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Academic year: 2022



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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



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

June 2011

ELTE Faculty of Social Sciences, Department of Economics



Part II

Principles of health economic evaluations

Week 8–13

Authors: Zoltán Kaló, Balázs Nagy

Supervised by Éva Orosz


Week 8

Terminology. Types of economic evaluations

Authors: Zoltán Kaló and Balázs Nagy Supervised by Éva Orosz



Centre for Health Economics, University of York


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.

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.


Economic evaluation and budget impact analysis of pharmaceutical technologies


Evidence based medicine

Source: Sackett et al. – Clinical Epidemiology, 1995

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%


Meaningful health benefit for patients

• Life years (not only 5 year survival)

• Quality of life (QoL)

• Combination of life years and QoL


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



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?


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


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

(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


cost analysis cost-minimsation analysis cost-effectiveness analysis

cost-utility analysis cost-benefit analysis

1. Comparison of two or more alternatives?

2. Both costs (inputs) and consequences (outputs) of the alternatives examined?

Drummond et. al. (1987)


Full Economic Evaluation

Target Patient


New Therapy

Alternative Therapy

Impact on health status

Impact on healthcare resource use : physical units and costs

Impact on health status

Impact on healthcare resource use : physical units and costs

i) Survival ii) QoL

i) Hospitalisations ii) Other drugs

iii) Procedures iv) Long-term care

i) Survival ii) QoL

i) Hospitalisations ii) Other drugs

iii) Procedures iv) Long-term care


Full economic evaluation

Type of

analysis Abbr. Unit of inputs (costs)

Unit of outputs (consequences) cost-

minimisation CMA money identical


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)

(comparative assessment of both costs and consequences of two or more alternative health care interventions)



• 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


Cost-minimisation analysis


• Technical efficiency

• Choose between two technologies with equal health outcomes

• If health outcomes are different:

 cost-effectiveness

 cost-utility

 cost-benefit analysis


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


• Applicable for all health care interventions

• Decision-making based on ratio

• Applicability: reimbursement decision or revision of insurance package


QALY gain by oncology treatment

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

life years

utility weights

surgery + medical therapy palliative care


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



Applicability of full economic evaluations

Type of

analysis Decision-making cost-


alternative technologies with identical outcomes



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)



A továbbiakban bemutatásra kerül, hogy a hallgatók az adott kurzus vizsgájára készített kreatív alkotásokat tartalmazó portfólió elkészítése és annak

In the particular case of small business development policies most impact assessment and evaluation studies refer to the impacts of regulations, programmes and

The aim of the chapter is to introduce the students to the health characteristics of the population in the developing world and to show their difficulties in

Week 13: Applicability of economic evaluation in the allocation of health care resources and health policy decisions. • Budget

• Health insurance markets with several competing insurance companies result in high marketing and administration costs (high share of these costs in health

comparative assessment of both costs and consequences of two or more alternative health care interventions. Type of analysis

• Calculation of cost and health outcomes in case of different values of uncertain variables. • Impact analysis

Budget Impact Analysis Task Force Report, Value Health, 2007.?. Budget Impact Analysis Task Force Report, Value