Publication Description
Several probability‐based measures are introduced in order to assess the cost‐effectiveness of a treatment. The basic measure consists of the probability that one treatment is less costly and more effective compared with another. Several variants of this measure are suggested as flexible options for cost‐effectiveness analysis. The proposed measures are invariant under monotone transformations of the cost and effectiveness measures. Interval estimation of the proposed measures are investigated under a parametric model, assuming bivariate normality, and also non‐parametrically. The delta method and a generalized pivotal quantity approach are both investigated under the bivariate normal model. A non‐parametric U‐statistics‐based approach is also investigated for computing confidence intervals. Numerical results show that under bivariate normality, the solution based on generalized pivotal quantities exhibits accurate performance in terms of maintaining the coverage probability of the confidence interval. The non‐parametric U‐statistics‐based solution is accurate for sample sizes that are at least moderately large. The results are illustrated using data from a clinical trial for prostate cancer therapy. Copyright © 2016 John Wiley & Sons, Ltd.