, PATIENT DISTRIBUTION, AND COST-OUTCOMES RATIOS

The purpose of this paper is to argue that the emphasis in the pharmac oeconomic literature on cost-outcomes ratios as key decision variables in determining drug choice is misplaced. Unless strict assumptions ar e made (and believed) as to the relationship between numbers of patien ts treated and the marginal costs and outcomes of therapy, the only ba sis on which an evaluation of alternative therapy options can be made is an equilibrium-to-equilibrium modeling framework. This specifically refers to the assumption that costs and outcomes functions exhibit co nstant returns to scale. In this framework, given the expected changes of distribution of patients between therapy options, estimates can be made of net changes in overall treatment costs and outcomes.