Power and sample size in cost-effectiveness analysis

For resource allocation under a constrained budget, optimal decision rules for mutually exclusive programs require that the treatment with the highest incremental cost-effectiveness ratio (ICER) below a willingness-to-pay (WT P) criterion be funded. This is equivalent to determining the treatment wit h the smallest net health cost. The designer of a cost-effectiveness study needs to select a sample size so that the power to reject the null hypothes is, the equality of the net health costs of two treatments, is high. A rece ntly published formula derived under normal distribution theory overstates sample-size requirements. Using net health costs, the authors present simpl e methods for power analysis based on conventional normal and on nonparamet ric statistical theory.