Part I: Economic Evaluation Based on a Clinical Trial


A one-year Randomized Controlled Trial (RCT) was conducted among employed people with Rheumatoid Arthritis in Canada to measure the cost-effectiveness of treatment with TrE compared to standard treatment with CoM. During the one year (52 weeks) study period, the subjects in the treatment group received TrE subcutaneous injections once weekly and those in the control group took CoM orally once weekly on the same day as the TrE injections.

At baseline, age, gender, disease activity, and other outcomes were collected. Disease activity was measured by DAS28. The higher the score, the more severe is the disease. The Health Utility Index (HUI) was administered to measure utility at baseline, 3 months, 6 months, and 12 months. One-year health care utilizations was reported by study participants. Health care utilizations include physician visits, length of stay (LOS) in hospital, and other medication uses. Table 1 defines each variable included in the dataset, “Assignment data.xlsx” (please download from UBC Canvas). Table 2 includes the unit costs that you need to calculate the costs.

Table 1: Variable definition

IDIdentification number of study participants
TreatmentTreatment group: TrE (200 patients) and CoM (200 patients)
Female1 = female, 0 = male
DAS28Disease activity score at baseline (higher scores = more severe disease)
HUI0Utility score at baseline
HUI3Utility score at the 3rd month
HUI6Utility score at the 6th month
HUI12Utility score at the 12th month
VisitNumber of physician visits in the past year
LOSLength of stay (# days) in hospital in the past year
DrugCost of medications excluding TrE or CoM in the past year

Table 2: Unit cost

ItemsUnit cost
Physician visit$50 per visit
LOS$1000 per day
TrE$550 per injection
CoM$5 per tablet


  1. The information and data provided will be used to conduct an economic evaluation. Please describe the design of this economic evaluation by filling in the following Table.
Type of economic evaluation that can be conducted based on the data provided (1 mark) 
Comparators of this economic evaluation (1 mark) 
Perspective of this economic evaluation (1 mark) 
Time horizon of this economic evaluation (1 mark) 
Identify resource uses that have been considered in the RCT (2 marks) 
What were the potential data sources for each unit cost provided? If there is more than one potential data source for each unit cost, please comment on which one is the best data source (4 marks) 
  • Calculating Costs, QALYs and ICER
  • Calculate the mean cost for each group during the study period: TrE treatment group and CoM control group (first calculate total cost for each patient and then take the mean) (4 marks)
  • Calculate the mean QALY for each group during the study period: TrE treatment group and CoM control group (first calculate QALY for each patient and then take the mean) (4 marks)
  • Calculate the point estimate of the incremental cost-effectiveness ratio (ICER) of TrE versus CoM during the study period (i.e., the difference in the mean costs between groups divided by the difference in the mean QALYs between groups) (2 mark)
  • What other cost components not included in this RCT would you like to measure? Please justify why each of these cost components should be measured and comment on their corresponding potential impact on the cost-effectiveness results (10 marks)

Part II: Cost Allocation

Consider the following information pertinent to the costing of a new laboratory area, being proposed for your facility. You are required to calculate the allocated annual costs of the new laboratory.

Size of total lab area1,000 m2
Size of your facility50,000 m2
Cost of lab equipment$50,000
Life of lab equipment10 Years
Cost of lab site preparation$75,000
Useful life of lab site25 Years
Annual utility costs of your facility$60,000
Annual maintenance cost of your facility$80,000


  1. Annuitization: Compute an equivalent annual cost for the lab equipment and lab site preparation, respectively. Assume a discount rate of 4 % and annuity is in arrears. (4 marks)
  2. Equivalent annual cost for equipment?
  3. Equivalent annual cost for lab site preparation?
  • Cost allocation: Compute the shared utility cost and maintenance cost allocated for the new laboratory using direct allocation method. (4 marks)
  • Allocated annual utility cost for the new lab?
  • Allocated annual maintenance cost for the new lab?
  • How much are the total annual costs of the new laboratory? (2 marks)


  • Assignment Part I:
  • Calculations for Part I can be done in excel file or using statistical software such as SAS and R.
  • Please describe in detail how to calculate QALY, cost and ICER, that is, showing the calculation formula in a word document, or in the excel file directly, or SAS/R.
  • 2-page limit for answering all of these questions
  • Assignment Part II:
  • Please describe in detail how to calculate the costs, that is, showing the calculation formula in a word document.
  • 1-page limit for answering all of these questions
  • Page format: Font size of 12 point, single line spacing, letter size and page margins of 1 inch
  • Please submit both word document and the calculations in excel, SAS or R, if any, on Canvas under Assignment 1.

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