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
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Authors: Éva Orosz, Zoltán Kaló and Balázs Nagy Supervised by Éva Orosz
June 2011
Week 10
Cost-effectiveness and cost-utility analyses
Authors: Zoltán Kaló and Balázs Nagy Supervised by Éva Orosz
Full economic evaluation
(comparative assessment of both costs and consequences of two or more alternative health care interventions)
Type of analysis Abbr. Unit of inputs (costs)
Unit of outputs (consequences)
cost-minimisation CMA money identical cost-
effectiveness CEA money natural unit (e.g. Hgmm, life years)
cost-utility CUA money quality adjusted life years (e.g.
QALY)
cost-benefit CBA money money
Drummond et. al. (1987)
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Cost-effectiveness analysis
• Costs and savings are assessed in monetary values
• Health benefit is expressed in natural units
– intermediate outcomes (Hgmm blood pressure, mmol/L cholesterol reduction) – hard endpoints (life years gained, disease free days, screened cases)
• Health benefits captures only one dimension
• Decision-making based on ratio
• Applicability: reimbursement decision, is the new health care technology more cost- effective than the current standard
Categories of health outcomes
Natural units
• Hgmm blood pressure reduction
• mmol/L cholesterol reduction
• disease (ulcer) free days
• symptom free days
• avoided amputation
• life years gained
• …
D = Drug cost
C = Other treatment cost E = Effectiveness
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Surrogate (intermediate) outcomes vs hard end-points
RCT results
(1000 patients) Placebo Clofibrat Relative risk reduction
Serum cholesterol
reduction +1% –9%
Non-fatal myocardial
infarct 7.2 5.8 –19%
Fatal and non-fatal
myocardial infarct 8.9 7.4 –17%
Total mortality 5.2 6.2 19%
Source: Sackett et al. – Clinical Epidemiology, 1995
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Incremental cost per life years gained
in US dollars (USD) in terms of fees valid in 1997 Source: Kalo, Járay, Nagy – Progress in Transplantation (2001)
Critical factors of cost-effectiveness analyses
• Surrogate outcome vs. real health gain (hard endpoints)
• Solution: Validation of surrogate outcomes in clinical trials and observational studies
• Health status changes outside the scope of the selected naturalistic endpoint (e.g.
side-effect).
• Solution: inclusion of consequences of these parameters into costs Health care service Haemodialysis (waiting listed) Transplantation
Transplantation 11,444
Dialysis 31,654 4,411
Transport for dialysis 6,049 650
Outpatient care 537 353
Inpatient care 809 886
Medication 5,798 8,813
Total per one life-year
gained 44,846 26,557
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Cost-effectiveness analysis
Applicability:
• Allocative efficiency (with limitations)
• To compare two alternative health technologies, if health outcomes – can be measured by the same health dimension
– are unequal
• Can be used to support reimbursement decisions (ranking between old vs. new technology)
Cost-utility analysis
• Costs and savings are assessed in monetary values
• Health benefit is expressed in quality adjusted life years
–
QALY, HYE, DALY• Applicable for all health care interventions
• Decision-making based on ratio
• Applicability: reimbursement decision or revision of insurance package
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Visual analogue scale
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Standard gamble
Time Trade-Off
Torrance GW. J Health Econ 1986.
Torrance GW. J Health Econ 1986.
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Dilemma of establishing utility values
Whom should we ask about the relative utility of each health status?
• patients?
• general population?
• medical workers?
EQ-5D questionnaire
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EQ-5D tariffs (Dolan N3)
Alternatives of QALY measurement in clinical trials
• Direct method: eliciting utility values by applying PROs with related utility values (EQ5D, SF36, QWB)
• Indirect method
• applying HRQoL instruments in clinical trials
• mapping HRQoL and utility values in an independent cross-sectional survey dimension coefficient
constant 0,081
mobility 1. 2. level 2. 3. level
0,069 0,314
self-care 1. 2. level 2. 3. level
0,104 0,214
Usual activities 1. 2. level 2. 3. level
0,036 0,094
pain / discomfortt 1. 2. level 2. 3. level
0,123 0,386
anxiety / depression 1. 2. level 2. 3. level
0,071 0,236
N3 (3. level in any dimension)
0,269
unconscious -0,402
Health Status: 11223 calculated utility:
1 – 0,081 – 0,036 – 0,123 – 0,236 – 0,269 =
0,255
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QALY League Table
Cost/QALY (£ 1990) Cholesterol testing and diet therapy only (all adults, aged 40-69) 220
Neurosurgical intervention for head injury 240
GP advice to stop smoking 270
Neurosurgical intervention for subarachnoid haemorrhage 490 Anti-hypertensive therapy to prevent stroke (ages 45-64) 940
Pacemaker implantation 1,100
Hip replacement 1,180
Valve replacement for aortic stenosis 1,140
Cholesterol testing and treatment 1,480
CABG (left main vessel disease, severe angina) 2,090
Kidney transplant 4,710
Breast cancer screening 5,780
Heart transplantation 7,840
Cholesterol testing and treatment (incrementally) of all adults aged 25-39 years
14,150
Home haemodialysis 17,260
CABG1 (1 vessel disease, moderate angina) 18,830
CAPD2 19,870
Hospital haemodialysis 21,970
Erythropoietin treatment for anaemia in dialysis patients (assuming a 10% reduction in mortality)
54,380
Neurosurgical intervention for malignant intracranial tumour 107,780
Erythropoietin treatment for anaemia in dialysis patients (assuming no increase in survival)
126,290
Source: Maynard A.K. (1991): Developing the health care market.
Economic Journal, 101, 1277-1286.
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Applicability of cost-utility analysis
• To improve the allocative efficiency in health care financing
• To compare any alternative health technologies with different health gain, even if health outcomes are measured in different dimensions
• Examples:
– reimbursement decisions (ranking between old vs. new technology)
– exclusion of therapies from reimbursement (e.g. technologies with huge budget impact)
– development of financing protocols based on existing therapeutic guidelines – comparison of all medical technologies (e.g. to define insurance package)