Conceptualising the problem

Health economics in Australia

Health economics in Australia is practised in a number of locations, including government, universities, health service providers, consultancy firms and health-related industry. A diverse mix of individuals from a wide range of disciplinary backgrounds practise health economics in Australia. Many are economists with either theoretical or applied interests in health economics, but many are qualified and practise in other specialties, especially public health. Practitioners often have university affiliation, although the numbers are spread across government, consulting and industry.

Pharmacoeconomics is a well-developed and practised field within Australia. The Commonwealth Government's evidence-based approach to the listing and subsidy of pharmaceuticals represents a world's best approach to using evidence of both costs and outcomes on which to base funding recommendations. It has also enabled the development of a critical mass of first-class expertise in pharmacoeconomics in Australia.

Health economics in clinical trials

Based on Drummond, Sculpher, Torrance, O'Brien and Stoddart, 2005.

Randomised controlled clinical trials have both strengths and weaknesses for economic evaluation. In general, there are two ways to incorporate economic questions into a trial — either by:

• including economic evaluation within an existing trial
• the design of a pragmatic trial specifically for the purpose of economic evaluation.

Given that randomised controlled trials are the accepted gold standard for assessing safety and efficacy, it is reasonable to consider prospectively collecting economic data within a planned clinical trial. This allows prospective collection of patient-level cost and outcomes data, while utilising the existing trial infrastructure and therefore requiring minimal additional resources. However, issues such as the comparison of new treatments to placebos, the use of surrogate endpoints and a lack of long-term follow-up can limit the ability of trials designed primarily for a clinical purpose to answer economic questions.

Alternatively, pragmatic trials can be designed specifically to answer economic evaluation questions. These trials minimise bias through random allocation but aim to assess the effectiveness or cost-effectiveness of an intervention under ‘real world' conditions, by having fewer restrictions on patient recruitment and follow-up. This allows greater generalisability of results. Difficulties in comparing more than two or three treatment options and a lack of long-term follow-up are still present in pragmatic trials and need to be addressed in the design phase.

Finally, economic modelling can be used when evidence from a range of sources is required for decision making. Data sources such as cohort studies and surveys can be used alongside clinical trials to obtain clinical, cost and quality of life information for use in decision analytic models.