Adjusting for Inflation and Currency Changes Within Health Economic Studies

• Published in: Value in health Vol. 22; no. 9; pp. 1026 - 1032
• Main Authors: Turner, Hugo C., PhD, Lauer, Jeremy A., PhD, Tran, Bach Xuan, PhD, Teerawattananon, Yot, PhD, Jit, Mark, PhD
• Format: Journal Article
• Language: English
• Published: United States Elsevier Inc 01.09.2019; Elsevier Science Ltd
• Subjects: Cost analysis; Costs and Cost Analysis; Currency; currency changes; Developing Countries; Economics, Medical - organization & administration; global health; Health care; Health economics; Health Expenditures - statistics & numerical data; Humans; Inflation; Inflation rates; Inflation, Economic; Internal Medicine; international dollars; Money; Prices; United States > US; global health; international dollars; currency changes; inflation; health economics
• ISSN: 1098-3015; 1524-4733
• DOI: 10.1016/j.jval.2019.03.021

AbstractObjectivesWithin health economic studies, it is often necessary to adjust costs obtained from different time periods for inflation. Nevertheless, many studies do not report the methods used for this in sufficient detail. In this article, we outline the principal methods used to adjust for inflation, with a focus on studies relating to healthcare interventions in low- and middle-income countries. We also discuss issues relating to converting local currencies to international dollars and US$ and adjusting cost data collected from other countries or previous studies. MethodsWe outlined the 3 main methods used to adjust for inflation for studies in these settings: exchanging the local currency to US$ or international dollars and then inflating using US inflation rates (method 1); inflating the local currency using local inflation rates and then exchanging to US$ or international dollars (method 2); splitting the costs into tradable and nontradable resources and using method 1 on the tradable resources and method 2 on the nontradable resources (method 3). ResultsIn a hypothetical example of adjusting a cost of US$100 incurred in Vietnam from 2006 to 2016 prices, the adjusted cost from the 3 methods were US$116.84, US$172.09, and US$161.04, respectively. ConclusionsThe different methods for adjusting for inflation can yield substantially different results. We make recommendations regarding the most appropriate method for various scenarios. Moving forward, it is vital that studies report the methodology they use to adjust for inflation more transparently.