6 CURRENT ISSUES Indirect costs of healthcare: calculation methods debated Drs Werner Brouwer and Marc Koopmanschap from Erasmus University, Rotterdam, The Netherlands, stress that neither the human capital-cost approach nor the friction-cost method are 'perfect' approaches for calculating indirect costs in health economic evaluations.! They made this comment in response to the claim by Dr Bengt Liljas from Lund University, Sweden, that the human capital-cost approach is better than the friction-cost method for assessing indirect costs. * Drs Brouwer and Koopmanschap argue that the human capital-cost approach represents ideal individualistic behaviour but is not useful in estimating societal production losses, and its foundation in neoclassical theory does not resemble the real economy. Drs Brouwer and Koopmanschap suggest that methods are needed that produce more realistic estimates of the indirect costs of healthcare, and that the friction-cost method, although imperfect, is intended to do just that. Dr Liljas agrees that neither the human capital-cost method nor the friction-cost method are optimal for calculating indirect costs of healthcare. 2 However, he believes that the existence of a theoretical foundation for the chosen method is important when conducting an economic analysis from the societal perspective. On this basis, he suggests that the human capital-cost approach provides an acceptable estimation. In contrast, Dr Liljas maintains that the friction-cost method will underestimate indirect costs, and that this method needs to be underpinned by an economic theory in order to be considered competitive with the human capital-cost approach. * see PharmacoEconomics & Outcomes News 144: 2, 10 Jan 1998; 800531471 1. Brouwer WBF, et al. How to calculate indirect costs in economic evaluations. PharmacoEconomics 13: 563-566, Part I, May 19982. Liljas B. How to calculate indirect costs in economic evaluations. Reply. PharmacoEconomics 13: 566-569, Part I. May 1998 _32017 PharmacoEconomics & Outromes News 16 May 1998 No.1 62 1173-5503l9810162-0006l$01.00 C Adis !nternational Limited 1998. All rights reserved

Indirect costs of healthcare

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6 CURRENT ISSUES

Indirect costs of healthcare: calculation methods debated

Drs Werner Brouwer and Marc Koopmanschap from Erasmus University, Rotterdam, The Netherlands, stress that neither the human capital-cost approach nor the friction-cost method are 'perfect' approaches for calculating indirect costs in health economic evaluations.!

They made this comment in response to the claim by Dr Bengt Liljas from Lund University, Sweden, that the human capital-cost approach is better than the friction-cost method for assessing indirect costs. * Drs Brouwer and Koopmanschap argue that the human capital-cost approach represents ideal individualistic behaviour but is not useful in estimating societal production losses, and its foundation in neoclassical theory does not resemble the real economy.

Drs Brouwer and Koopmanschap suggest that methods are needed that produce more realistic estimates of the indirect costs of healthcare, and that the friction-cost method, although imperfect, is intended to do just that.

Dr Liljas agrees that neither the human capital-cost method nor the friction-cost method are optimal for calculating indirect costs of healthcare. 2

However, he believes that the existence of a theoretical foundation for the chosen method is important when conducting an economic analysis from the societal perspective. On this basis, he suggests that the human capital-cost approach provides an acceptable estimation.

In contrast, Dr Liljas maintains that the friction-cost method will underestimate indirect costs, and that this method needs to be underpinned by an economic theory in order to be considered competitive with the human capital-cost approach. * see PharmacoEconomics & Outcomes News 144: 2, 10 Jan 1998; 800531471

1. Brouwer WBF, et al. How to calculate indirect costs in economic evaluations. PharmacoEconomics 13: 563-566, Part I, May 19982. Liljas B. How to calculate indirect costs in economic evaluations. Reply. PharmacoEconomics 13: 566-569, Part I. May 1998 _32017