Problem
The following treatments exist to reduce headache. In recent years, extensive surveys of patients taking these treatments have revealed the average pain reductions for the different treatments as shown in the table below. The price for each treatment is also shown. Note that the benefits are measured by percentage reduction in pain, thus your ICER should show additional $ cost per percentage point reduction in pain.
Option Yearly Price ($) Average % reduction in pain
No Treatment 0 0
Treatment A 1200 18
Treatment B 1500 13
Treatment C 1500 22
Treatment D 2000 25
Treatment E 2500 25
Treatment F 3200 20
A. What treatments are on the cost effectiveness frontier and what treatments are dominated?
B. Calculate ICER (Incremental Cost Effectiveness Ratio) for all remaining treatment options (those on cost-effectiveness frontier).
C. If, without insurance, your willingness to (out-of-pocket) pay for back pain reduction amount were $60 per one percentage reduction in pain, what's the optimal option for you?
D. Now with insurance, you can use all treatment options at half its previous price. With the same willingness to pay amount ($60 per one percentage reduction in pain), what is the optimal option for you?
E. Now assume that treatments B, D, E are withdrawn from the market due to previously unknown safety issues. What is the effect on the treatment options as a result?