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HIV Cost-effectiveness


This guide consists of two sections. The first section introduces the basic concept of cost-effectiveness analysis. The second section provides the sources of basic model inputs commonly used in the literature. Significant publications in the field and other related sources are also provided at the end.

Picture of a book of calculations.Overview of Cost-Effectiveness Analysis

What is cost-effectiveness analysis?

Cost-effectiveness analysis (CEA) is a type of economic analysis where both the cost and the outcome (impact, result, effect, benefit, health gain …) of an intervention are evaluated and then expressed in the form of a cost-effectiveness ratio. The numerator of the cost-effectiveness (CE) ratio represents the cost of the intervention associated with one unit of “outcome”. The denominator is the unit of outcome. It can be expressed using many types of measures including: years of life gained, quality-adjusted life years gained (QALYs), new diagnoses, infections averted, and deaths averted. CEA is usually conducted on interventions that are known to be effective.

The CE ratio is a fraction used to compare the relative costs and outcomes of two or more interventions. In Example 1, the outcome measure chosen is “new HIV diagnoses” and the CE ratio of the programs evaluated is expressed in terms of “cost per new HIV diagnosis”. The CE ratio of Program A is $41,667 per new HIV diagnosis. This ratio does not reveal the cost of implementing the program nor the number of new HIV diagnoses detected by the program. However, when comparing the CE ratio of Program A to that of Program B, we can say that Program B is more cost-effective than Program A when CE is measured in terms of “cost per new HIV diagnosis,” because at $7,400 per new HIV diagnosis, Program B is less costly for the same outcome. 

Example 1 [a] Annual program cost [b] Annual number of new HIV diagnoses detected by program CE ratio:  Cost per new HIV diagnosis ([a]/[b])
Program A $500,000 12 $41,667 / new HIV diagnosis
Program B $37,000,000 5,000 $7,400 / new HIV diagnosis

Cost per new HIV diagnosis
HIV interventions, such as screening and partner services, are intended to identify HIV-positive persons who are unaware of their infection. When evaluating several such programs in CE analysis, the outcome “new HIV diagnoses” is often used to enable a comparison across these programs; so the CE ratio is expressed in terms of cost per new HIV diagnosis.

Cost per infection averted (IA)
HIV prevention interventions such as syringe exchange programs, counseling for at-risk youth or post-exposure prophylaxis are intended to prevent (avert) infection in HIV-negative persons. Such programs can be evaluated to determine the number of infections prevented that would have otherwise occurred had the intervention not been provided. When evaluating several such programs in CE analysis, the outcome “HIV infections averted” is often used to enable a comparison across these programs; so the CE ratio can be expressed in terms of cost per infection averted.


As an outcome, the number of HIV infections averted due to a program can be evaluated using different mathematical techniques that vary in complexity and the amount of data or number of assumptions required. Attention should be paid to the timeframe of the intervention effect considered in the evaluation. For example, if the timeframe is one year, then the cost may have to be incurred annually in order to continue to avert the HIV infections.

Cost per life year (LY) gained
HIV treatment interventions, including retention in care and treatment adherence, are in part intended to extend the lives of HIV-positive persons. Such programs can be evaluated to determine the number of additional life years gained (or saved) that otherwise would have been lost to premature death. When evaluating these types of  programs in CE analysis, the outcome “life years” often is used to compare them; so the CE ratio can be expressed in terms of cost per life year gained.

Cost per quality-adjusted life year (QALY) gained
As an outcome, life years do not reflect any of the positive or negative effects on the quality of life of the patients receiving an intervention. For example, drug treatment A may provide an additional 2 years of life dominated by hospitalization while drug treatment B may provide an additional 1 year of life without any significant ill effects.

A quality-adjusted life year (QALY) is an outcome measure that considers both the quality and the quantity of life lived. The QALY is based on the number of years of life added by the intervention. Each year in perfect health is assigned the value of 1.0.  Each year of less-than-perfect health is assigned a value less than 1.0 down to a value of 0.0 for death. If the extra years would not be lived in full health, for example if the patient would lose a limb, be blind or suffer from worse mental health, then the extra life-years may be given a value of less than 1 to account for this.

HIV interventions intended to improve and/or extend the lives of HIV positive persons can be evaluated to determine the number of additional QALYs gained (or saved) that would have otherwise been lost. When evaluating several such programs in CE analysis, the CE ratio can be expressed in terms of cost per QALY gained.

Most outcome measures, including infections averted, life years gained and new HIV diagnoses, can be translated into QALYs, thereby providing a consistent measure of comparison across many different types of intervention programs.

Cost-effectiveness thresholds

A cost-effectiveness ratio of $50,000 to $100,000 per QALY gained has been long cited in the literature as a conservative threshold for a cost-effective intervention. Traditionally, if an intervention was estimated to cost less than $50,000 to $100,000 per QALY gained, it would be considered cost-effective. However, recent studies have argued that this benchmark is likely too low since the threshold has not been reassessed over time.1 To reflect the advances of modern health care, Braithwaite et al reevaluated the threshold and estimated the plausible range for a cost-effectiveness decision rule to be between $109,000 and $297,000 per QALY saved (in 2003 dollars; $143,000-$388,000 in 2010 dollars).2

What does “cost-saving” mean?

When two or more programs are being compared (intervention vs. comparator), the intervention is labeled as “cost-saving” when both the net outcome of the intervention is greater than or equal to that of the comparator and the cost of the intervention is less than the cost of the comparator. A program can only be deemed cost-saving when it is compared to an alternative. The alternative is typically the status quo or the current standard of care.

