Econ317 (the economics of canadian health care)


Question 1 (Reading)

1. Read the following article:

Kim, D. D. et al. (2020). Perspective and Costing in Cost-Effectiveness Analysis, 1974-2018. PharmacoEconomics, 38, 1135-1145. Retrieved from


a. Write a 3-2-1 report in the usual fashion. (12 marks)


b. Read the following (extremely short) article:

Primeau, C. A., Marsh, J. D., Birmingham, T. B. & Giffin, J. R. (2019). The importance of costing perspective: an example evaluating the cost-effectiveness of a locking versus non-locking plate in medial opening wedge high tibial osteotomy. Canadian Journal of Surgery, 62(1), E14-E16. Retrieved from 

Note that you’ll need to click the ‘PDF’ link at the top to read the full article. If you’d like an HTML version, see 

The authors claim that in addition to the usual “health care payer perspective,” they take a “societal perspective”. In the Appendix[1] to their paper, they clarify what this means. Briefly, in their “societal” perspective they included:

· Direct costs to the provincial single payer, using a case costing approach

· All additional related costs to the provincial single payer over the year after the surgery, using a case costing approach.

· “[E]mployment time lost, and homemaking or volunteer time lost” during the study period (surgery + 12 months later). This was obtained either via patient interviews, or analysis of reports of follow-up visits.

· “The 2015 average Canadian wage reported by Statistics Canada was used to value time off employment. We assigned the current value of minimum wage in Ontario to account for time off for patients who were retried, or who lost time from home making or volunteer activities.”

i. (3 marks) The Kim et al. paper has very specific ideas about what a Societal (or Limited Societal) perspective is. Do you think that Kim et al. would agree that the Primeau et al. paper included an analysis from a Societal (or Limited Societal) perspective? Why or why not?

Is the (Primeau, 2019) ‘Societal’ perspective a (Kim et al., 2020) ‘Societal’ or ‘Limited Societal’ perspective? (Yes/No/Maybe)

Why or why not?


ii. (3 marks) Using what you have learned in ECON 317, in your economics degree so far, and from the Kim et al. paper, make a suggestion for how to improve the ‘Societal perspective’ in the (Primeau, 2019) paper. Briefly explain why your suggestion would be helpful.


Why it’s helpful:


Question 2 (Regular) 

2. [Cost Effectivess Analysis] In this question, you will be checking the math of a published paper:

Mittman, N. et al. (2018). Cost-effectiveness of mammography from a publicly funded health care system perspective. CMAJ Open, 6(1), E77 – E86. Retrieved from 

I find this to be an excellent paper, and some of you may find it a very interesting and worthwhile read, but it’s not necessary to read the paper for this question. We’ll only be looking at Table 4 on p. E82:

Table  Description automatically generated

I’ve rewritten the table in a more convenient format for calculations, and provided it as an Excel spreadsheet for those of you who’d prefer to perform the necessary calculations right in Excel.

You’ll be doing three things: checking for dominance and extended/weak dominance, using those results to determine which of these mutually-exclusive scenarios are on the cost-effectiveness frontier, and then using incremental cost-effectiveness analysis to select the preferred treatment under two possible cost-effectiveness thresholds.


The rewritten table is below. You may use the shorter ‘Treatment’ (A,B, etc.) names instead of my longer scenario labels (No Screening, TRI5069, etc.).


a. In the table below, write whether each treatment is dominated or extended/weakly dominated. In the case of extended/weak dominance, list the pair of treatments by which the treatment is dominated. (e.g. ‘F and H’ for Treatment G, if it is weakly dominated by F and H.)

If a treatment is NOT dominated or weakly dominated, leave the relevant cells blank. In the extreme case where no treatments are either dominated or weakly/extended dominated, this means the correct answer would be leaving all the cells blank.




