The cost and effects of the intervention on sub-populations within the decision problem should be explored and the implications appropriately characterised.

Importance to decision-making
It is important to make a clear distinction between uncertainty, variability and heterogeneity. Uncertainty refers to the fact that we do not know what the expected effects of an intervention will be in a particular population of individuals. This remains the case even if all individuals within this population have the same observed characteristics. Variability refers to the fact that responses to an intervention will differ within the population or even in a sub population of individuals or patients with the same observed characteristics. Heterogeneity refers to those differences in response that can be associated with differences in observed characteristics, for example where the sources of natural variability can be identified and understood. As more becomes known about the sources of variability the patient population can be partitioned into sub populations or subgroups, each with a different estimate of the expected effect and costs of the intervention, and of the uncertainty associated with these.

An exploration of heterogeneity thus enables decision-makers to consider whether an intervention should be made available to certain groups of individuals with greatest capacity to benefit (or in whom the costs of provision are worthwhile). It means they have the opportunity to make different decisions for different groups of individuals that lead to improved health outcomes overall given the available resources.

There may, however, be good reasons not to make different decisions about provision based on certain types of observed characteristics. These reasons might include:
i) the difficulty and/or cost of maintaining differential access;
ii) adverse equity implications; or iii) social values that would not support discrimination based on certain types of characteristics.

However, even in these circumstances an exploration of heterogeneity is important for a number of reasons:

• The correct assessment of the cost and effects of providing an intervention across some or all subgroups depends on the effects and costs in each group.
• It enables decision-makers to consider the opportunity costs (the health foregone) of acceding to concerns about differential provision across identifiable groups, adding to consistency and accountability in the application of other social values.
• It can provide a foundation for exploring the health equity implications of how an intervention might be provided, and can identify potential trade-offs between equity objectives and overall health benefits ( eg. for equity reasons it might be considered worthwhile providing an intervention to groups where provision is more costly even though this may reduce health benefits overall).
• It can provide a better understanding of the distributional issues associated with an intervention. This can form the basis for further more targeted research and inform other related decisions.

Method specification

Since any observed characteristics that affect health benefits and costs of an intervention are relevant in principal, the exploration of heterogeneity should include subgroups where there is good evidence that the relative effect of the intervention will differ (eg. pre-specified subgroups within a clinical trial). However, subgroup analysis can be considered when external evidence suggests (and there are good reasons to believe) that relative effects differ between subgroups even if they have not been pre-specified.

The exploration of heterogeneity should not be restricted to differences in relative effects between different groups of individuals or patients. It should also include exploration of characteristics that will influence absolute health effects, even where the relative effects are the same, such as differences in base line risk of an event or incidence and prevalence of a disease.

There may also be characteristics which are unrelated to relative effects or baseline risk but nevertheless influence the direct costs of provision or other health intervention costs and benefits, such as geographical location or differences in other health care provision.

The question of which sets of observed characteristics to explore should be informed by:

1. the evidence base regarding differences in relative effect, baseline risk or other relevant characteristics
2. whether any differences are likely to have an important influence on costs and effects.

The analysis should justify how the exploration of heterogeneity has been undertaken with respect to these two considerations. A presumption that certain observed characteristics should not be used to offer differential access to an intervention is not a justification for failing to explore the implications of heterogeneity.