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On a simple quickest detection rule for health-care technology assessment

Author

Listed:
  • Daniele Bregantini
  • Jacco J.J. Thijssen
Abstract
In this paper we propose a solution to the Bayesian problem of a decision maker who chooses, while observing trial evidence, an optimal stopping time at which either to invest in a newly developed health care technology or abandon research. We show how optimal stopping boundaries can be computed as a function of the observed cumulative net benefit derived from the new health care technology. At the optimal stopping time, the decision taken is optimal and the decision maker either invest or abandon the technology with consequent health benefits to patients. The model takes into account the cost of decision errors and explicitly models these in the payoff to the heath care system. The implications in terms of opportunity costs of decisions taken at sub-optimal time is discussed and put in the value of information framework. In a case study it is shown that the proposed method, when compared with traditional ones, gives substantial economic gains both in terms of QALYs and reduced trial costs.

Suggested Citation

  • Daniele Bregantini & Jacco J.J. Thijssen, 2014. "On a simple quickest detection rule for health-care technology assessment," Discussion Papers 14/01, Department of Economics, University of York.
    • Handle: RePEc:yor:yorken:14/01
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    References listed on IDEAS

    as
    1. Claxton, Karl, 1999. "The irrelevance of inference: a decision-making approach to the stochastic evaluation of health care technologies," Journal of Health Economics, Elsevier, vol. 18(3), pages 341-364, June.
    2. Avinash K. Dixit & Robert S. Pindyck, 1994. "Investment under Uncertainty," Economics Books, Princeton University Press, edition 1, number 5474.
    3. Paolo Pertile & Martin Forster & Davide La Torre, 2010. "Optimal sequential sampling rules for the economic evaluation of health technologies," Discussion Papers 10/24, Department of Economics, University of York.
    4. Martin Forster & Paolo Pertile, 2013. "Optimal decision rules for HTA under uncertainty: a wider, dynamic perspective," Health Economics, John Wiley & Sons, Ltd., vol. 22(12), pages 1507-1514, December.
    5. Karl Claxton & John Posnett, "undated". "An Economic Approach to Clinical Trial Design and Research Priority Setting," Discussion Papers 96/19, Department of Economics, University of York.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Optimal stopping; HTA; Bayes; Value of Information;
    All these keywords.

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory

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