, Volume 27, Issue 11, pp 903–917 | Cite as

Cost Effectiveness in Low- and Middle-Income Countries

A Review of the Debates Surrounding Decision Rules
  • Samuel D. Shillcutt
  • Damian G. Walker
  • Catherine A. Goodman
  • Anne J. Mills
Review Article Cost-Effectiveness Decision Rules


Cost-effectiveness analysis (CEA) is increasingly important in public health decision making, including in low- and middle-income countries. The decision makers’ valuation of a unit of health gain, or ceiling ratio (λ), is important in CEA as the relative value against which acceptability is defined, although values are usually chosen arbitrarily in practice. Reference case estimates for λ are useful to promote consistency, facilitate new developments in decision analysis, compare estimates against benefit-cost ratios from other economic sectors, and explicitly inform decisions about equity in global health budgets.

The aim of this article is to discuss values for λ used in practice, including derivation based on affordability expectations (such as $US150 per disabilityadjusted life-year [DALY]), some multiple of gross national income or gross domestic product, and preference-elicitation methods, and explore the implications associated with each approach. The background to the debate is introduced, the theoretical bases of current values are reviewed, and examples are given of their application in practice. Advantages and disadvantages of each method for defining λ are outlined, followed by an exploration of methodological and policy implications.



No specific sources of funding were used to assist in the preparation of this review. Samuel Shillcutt is supported by the WHO Child Health Epidemiology Reference Group (CHERG), Damian Walker is supported by the UK Department for International Development (DFID)-funded Future Health Systems Consortium, and Catherine Goodman is a member of the KEMRI/Wellcome Trust Research Programme, which is supported by a grant from the Wellcome Trust (#077092). The authors have no conflicts of interest that are directly relevant to the content of this review.


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Copyright information

© Adis Data Information BV 2009

Authors and Affiliations

  • Samuel D. Shillcutt
    • 1
  • Damian G. Walker
    • 1
  • Catherine A. Goodman
    • 2
    • 3
  • Anne J. Mills
    • 3
  1. 1.Department of International HealthJohns Hopkins Bloomberg School of Public HealthBaltimoreUSA
  2. 2.Kenya Medical Research Institute/Wellcome Trust Research ProgrammeNairobiKenya
  3. 3.Department of Public Health & PolicyLondon School of Hygiene & Tropical MedicineLondonUK

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