In Example 2, Program A is both cheaper and more beneficial than the current standard of care and is therefore a cost-saving alternative. CE ratios cannot be negative. 

Example 2 [a] Annual program cost [b] Annual number of QALYs gained CE ratio:  Cost per QALY gained ([a]/[b])
Program A (intervention) $750,000 50 $15,000 / QALY gained
Standard of care (comparator) $1,000,000 40 $25,000 / QALY gained
Difference $(250,000) 10 Cost-saving

If the costs of Program A and the Standard of care are borne by the same institution, then the savings will be reaped by that institution. Often, however, the costs of HIV interventions are borne by many distinct entities, including government, health care systems and individuals, and the savings are not realized by any single entity. In addition, the savings may occur over many years.

How to interpret a CE ratio?

At $100,000 per QALY (or at higher thresholds), a program may be considered cost-effective. However, this ratio contains a numerator and a denominator and thus no interpretation can be made as to the annual cost of this program.

Example 3 [a] Annual program cost [b] Number of persons served by program [c] Sum of QALYs gained by program Cost per person served ([a]/[b]) Cost per QALY gained ([a]/[c])
Program A $400,000 4,000 10 $100 $40,000
Program B $50,000,000 5,000 1,250 $10,000 $40,000

In Example 3, both programs A and B have the same measure of cost-effectiveness in terms of cost per QALY gained, however, Program B is more costly to implement than A. Investment in Program B may nonetheless be justified depending on budgetary constraints and the ability to implement for the program in the population and setting considered.

If A and B are complementary rather than alternative programs, then they can both be implemented. Implementing Program A and/or B in a particular population and setting requires an evaluation of the number of persons that potentially could be served by the intervention and the resulting overall costs.

Basic Model Inputs for Cost-Effectiveness Analyses

In this section, we list some of the most recent and significant publications that include key input parameters researchers might use in model-based cost-effectiveness analyses. It is not intended to provide a comprehensive overview of these topic areas—only to give readers an idea of some key works in the field.

Cost of HIV treatment


Cost of Testing

Testing in health care settings

Testing in non-health care settings

HIV survival



HIV epidemiology

Recent HIV incidence estimates


More HIV surveillance reports can be found in HIV Surveillance Reports.

HIV transmission rate estimates


Utility Estimate for HIV/AIDS


HIV Prevention Data

Annual cost of HIV by state

We estimated the annual cost of HIV by state based on the number of new HIV diagnoses in each state, multiplied by the lifetime treatment cost discounted to the time of infection for each new case (Table 1). Our cost estimates assume that a diagnosis occurs within the same year as infection, and thus an individual incurs treatment costs over many years. The states with highest number of new diagnoses in 2009, and thus the greatest financial burden, were Florida, California, New York, and Texas.  In all, the total lifetime treatment cost for HIV based on new diagnoses in 2009 was estimated to be $16.6 billion.

Table 1: State-Specific Costs from New Diagnoses of HIV Infection in 2009—
United States and 5 U.S. dependent areas

State Nb. of New Diagnosesa Total Lifetime Treatment Costb
(in million)
Alabama 690 $253
Alaska 21 $8
Arizona 653 $240
Arkansas 214 $79
California 4,886 $1,794
Colorado 391 $144
Connecticut 366 $134
Delaware 168 $62
District of Columbia 713 $262
Florida 5,775 $2,120
Georgia 2,073 $761
Hawaii 70 $26
Idaho 42 $15
Illinois 1,708 $627
Indiana 483 $177
Iowa 125 $46
Kansas 150 $55
Kentucky 361 $133
Louisiana 1,247 $458
Maine 57 $21
Maryland 1,400 $514
Massachusetts 484 $178
Michigan 827 $304
Minnesota 393 $144
Mississippi 559 $205
Missouri 547 $201
Montana 30 $11
Nebraska 105 $39
Nevada 386 $142
New Hampshire 43 $16
New Jersey 1,252 $460
New Mexico 170 $62
New York 4,649 $1,707
North Carolina 1,719 $631
North Dakota 14 $5
Ohio 1,144 $420
Oklahoma 297 $109
Oregon 235 $86
Pennsylvania 1,736 $637
Rhode Island 123 $45
South Carolina 789 $290
South Dakota 23 $8
Tennessee 999 $367
Texas 4,291 $1,575
Utah 125 $46
Vermont 11 $4
Virginia 997 $366
Washington 557 $204
West Virginia 80 $29
Wisconsin 305 $112
Wyoming 19 $7
Subtotal 44,502 $16,338
U.S. dependent areas
American Samoa 0 $0
Guam 3 $1
Northern Mariana Islands 1 $0
Puerto Rico 671 $246
U.S. Virgin Islands 25 $9
Subtotal 700 $257
Total 45,202 $16,595

a Source: CDC HIV Surveillance Report 2009, Vol 21.
Note that the numbers of new diagnoses listed in this table do not adjust for reporting delay, and thus are likely underestimated.
b Total cost = Nb. of new diagnoses* Lifetime treatment cost per person
Life treatment cost per person=$367,134 (in 2009 dollars)
Source: Schackman BR, Gebo KA, Walensky RP, et al. The lifetime cost of current human immuno-deficiency virus care in the United States. Medical Care 2006; 44: 990-997.

Savings from prevention efforts

Farnham et al. (2010) measured the value of HIV prevention efforts in the United States by comparing the difference between the number of infections that have occurred with the number that might have occurred in the absence of prevention programs. Combined with estimates of lifetime treatment costs4 (2009 dollars), the study estimated the medical savings from infections averted by US prevention programs from 1991-2006 to be $129.9 billion with 361,878 HIV infections averted.26

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