Cost-Effectiveness Analysis of Inventory Levels in Rural Ethiopia

Abstract Objectives To estimate the cost-effectiveness of investing in higher pneumonia drug inventory levels to prevent treatment stockouts in rural Ethiopian health facilities. Methods A cost-effectiveness analysis was conducted using facility inventory data from five health centers. Drug availability, measured as days in stock (DIS), was modelled from current 80% to 99% DIS. Incremental costs included procurement, transport, and increased storage costs. Health outcomes were derived from expected reductions in missed pneumonia treatments. Results were expressed as incremental cost-effectiveness ratios (ICERs) per life saved and per life-year gained. Results Increasing inventory from 80% to 99% DIS increased annual treatment capacity from 4,757 to 5,887 patients, saving an estimated 28 additional lives at an ICER of $18 per life saved under mid-range assumptions. Worst-case estimates showed an ICER of $636 per life saved. Even in the worst scenario, the cost per life-year gained was highly cost-effective at 2% of GDP per capita. Conclusions Investment in drug inventory to reduce pneumonia treatment stockouts is a highly cost-effective approach to improving child survival and warrants further policy attention in resource-limited settings.