Cost effectiveness. How should it be determined?

The purpose of this article is to compare three commonly used indices of cost-effectiveness: the cost-effectiveness ratio, the cost-benefit ratio, and net benefit. We show that these indices can be interpreted to be consistent with one another and consistent with the traditional economic definition of cost-effectiveness. Further, we show that the relative cost-effectiveness of competing strategies cannot be determined by simply comparing their respective cost-benefit or cost-effectiveness ratios, but can be determined by comparing their respective net benefits. Finally, we show that cost-effectiveness ratios cannot be properly interpreted without consideration of the dollar value of health benefits.