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Productivity Costs in Economic Evaluations: Past, Present, Future

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Abstract

Productivity costs occur when the productivity of individuals is affected by illness, treatment, disability or premature death. The objective of this paper was to review past and current developments related to the inclusion, identification, measurement and valuation of productivity costs in economic evaluations. The main debates in the theory and practice of economic evaluations of health technologies described in this review have centred on the questions of whether and how to include productivity costs, especially productivity costs related to paid work. The past few decades have seen important progress in this area. There are important sources of productivity costs other than absenteeism (e.g. presenteeism and multiplier effects in co-workers), but their exact influence on costs remains unclear. Different measurement instruments have been developed over the years, but which instrument provides the most accurate estimates has not been established. Several valuation approaches have been proposed. While empirical research suggests that productivity costs are best included in the cost side of the cost-effectiveness ratio, the jury is still out regarding whether the human capital approach or the friction cost approach is the most appropriate valuation method to do so. Despite the progress and the substantial amount of scientific research, a consensus has not been reached on either the inclusion of productivity costs in economic evaluations or the methods used to produce productivity cost estimates. Such a lack of consensus has likely contributed to ignoring productivity costs in actual economic evaluations and is reflected in variations in national health economic guidelines. Further research is needed to lessen the controversy regarding the estimation of health-related productivity costs. More standardization would increase the comparability and credibility of economic evaluations taking a societal perspective.

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Notes

  1. This review generally focuses on issues regarding productivity cost estimation in economic evaluations conducted to inform (national) decision makers regarding the relative cost effectiveness of new health interventions. Some of the topics discussed may therefore not fully relate to, for instance, the US healthcare system, where employers are significant purchasers of healthcare.

  2. Note that the inclusion of productivity costs does not necessarily lower cost-effectiveness estimates or favour interventions for productive individuals [17–20].

  3. Whether it is relevant to include potential effects on future productivity depends on the valuation approach. If the friction cost approach is adopted, these costs normally need not be included, since they will commonly fall beyond the friction period. Their inclusion is important, however, when using the human capital approach.

  4. Valuation approaches are further discussed in Sect. 5 of this review.

  5. Obviously, the term productivity costs is less appropriate if lost productivity is valued in terms of effects instead of costs.

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Acknowledgments

This study was part of a larger project investigating the broader societal benefits of healthcare, which was financially supported by AstraZeneca, GlaxoSmithKline, Janssen-Cilag Merck and Pfizer BV. The views expressed in this paper are those of the authors.

Author contributions

WB and FR had the idea for the review. MK was primarily responsible for reviewing the literature and writing the manuscript, in cooperation with WB and FR. All authors read, edited and approved the final manuscript. WB is the overall guarantor for the content of this article.

Conflicts of interest

The authors have no further conflicts of interest to declare.

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Authors and Affiliations

  1. Department of Health Policy and Management, Erasmus University, P.O. Box 1738, 3000 DR, Rotterdam, The Netherlands

    Marieke Krol, Werner Brouwer & Frans Rutten

  2. Institute for Medical Technology Assessment, Erasmus University, Rotterdam, The Netherlands

    Marieke Krol, Werner Brouwer & Frans Rutten

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  1. Marieke Krol
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Correspondence to Marieke Krol.

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Krol, M., Brouwer, W. & Rutten, F. Productivity Costs in Economic Evaluations: Past, Present, Future. PharmacoEconomics 31, 537–549 (2013). https://doi.org/10.1007/s40273-013-0056-3

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