Table 5.

CBA components that have relatively good agreement, poor agreement and flexibility in application

CBA component	Areas of agreement	Areas of disagreement	Areas of flexibility
When to conduct a CBA	Commensurate with the scale of investment Required for investments over A$ 10 million	CBA not recommended for primary analysis by PBAC	Type of analysis that is appropriate for investments less than A$ 10 million
Perspective and referent group	Societal perspective for CBA	The referent group or standing varies from communities within LGAs, the state jurisdiction and whole of Australia Health perspective recommended by PBAC using CUA
Comparator/base case	Well-defined status quo. Avoidance of “straw man” comparator	Terminology (base case versus comparator)
Options for appraisal	A range of realistic options should be included	The number of options included	The nature of options included
Time horizon	Principle that the time horizon should be the economic life of the project Longer time horizons are associated with increased uncertainty	Appropriate time horizons for various interventions
Social discount rate		Theoretical basis for social discount rate The rate to be used in primary and sensitivity analyses
Costs and benefits	Second-round impacts excluded in primary analyses	The appropriate value for the VSL and VSLY	Technique for estimating non-market impacts Inclusion of productivity impacts
Decision rules	NPV and BCR should be reported	The preferred outcome measure (NPV or BCR) when these measures give varied results
Sensitivity analyses	Extensive uncertainty analysis should be undertaken to test the impact of key assumptions and variables	Terminology (uncertainty analysis, risk analysis, sensitivity analysis)	Type of analyses: one-way, scenario, best/worst-case, Monte-Carlo simulations
Distributional impacts and other considerations	Distributional impacts should not be incorporated into technical results Distributional impacts should be considered by decision-makers		Method of undertaking distributional analysis
Reporting	All critical assumptions and input parameters should be documented with supporting evidence	Reporting standardized but varied across guidelines

A$ Australian dollars, BCR benefit–cost ratio, CBA cost–benefit analysis, CUA cost-utility analysis, LGA local government area, NPV net present value, NSW New South Wales, PBAC Pharmaceutical Benefits Advisory Committee, VSL value of a statistical life, VSLY value of a statistical life-year