Estimating the costs of non-medical consumption in life-years gained for economic evaluations

Including the costs of non-medical consumption in life years gained in economic evaluations of medical interventions has been controversial. This paper focuses on the estimation of these costs using Dutch data coming from cross-sectional household surveys consisting of 56,569 observations covering the years 1978–2004. We decomposed the costs of consumption into age, period and cohort effects and modelled the non-linear age and cohort patterns of consumption using P-splines. As consumption patterns depend on household composition, we also estimated household size using the same regression modeling strategy. Estimates of non-medical consumption and household size were combined with life tables to estimate the impact of including non-medical survivor costs on an incremental cost-effectiveness ratio (ICER). Results revealed that including non-medical survivor costs substantially increases the ICER, but the effect varies strongly with age. The impact of cohort effects is limited but ignoring household economies of scale results in a significant overestimation of non-medical costs. We conclude that a) ignoring the costs of non-medical consumption results in an underestimation of the costs of life prolonging interventions b) economies of scale within households with respect to consumption should be accounted for when estimating future costs.