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
Part II
Principles of health economic evaluations Week 8–13
Authors: Zoltán Kaló and Balázs Nagy Supervised by Éva Orosz
Week 8
Terminology. Types of economic
evaluations
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Definition of research areas
• Health Technology Assessment (HTA)
Assessment of health technologies from various perspectives (clinical, economic, organisational, ethical) to inform health policy
• Economic Evaluation (assessment of cost-effectiveness)
Evaluation of health technologies in terms of their costs and benefits; is generally the core of a HTA.
Centre for Health Economics, University of York
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• Budget Impact Analysis (BIA)
Estimate the financial consequences of adoption and diffusion of a new health care intervention within a specific health care setting or system context given inevitable resource constraints.
• Pharmacoeconomics
Economic evaluation and budget impact analysis of pharmaceutical technologies
Evidence based medicine
Meaningful health benefit for patients
• Life years (not only 5 year survival)
• Quality of life (QoL)
• Combination of life years and QoL 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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Basic problems
• Uncertainty in the effectiveness of health technologies welfare loss
• Effective technologies should be selected in order to avoid welfare loss.
• Scarce resources opportunity cost
• Society cannot provide all effective health technologies to everyone from public resources, cost-effective technologies should be selected.
We have to select from the available health technologies!!
Based on what criteria?
Criteria for clinical decision-making
• Efficacy (but not effectiveness and not necessarilly health gain!)
• Side-effects (e.g. expected risks vs. expected benefits)
• Length of therapy
• Interactions
• Patient compliance (see also copayment)
• Relevant costs (primary care + hospital + ambulantory + medicines + patient costs etc.)
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Assessment of health technologies
• Quality – in the long-term can the manufacturer guarantee the quality presented at registration?
• Efficacy – does it work in clinical trial / under controlled or ideal conditions?
• Safety – is risk/benefit ratio acceptable for individual patients?
• Effectiveness – does it work in real life?
• Technical efficiency – can target health gain be attained at smaller costs?
• Cost-effectiveness – how much is the cost of producing one unit of health gain?
• (Allocative efficiency – optimal resource allocation (can more health gain be
achieved for society with different mix of health technologies given a fixed budget?)
• (Macro-economic efficiency – affordability/budget impact)
Questions for (micro & macro level) decision-makers
Does the particular health care intervention result in
• health gain to patients? (either survival or QoL or both)
• more health benefit to patients than the current gold standard treatment?
• incremental health benefit at an acceptable incremental cost?
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Further questions to macro level decision- makers
• Is there public need to cover a particular intervention from public resources? – see life-style drugs.
• Do we have enough resources to reimburse a technology? Or which alternative technology should be sacrificed (see opportunity cost)?
• Do we have sufficient capacity, personnel, infrastructure to cover the need for the technology?
• Can we ensure equity? (equal access, equal utilization, equal money spent on a patient, equal outcome of interventions, equal health status)
Which technologies can be assessed by economic evaluation?
• pharmaceuticals
• medical appliences
• medical devices
• diagnostics
• screening programmes
• public health programmes
• managed care programmes
• hospital (or other institutional) investments
• any other health care investments
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Components of
Health Technology Assessment
• importance of disease/unmet medical need
• public health need
• subgroup of patients
• clinical results (efficacy)
• health impact in real life (effectiveness)
• cost-effectiveness
• budget impact/opportunity cost
• risk of off-label use
• equity
• infrastructure / investment needed
Distinguishing characteristics of health care evaluations
1. Comparison of two or more alternatives?
2. Both costs (inputs) and consequences (outputs) of the alternatives examined?
(2) No (2) Yes
Examines only consequences
Examines only costs
(1) 1A Partial evaluation 1B 2 Partial evaluation
No outcome description cost description cost - outcome description (1) 3A Partial evaluation 3B 4 Full economic evaluation Yes efficacy or effectiveness
evaluation
cost analysis cost-minimsation analysis cost-effectiveness analysis cost-utility analysis
cost-benefit analysis
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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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Definition
• Cost-effective: one unit of incremental health gain can be achieved at acceptable incremental cost by a technology to a comparator. Cost-effectiveness can be assessed by all different types of full economic evaluation (including CMA, CEA, CUA and CBA).
• Cost-effectiveness analysis: special type of full economic evaluations, in which health outcomes are measured in one dimension by natural units.
Cost-minimisation analysis
• Costs and savings are assessed in monetary values.
• Health benefit of compared interventions is equal (precondition).
• Decision-making based on difference
• Example:
– one-day vs. traditional surgery – generic vs. original drug Applicability:
• Technical efficiency
• Choose between two technologies with equal health outcomes
• If health outcomes are different:
− cost-effectiveness
− cost-utility
− cost-benefit analysis
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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.
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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QALY gain by oncology treatment
Cost-benefit analysis
• Costs and savings assessed in monetary values
• Health benefits assessed in monetary values
• Can compare all health care interventions
• Decision-making based on difference
• Translation of health benefit into monetary values is still not widely accepted
• Applicability: revision of insurance package, investment decision in different industrial sectors
0 0,2 0,4 0,6 0,8 1
life years
utility weights
surgery + medical therapy
palliative care
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Applicability of full economic evaluations
Type of analysis Decision-making
cost-minimisation alternative technologies with identical outcomes cost-effectiveness reimbursement decisions (ranking new vs. standard
technology)
cost-utility
reimbursement decisions + ranking all health care technologies
(e.g. revision of insurance package)
cost-benefit all societal investment decisions (e.g. European funds)
