Future Challenges for the Economic Evaluation of Healthcare: Patient Preferences, Risk Attitudes and Beyond

The continued growth in the economic evaluation of healthcare over the past 25 years has led to a shortage of trained health economists globally, leading to a number of universities and/or national governments developing specialised health economics programmes to train more health economists. One of the common problems with many of these training programmes is that they only educate new health economists to the Masters level, and as such they are unable to cover the many skills needed by a successful health economist. Furthermore, government and industry interests have ensured that economic evaluation is a heavily regulated environment that gives little incentive to seek further education. These two related factors (under-education and over-regulation) have lead to a situation where economic evaluation methods may adversely limit innovation of therapeutics and devices in clinical areas that perform badly when evaluated on the cost per QALY scale. The good news, however, is that the tide is turning and theoretically sound adjustments (such as risk adjustments and stated preferences) to the current paradigm are now being considered. This, of cause, is just the tip of the iceberg with other important issues such as time preference and the endogeneity of preference remaining very much under-researched areas in health. This paper concludes that many of these real-world issues, such as patient preferences, can be avoided by using artificial objective functions such as cost per QALY, but this comes at the cost of irrelevance and the misallocation of resources. If we are to meet all of the future challenges in economic evaluation in healthcare then we must focus more on advanced education and far less on the regulation of health economists.