HP4E4E      Half Unit
Cost-effectiveness in Health Care

This information is for the 2020/21 session.

Teacher responsible

Dr Ranjeeta Thomas COW 2.07


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.

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.


This course will be delivered online over a period of five weeks in Michaelmas Term as a combination lectures and seminars. Students will have access to lecture material delivered as short online videos. Seminars will take place online and students will work in small groups on structured learning activities set by the course lead.

Formative coursework

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

The formative assessment an essay (max 1000 words) critically appraising a published paper based on a few questions provided to students. 

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 (80%, 3000 words) in the LT.
Continuous assessment (20%) in the MT.

Important information in response to COVID-19

Please note that during 2020/21 academic year some variation to teaching and learning activities may be required to respond to changes in public health advice and/or to account for the situation of students in attendance on campus and those studying online during the early part of the academic year. For assessment, this may involve changes to mode of delivery and/or the format or weighting of assessments. Changes will only be made if required and students will be notified about any changes to teaching or assessment plans at the earliest opportunity.

Key facts

Department: Health Policy

Total students 2019/20: 2

Average class size 2019/20: Unavailable

Controlled access 2019/20: No

Value: Half Unit

Guidelines for interpreting course guide information

Personal development skills

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