HEALTH ECONOMICS

HEALTH ECONOMICS

HEALTH ECONOMICS

Sponsored by a Grant TÁMOP-4.1.2-08/2/A/KMR-2009-0041 Course Material Developed by Department of Economics,

Faculty of Social Sciences, Eötvös Loránd University Budapest (ELTE) Department of Economics, Eötvös Loránd University Budapest

Institute of Economics, Hungarian Academy of Sciences Balassi Kiadó, Budapest

HEALTH ECONOMICS

Authors: Éva Orosz, Zoltán Kaló and Balázs Nagy Supervised by Éva Orosz

June 2011

ELTE Faculty of Social Sciences, Department of Economics

Week 11

Steps of economic evaluation

Authors: Zoltán Kaló and Balázs Nagy Supervised by Éva Orosz

HEALTH ECONOMICS

Steps of economic evaluation

Definition of programme

• A comprehensive description of the competing alternatives

• Who did what to whom, where and how often?

Calculation of net health benefits

• Estimation of potential types of health status changes

• Incremental life years, quality of life etc.

• Consideration of time preference

• Calculation of net health benefit Calculation of net costs

• Calculation of programme costs

• Calculation of monetary savings

• Discounting costs and savings

• Calculation of net costs

Steps of economic evaluation

Application of decision rules

• Selection of the appropriate decision rule

• Application of decision rule Sensitivity analysis

• Calculation of costs and consequences according to plausible values of

uncertain variables

• Assessment effect on decisions

Definition of programme

Selection of comparator

Selection of the comparator

• Most critical question in economic evaluations – incremental cost-

effectiveness compared to which technology?

• What is the appropriate comparator?

– new drug therapy vs.?

– screening programme vs.?

– diagnostic procedure vs.?

Rule of thumb in selection of comparator

• Select that (current, old or even future) technology, which competes with the

new technology

• Consider completed therapy (not only

partial intervention)

Calculation of net health

benefits

Opinion of experts

The greatest danger to a man with high blood pressure lies in its discovery, because then some fool is certain to try and reduce it.

Hay JH, BMJ 1931, 2:432-47

Hypertension may be an important compensatory

mechanism which should not be tampered with, even were it certain that we could control it.

White PD, Heart Disease, New York: McMillan, 1931:400

Source: Moser M (2006). Historical Perspectives on the Management of Hypertension.

The Journal of Clinical Hypertension 8 (s8), 15–20.

Hierarchy of evidence

• Meta-analysis of Randomized Control Trials (RCTs)

• Systematic Review of RCT studies

• Single RCT

• Observational or Cohort studies

• Uncontrolled studies

• Basic research

– test tube, animal, human physiology – physiological rationale

• Clinical experience, experts’ opinion – unsystematic clinical observation

– our own, or experts

Most crucial factor of evidence gathering

• Systematic review of the literature – unbiased collection of evidence

• What makes a review “systematic”?

– Based on a clearly formulated question – Identifies relevant studies

– Appraises quality of studies

– Summarizes evidence by use of explicit methodology

– Comments based on evidence gathered

Need for comparative effectiveness research (indirect comparison)

• Control therapy in the pivotal clinical trials is not relevant locally

• Potential reasons:

1. control therapy is out-of-date

− not used in clinical practice anymore

− registration is withdrawn (e.g. side-effects) 2. therapeutic guidelines

− control therapy is used first-line, new therapy is only second-line due to its high price

3. local reimbursement status

− control therapy is not reimbursed

Meaningful health benefit for patients

• Life years (not only 5 year survival)

• Quality of life

• Combinations

– QALY (Quality Adjusted Life Years) – HYE (Healthy Year Equivalents)

– DALY (Disablity Adjusted Life Years)

Efficacy vs. effectiveness

• Efficacy & safety: registration criteria (for pharmaceuticals)

• New medicines may result in different health gain in real world

– rare but clinically significant adverse events

– less ideal conditions, including copayment: reduced persistence

– improved tolerability or easier use: compliance, adherence

• Importance for payers: effectiveness can be measured in naturalistic, observational studies or registries

Transferability of health outcomes

Categories Transferability

Epidemiology limited

Efficacy & Effectiveness yes (with limitations) Life expectancy no (or with serious

limitations)

QoL / Utility yes (with limitations) Transition probabilities yes (with limitations)

Calculation of net costs

Relevant costs from different perspectives

Societal • all medical and non medical costs

• productivity loss Third party payer /

health insurance

• total health care costs

• charges linked with reimbursement of providers

Health care provider

• variable costs that influence the expenses of provider

Patient

• out-of-pocket expenses

• lost wages

• family cost of caring

Employer

• productivity loss

• replacement costs

• risks on routine operation and business objectives

Main types of costs

Health care costs Non health care costs

Direct costs

– Direct costs of health care provision (drug, primary

care, hospital care, nursing) – Direct costs of patients

(copayment, fee-for non reimbursed and private services, under-the-table payment)

– Travelling costs – Home nursing

– Sick leave compensation

Indirect costs

– Costs during additional life years

– Lost wages of patients or family supporters

– Productivity costs

– Intangible costs (e.g. pain suffering, anxiety)

– Social value of premature death

Transferability of cost vectors among countries

• Production functions of health care services are country specific.

