Efficiency frontier approach (IQWiG cost-benefit assessment)
This method helps decision makers understand how well a health intervention uses money by comparing its costs and health benefits to other similar treatments. It shows which treatments offer the best value, helping guide fair pricing and reimbursement decisions in the German health system.
At a glance
Use when
Assessing cost-benefit relationships of health interventions within a specific disease area for reimbursement decisions
Avoid when
Making system-wide priority decisions across different health conditions; when benefit valuation is highly uncertain or not feasible
Inputs
Cost data and value of additional benefits for health interventions within a specific indication
Outputs
Efficiency plot showing the efficiency frontier and positioning of interventions; identification of non-dominated options
How it works
The efficiency frontier approach, developed for IQWiG, involves plotting health-care interventions on a graph with net costs on the horizontal axis and value of additional benefits on the vertical axis. The efficiency frontier is formed by non-dominated interventions, meaning those that are not both more costly and less beneficial than others. Interventions on or to the left of the frontier are considered reasonably efficient, while those to the right may require further justification for reimbursement. The method supports context-specific economic evaluation within a single indication but does not support cross-indication priority setting.
- HTA domains
- Clinical Effectiveness, Costs & Economic Evaluation
- Assumptions
- Benefits can be meaningfully valued and compared across outcomes; cost and benefit estimates are reliable and comparable across interventions; decision context is limited to a single indication
- Strengths
- Aligns with economic efficiency principles; transparently visualizes trade-offs between costs and benefits; identifies dominated interventions; supports structured reimbursement decisions within an indication
- Limitations
- Does not support cross-indication priority setting; depends on reliable valuation of benefits; does not incorporate equity or other non-efficiency considerations directly; requires high-quality comparative data
- Also known as
- Efficiency frontier method, IQWiG efficiency frontier
Questions this answers
References & sources
Similar by meaning
- WHO-CHOICE Generalized Cost-Effectiveness Analysis (updated methodology)
- ICER Value Assessment Framework
- IQWiG threshold method for extent of added benefit (minor/considerable/major)
- Generalized Risk-Adjusted Cost-Effectiveness (GRACE)
- ICER Value Framework 2020 Update - Aggregation of Benefits and Contextual Considerations
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