Background: Economic cost-effectiveness analysis (CEA) has been proposed as the appropriate tool to set priorities for resource allocation among available health interventions. Controversy remains about the way CEA should be used in the field of HIV/AIDS.
Methods and objectives: This paper reviews the general literature in health economics and public economics about the use of CEA for priority setting in public health, in order better to inform current debates about resource allocation in the fight against HIV/AIDS.
Results: Theoretical and practical limitations of CEA do not raise major problems when it is applied to compare alternatives for treating the same medical condition or public health problem. Using CEA to set priorities among different health interventions by ranking them from the lowest to the highest values of their cost per life-year saved is appropriate only under the very restrictive and unrealistic assumptions that all interventions compared are discrete and finite alternatives that cannot vary in terms of size and scale. In order for CEA to inform resource allocation compared across programmes to fight the AIDS epidemic, a pragmatic interpretation of this economic approach, like that proposed by the Commission on Macroeconomics and Health, is better suited. Interventions, like a number of preventive strategies and first-line antiretroviral treatments for HIV, whose marginal costs per additional life-year saved are less than three times the gross domestic product per capita, should be considered cost-effective.
Conclusion: Because of their empirical and theoretical limitations, results of CEA should only be one element in priority setting among interventions for HIV/AIDS, which should also be informed by explicit debates about societal and ethical preferences.