Cost ($)


Dominated By

Ext. Dominated By



No   Screening





















































Hint: If a treatment is Dominated, that means there’s another treatment with lowers costs AND higher QALY. To check for extended/weak dominance, it’s enough to follow a simple algorithm:

i. Calculate the ICER between each treatment and its cheaper neighbor. I’ve already sorted the treatments in order of increasing cost for you, so this means you should calculate (B-A), (C-B), (D-C), etc. The spreadsheet includes a ‘helper table’ that makes this easier for you.

ii. Check for ‘triangles’. Going down the list of ICER you just calculate, check for a situation where the list, in order, goes LOW-HIGH-LOW. (e.g. ICER of 5-12-8). Eliminate the Treatment with the HIGH ICER.

Why? Because this treatment is extended/weakly dominated by the two LOW treatments surrounding it. As we saw in class, a linear combination of those two LOW treatments could provide the same QALY at a lower cost than the HIGH treatment.

iii. Your list should now be one row shorter. With your reduced list, go back to Step i. and re-calculate the ICER. Keep iterating until there are no more LOW-HIGH-LOW patterns – that is, until the ICER go up with treatment cost.


b. Which treatments are on the cost-effectiveness frontier?

Treatments on the Cost-Effectiveness Frontier: _____________________________

Hint: Treatments are on the cost-effectiveness frontier if they are neither dominated nor weakly/extended dominated. You don’t need to include ‘No Screening’ (Treatment A).


c. While Canada has no official cost-effectiveness threshold, some researchers[2] suspect that CADTH uses an unofficial threshold of $50,000/QALY.

Assuming a cost-effectiveness threshold of $50,000/QALY, use incremental cost-effectiveness analysis to determine the preferred treatment. Show your work:

The preferred treatment is treatment _________


[Show work here]



d. Cost-effectiveness thresholds of as high as $100,000/QALY have been considered appropriate for Canada[3]. 

Assuming a cost-effectiveness threshold of $100,000/QALY, use incremental cost-effectiveness analysis to determine the preferred treatment:

The preferred treatment is treatment _________


[Show work here]


Question 3 (Challenge)

3. [Costing Canadian Health Care] For this question, we’re going to re-do example A-1 in CADTH’s Guidance Document for the Costing of Health Care Resources in the Canadian Setting[4], but for British Columbia in 2021, instead of Saskatchewan in 2016. Since in BC, Botox injections must be given by a medical professional[5], and because the original example missed the fact that there is more than 1 injection per treatment, there will be a few extra steps.

To help the TA mark your assignment, please fill in your answers in the blanks provided. Please note that the first blank you have to fill in is for the TOTAL cost, which you will not be able to calculate until the end of the exercise.


$ ___________________ (1 mark)

Now for the steps that will get you to that answer….

Step A

A. Obtain the unit drug costs from the B.C. Drug Formulary Search Page[6]

Unit drug cost: $______________ (1 mark)

You can do this by copy-pasting ‘ONABOTULINUMTOXINA’ into the Generic/Brand name field at

(Typing in ‘Botox’ in the same field also works, since that’s the brand name.)


Step B

B. Since BC’s formulary only approves the 100 U dispensable unit, this step in the original example isn’t needed. If you checked the cover page of the Botox monograph (below), you’d find that 50, 100 and 200 unit versions are available.

Step C

C. Obtain information on the recommended administration from the product monograph[7]:

How many units of Botox? ________ (1 mark)

How many injections in the treatment? ___________ (1 mark)

What type of injection: intra-venous, or intra-muscular? _____________ (1 mark)

You can find the monograph at – you want the one for Botox® (OnabotulinumtoxinA), NOT the cosmetic version below it.

Once you have the monograph, use the Table of Contents to find the start of the section on DOSAGE AND ADMINISTRATION. Once in the right section, scroll down until you find the sub-section on ‘Overactive Bladder’. You’ll know you’re on the right page when you see a cut-away illustration of a bladder.

The units of Botox needed are clearly listed in that section. Those units are, however, spread out across a number of injections. The text should make it very clear how many injections there are, and of what type.


Step D

D1. Calculate the (Botox) acquisition cost based on administration: $________ (1 mark)

This one’s easy. You already have the cost per unit of Botox, and the number of units required. Multiply one by the other to get the total cost.

