How to appropriately extrapolate costs and utilities in cost-effectiveness analysis

Costs and utilities are key inputs into any cost-effectiveness analysis. Their estimates are typically derived fromindividual patient-level data collected as part of clinical studies the follow-up duration of which is often too short toallow a robust quantification of the likely costs and benefits a technology will yield over the patient’s entire lifetime. Inthe absence of long-term data, some form of temporal extrapolation—to project short-term evidence over a longertime horizon—is required. Temporal extrapolation inevitably involves assumptions regarding the behaviour of thequantities of interest beyond the time horizon supported by the clinical evidence. Unfortunately, the implications fordecisions made on the basis of evidence derived following this practice and the degree of uncertainty surroundingthe validity of any assumptions made are often not fully appreciated. The issue is compounded by the absence ofmethodological guidance concerning the extrapolation of non-time-to-event outcomes such as costs and utilities.This paper considers current approaches to predict long-term costs and utilities, highlights some of the challengeswith the existing methods, and provides recommendations for future applications. It finds that, typically, economicevaluation models employ a simplistic approach to temporal extrapolation of costs and utilities. For instance, theirparameters (e.g. mean) are typically assumed to be homogeneous with respect to both time and patients’characteristics. Furthermore, costs and utilities have often been modelled to follow the dynamics of the associatedtime-to-event outcomes. However, cost and utility estimates may be more nuanced, and it is important to ensureextrapolation is carried out appropriately for these parameters.