WILLINGNESS-TO-PAY IN THE CONTEXT OF AN ECONOMIC-EVALUATION OF HEALTH-CARE PROGRAMS - THEORY AND PRACTICE

Cost-benefit analysis (CBA) is defined in the methodology literature a s a form of economic evaluation in which both costs and consequences a re measured in monetary terms. In recent years we have witnessed renew ed enthusiasm for CBA and the use of willingness to pay (WTP) as a met hod of measuring benefits from healthcare providers. Using the economi cs perspective, this paper assesses the usefulness of the WTP measure in a context of CBA analysis for economic evaluation of healthcare int erventions. Starting from the welfarist approach as the foundation of the analysis, this paper evaluates the benefit and cost of using WTP a s a measure of outcome compared mainly with the most commonly used mea sure of outcome (ie, quality-adjusted life years) as well as a newly s uggested measure of outcome (ie, healthy-years equivalents). This pape r studies this issue from both theoretical and practical aspects. The analysis starts with the premise that we want to use the discipline of economics as the mode of thinking and evaluate the methods suggested using economic criteria, A framework that includes five indicators (or criteria) to help identify the measures of outcome that are proper fo r use in the context of an economic evaluation are described. Followin g this framework, the paper argues that from a theoretic perspective t he WTP approach is the best available measure, despite its limitations . This paper also describes a new instrument that can be used to measu re individuals' WTP as well as a recent experience assessing the feasi bility of using such an instrument in the context of evaluating a new pharmaceutical agent in a managed care setting. The conclusion of this study is that this technique holds promise as a method that can gener ate monetary values for program benefits for future use in CBA.