Not available in 2018/19
HP4E4E      Half Unit
Cost-effectiveness in Health Care

This information is for the 2018/19 session.

Teacher responsible

Prof Alistair Mcguire Cowdray Building, Room 4.05

Professor Andrew Street and Professor Alistair McGuire will be responsible for this course. 


This course is compulsory on the Executive MSc in Health Economics and Policy (LSE and Chicago). This course is not available as an outside option.


There are no prerequisites for this course. 

Course content

This course will introduce students to the basic notions of economic evaluation including cost-benefit analysis, cost-utility analysis and cost-effectiveness analysis as applied to the health care sector. The course will discuss notions of welfare economics and extra-welfarism, the identification and measurement of resource costs when markets do not exist (shadow prices), the measurement of health outcomes (including life years gained and Quality Adjusted life-years gained (QALYs)), methods of discounting and the basic calculations involved in estimating the cost-effectiveness of new health care technologies, including Markov modelling. The definition of the incremental cost-effectiveness ratio (ICER) will be outlined, as will the treatment of uncertainty (including structural (model) uncertainty, sensitivity analysis, and multivariate, parameter uncertainty). The use of bootstrap elements to estimate standard errors for the ICER will be described. Presentation of results, including the use of Acceptability curves, will also be covered. Finally, the use of cost-effectiveness in pharmaceutical pricing and reimbursement will also be detailed.


10 hours of lectures and 15 hours of seminars in the MT.

The course will be supplemented by workshops, using Excel based programmes where students will learn how to build a cost-effectiveness model from scratch, detailing the type of data requirements and the choice (from basic decision tree to Markov models) of modelling framework.

All students will have the opportunity to participate in additional lectures undertaken by external guests. These lectures will be run every Monday and Wednesday from 6pm to 8pm during the teaching period at LSE.

In addition, students will be given the option to participate in a three-hour webinar hosted at least 10 days before the due date of the take-home assessment. The webinar will consist of two-hours of lectures and one hour of question time.

Formative coursework

Students will be expected to produce 1 essay in the MT.

Essay based question of 2,000 words which is related to their presentation will form the basis of the Formative coursework. This will allow greater direction of the group presentation and the individual students written assessment based around this presentation.

Indicative reading

Briggs,A. Claxton, K. and Schulpher, M, 2007, Decision Modelling for Economic Evaluation, Oxford, OUP

Drummond, M., Schulpher, M., Claxton, K., Stoddart, G. and Torrance, G., 2016, Methods for the Economic Evaluation of Health Care Programmes, Oxford, OUP,

Economic Evaluation in Health Care: Merging Theory with Practice, 2001, Edited by M. Drummond and A. McGuire, Oxford, OUP

Meltzer, D., 2013, Future costs in medical cost-effectiveness in Jones, A., editor The Elgar Companion to Health Economics, Cheltenham, Edward Elgar

Raikou, M and McGuire, A. Measuring costs for cost-effectiveness analysis in Jones, A., editor The Elgar Companion to Health Economics, Cheltenham, Edward Elgar


Essay (30%, 2500 words), presentation (10%) and take home exam (60%) in the MT.

The 'presentation' component of the summative assessment (40%) will consist of both a group presentation and follow-up individual essay. 

Key facts

Department: Health Policy

Total students 2017/18: Unavailable

Average class size 2017/18: Unavailable

Controlled access 2017/18: No

Value: Half Unit

Guidelines for interpreting course guide information

Personal development skills

  • Team working
  • Problem solving
  • Communication
  • Application of numeracy skills
  • Commercial awareness