When economic endpoints are included alongside clinical effectiveness measu
res in randomized clinical trials (RCT), they are summarized together by th
e incremental cost effectiveness ratio (ICER). Adding economic endpoints to
an RCT complicates the planning of experiments because investigators must
now solicit their beliefs about costs. but even more challenging, they must
also specify their association with effectiveness. Solicitation of correla
tions between costs and effects can be unintuitive, and so potentially high
ly inaccurate. This is unfortunate because power is highly sensitive to the
association between costs and effects. Mis-specification in this associati
on may lead to substantially underpowered or overpowered studies. We show t
hat when clinical effectiveness measures are dichotomous. specification of
the correlation between costs and effects can be avoided by instead describ
ing their association with a mixture model. This representation leads to si
mple and highly intuitive parameter specifications. It may also be used to
generate realistic raw data that can be used to evaluate experiment power w
ith simulation. We give particular attention to evaluating and interpreting
power when Fieller's theorem method (FTM) is used to calculate confidence
for, and test hypotheses about, the ICER. Data from a previously published
clinical trial are used to demonstrate the use of this new method to calcul
ate sample size for a cost effectiveness study. Copyright (C) 2001 John Wil
ey & Sons, Ltd.