• Transferability of cost vectors – unit cost: non-transferable

– resource utilisation: limited transferability – relative reduction in resource utilisation:

limited transferability

Health care costs

=

 resource utilisation x

unit costs

Cost vectors: crucial points

• Consistency of the same cost vectors in different economic evaluations

– costing guide

– standard cost vectors published by Public HTA Office (cost dictionary)

• Cost of data collection should be small

– payer’s database

– other secondary data sources

Sources of local data

• Secondary data collection

– publications

– public databases (payer, hospital, registry) – private databases (IMS)

– published tariffs / fees – annual reports

– previous submissions

• Primary data collection

– clinical trials (e.g. subgroup analysis of local patients in Phase III) – non-interventional studies

– survey of health care providers

– patient resource utilisation survey (via clinicians or patient organisations)

– market research/Delphi panel (signed by credible clinicians)

Application of decision rules

Economic evaluation does not

replace decision!

Incremental

cost-effectiveness ratio

1 2

1 2

QALY QALY

C C

QALY

Cost ICER

– –

D

=

D

hatékonyság

comparator is dominant therapy:

rejection

grey zone

grey zone

investigated technology is dominant therapy:

acceptance

Δcosts

Δeffectiveness

Decision rule: incremental cost-

effectiveness ratio

Determining explicit cost/QALY threshold

• How to establish threshold

– ask taxpayers (WTP)

– experienced thresholds (analysis of previous decisions) – benchmark (e.g. dialysis)

– League Table  Oregon experiment – GDP (e.g. 3x GDP/capita)

• How many thresholds

– single

– two (lower and upper)

– moving threshold relating to disease severity

Moving threshold related to disease severity

0 20000 40000 60000 80000

1 0,8 0,6 0,4 0,2 0

Severity of disease (proportional loss of QALYs)

Cost per QALY

EURO 20,000 per QALY Increase threshold

As the severity of disease increases, so does the threshold for cost-effectiveness!

Source: Redekop K, 2007

Pros and cons of an explicit threshold

Advantages:

• Encourages consistency in decision-making.

• More transparent.

• An implicit threshold would be inferred anyway.

Disadvantages:

• Hard to determine what the threshold should be.

• Does not tell us the opportunity cost of adopting a new technology.

• Other considerations may come into play

• Caveat: new technologies are priced up to threshold

Sensitivity analysis

Sensitivity analysis

• Calculation of cost and health

outcomes in case of different values of uncertain variables

• Impact analysis on decisions

Sources of uncertainty and solutions

• Uncertainty in the methodology (different results with different methodological approach?) 

guidelines for economic evaluations, reference data

• Uncertainty from input variables (robustness of results)  sensitivity analysis

• Uncertainty from extrapolation (surrogate outcomes to hard endpoints)  standard modelling approaches

• Generalizability of specific study results

(conclusion valid for total patient population or

only for study population?)  sensitivity analysis

Types of sensitivity analysis

1.

Deterministic: input variables with certain numbers

– univariate

– bivariate (e.g. confidence box) – several variables

2. Probabilistic (stochastic) – the model calculates outcomes based on random

values of variables, therefore the variables are selected by chance based upon their distribution

– bootstrap method

– Monte Carlo simulation

One way deterministic sensitivity analysis: tornado diagram

Variable 1

Variable 5

Variable 7 Variable 6

Variable 8 Variable 9 Variable 10 Variable 11 Variable 4 Variable 3 Variable 2

ICER (€/QALY) Cost-effectiveness threshold

Base ICER value

0

Negative ICER

Two-way sensitivity analysis

Comparator New therapy diff.

QALYs 5,97 8,52 2,54

treatment costs (Euro) 117 882 168 531 50 649

ICER 19 906

QALYs

19 906 0% 1% 2% 3% 4% 5% 6% 7%

Costs

0% 13 653 15 174 16 799 18 530 20 363 22 299 24 334 26 465 1% 13 238 14 713 16 290 17 967 19 745 21 622 23 595 25 661 2% 12 896 14 332 15 868 17 502 19 234 21 062 22 984 24 997 3% 12 613 14 018 15 520 17 118 18 812 20 600 22 480 24 449 4% 12 379 13 759 15 233 16 802 18 465 20 220 22 065 23 997 5% 12 188 13 546 14 997 16 542 18 179 19 906 21 723 23 625 6% 12 031 13 371 14 804 16 328 17 944 19 650 21 443 23 321 7% 11 903 13 229 14 646 16 155 17 753 19 441 21 215 23 072

Impact of discount rates on ICER

Confidence box

hatékonyság

Δcosts

Δeffectiveness

Probabilistic sensitivity analysis

ΔQALYs ΔCosts ICER

2,60 52 867 20 299

Probabilistic sensitivity analysis

ΔQALYs ΔCosts ICER

2,60 52 867 20 299

x

Confidence ellipse

ΔQALYs ΔCosts ICER

2,60 52 867 20 299

x

Cost-effectiveness acceptability curve

ΔQALYs ΔCosts ICER

2,60 52 867 20 299

x

Cost-effectiveness acceptability curve

ΔQALYs ΔCosts ICER

2,60 52 867 20 299