Discounting in economic evaluations: stepping forward towards optimal decision rules

TLDR

The National Institute for Clinical Excellence recently revised its guidelines to require that health effects be discounted at the same rate as costs, aligning with most other regulatory bodies. The study argues that NICE’s new guideline leads to sub‑optimal decisions by ignoring the changing value of health and proposes that regulators adopt differential discounting or explicitly address this value change, while also incorporating binding health‑service budget constraints into evaluations. The authors find that the guideline produces sub‑optimal decisions by neglecting the changing value of health and demonstrate how to incorporate binding health‑service budget constraints into evaluations. © 2006 John Wiley & Sons, Ltd.

Abstract

Abstract The National Institute for Clinical Excellence has recently changed its guidelines on discounting costs and effects in economic evaluations. In common with most other regulatory bodies it now requires that health effects should be discounted at the same rate as costs. We show that the guideline leads to sub‐optimal decisions because it fails to account for the changing value of health. NICE (and other regulatory bodies) should either use differential discounting or stipulate how the changing value of health should otherwise be dealt with. We also show how binding health service budget constraints should be incorporated in evaluations. Copyright © 2006 John Wiley & Sons, Ltd.