D2. Calculate the cost of injections needed for administration: $______________ (1 mark)

Since the injections are being administered by a physician, we’ll need to find out how much they charge for an injection. To do this, you need to look up the relevant fee in the MSC Payment Schedule. You can find the latest version (updated November 1, 2019) at

Once you’ve opened the Payment Schedule, look for ‘Injections’ under ‘Relevant Services’, and make a note of the cost per injection of the relevant type[8] (intramuscular or intravenous).

Fee per injection[9]: $_________

To obtain the cost of injections needed for administration, multiply the fee per injection by the number of injections you found in part C.

Step E

E. Botox acquisition cost after markup and dispensing fees: $_____________ (1 mark)

BC prices do not include markup or dispensing fees. You can find B.C.’s pharmacy markup allowance by consulting Section 5.6 of BC’s Pharmacare Policy Manual. The latest version is dated 2012 but has been continually updated when needed. You can find it at: 

To determine the maximum allowable markup, you will have to check whether Botox is considered a High-Cost Drug. Follow the relevant hyperlink(s) in the appropriate section of the Policy Manual (5.8 High-Cost Drugs Policy) to do so. 

Botox doesn’t fall under the Reference Drug Program (RDP) or Low Cost Alternative (LCA) programs. (I checked so you don’t have to! If you want to double check, you can do so at 

Now that you know whether Botox is a high cost drug or not, to find the maximum markup, see the Maximum Pricing Policy section (5.6) of the Pharmacare Policy Manual.

Maximum allowable markup for Botox: ____ % (1 mark)

Dispensing fees are found in section 8.2 of the same Pharmacare Policy Manual. Assume the maximum reimbursable dispensing fee is charged.

Maximum dispensing fee reimbursed by Pharmacare: $_________ (1 mark)

To obtain the Botox acquisition cost after markup and dispensing fees, take the Botox acquisition cost from part D1, multiply it by (1 + markup %)[10], and add the dispensing fee. 

Step F

F. It’s finally time to calculate the total cost. Add together the cost of injections (D2) to the cost of the Botox itself after markup and dispensing fees (E), and write your final answer in the blank provided at the top of this question. All done!


[1] Click on ‘Appendix’ next to the PDF link on the canjsurg page, or use this link: 

[2] “There is some evidence to suggest that CADTH’s cost-effectiveness threshold is ~$50,000 per-QALY, but this is neither consistently applied nor explicitly stated.” Griffiths, E.A. & Vadlamudi, N.K. (2016). CADTH’s $50,000 Cost-Effectiveness Threshold: Fact or Fiction? Value in Health, 19(7), A488-A489. Retrieved from 

[3] “Other estimates include […] a range of $20,000-$100,000 per quality-adjusted life-years reported in Canada. Some argue that these cost-effectiveness threshold estimates may be too high, and are contributing to escalating healthcare costs; others argue that they are too low.” Cameron, C.G. & Bennett, H.A. (2009). Appendix 2 of Cost-effectiveness of insulin analogues for diabetes mellitus. CMAJ, 180(4), 400-407. Retrieved from 

[4] CADTH. (2016). Guidance Document for the Costing of Health Care Resources in the Canadian Setting [Web Page]. Retrieved from . For example A-1, see 

[5] Oetter, H.M. (2015). Registrar’s message. College Connector, 3(2). Retrieved from 

[6] BC Pharmacare Formulary Search [Web Page]. (2021, February 9). Retrieved from 


[8] Some of you may have noticed that the Payment schedule has several entries specifically for Botulinum toxin injections. Unfortunately, none of these are for treatment of an overactive bladder. Those fees only apply when the injections are administered for different diagnoses.

[9] Just for reference. No marks given specifically for this fee (you’ll use it to calculate total cost of injections).

[10] So for example, if the cost from D1 is $100 and the markup is 10%, you’d multiply $100 by 1.1 = 1 + 10% = 1 + 0.1.

Q1 Reading 1:

Q1 Reading 2:

Q2 Source:

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