1. Health Economics Workshop: Costing exercise
Monisha Sharma, PhD
International Clinical Research Center (ICRC)
University of Washington

2. Goals of costing exercise:
To familiarize yourself with using Excel costing tools
To practice inputting intervention costs into appropriate categories, annualizing, and discounting costs.
To think about how to adapt costs collected from an RCT to estimate intervention costs.

3. Inflating costs to current value
You are looking for the yearly per patient cost of administering ART in Kenya.
You find an estimate in the literature of $350 per year, but this is in 2014 US dollars.
Your cost analysis is in 2015 US dollars
Need to account for inflation.
How do you adjust the ART cost for use in your analysis?
Adjust for inflation using the GDP deflator
Can also use the consumer price index (CPI)
Current cost ($) = (base year cost) * (Current GDP deflator) / (Base year GDP deflator)

4. GDP deflator Table: Kenya
Year
GDP deflator
2015
153.7
2014
140.8 …
2011
113.1
2010
102.1
2009
100
Obtain CPIs online from World Bank (online)
Obtain 2014 and Kenya to US exchange rates (also from World Bank)
Year
Exchange rate KSH to USD
2015
92.0
2014
87.7

5. Convert to 2015 US dollars using 2015 exchange rate (94.0)
Converting 2014 costs to 2015
Current cost ($) = (base year cost) * (Current GDP deflator) / (Base year GDP deflator)
Convert $350 US dollars to Kenyan Schillings using 2014 Kenyan to US exchange rate: 87.7
2015 GDP deflator = GDP deflator = 140.8
2014 ART cost= 350*87.7
=30,765 KSH
2015 ART Cost = 30,765 x (153.7/ 140.8)
= 33,507 KSH
Inflation-adjustment factor
Convert to 2015 US dollars using 2015 exchange rate (94.0)
=33,507/94
=$356 (2015 dollars)
$350 in 2014 in Kenya=$356 in 2015

6. Costing exercise: Instructions
You are conducting a microcosting of an HIV testing intervention run as an RCT in Kenya.
Results will be used for a cost-effectiveness analysis
Fill in the Excel spreadsheet provided to generate estimates of the total cost of the intervention if it were implemented by the Kenya Ministry of Health
The sheets are linked and will populate the summary sheet automatically.
Some boxes have formulas already written in (eg annuity factor) and will fill in automatically.

7. Costing exercise: Instructions cont’d
Boxes in blue can be filled in with words (description of items included in costing)
Boxes in yellow can be filled in with numbers
Boxes in green populate automatically and should not be altered
Assumptions:
Vehicles have 5 years of useful life
Furniture has 10 years of useful life
Discount rate: 3%
Costs are in 2014 US dollars

8. COSTING EXERCISE

9. My actual costing sheets

10. My actual costing sheets

11. Thank You!