Assessing cost-effectiveness – what is an ICER?-

Incremental analysis

Usa Chaikledkaew, Ph.D.

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Outline How to conduct health economic

evaluation results? What is an Incremental cost-

effectiveness ratio (ICER)?

What is health economic evaluation?

Refers to a study that considers both the comparative costs associated with two or more health care interventions, and the comparative clinical effects, measured either in clinical units, health preferences, or monetary benefit

OutcomesCosts

$

Source: Drummond et al, 2005

LYGs QALYs

$

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What Counts As An Economic Evaluation?

COSTS (INPUTS) AND CONSEQUENCES

(OUTPUTS) EXAMINED? No Yes

COMPARISON No Outcome

description Cost

description Cost-outcome

description

OF TWO OR MORE

ALTERNATIVES?

Yes Outcome analysis

Cost analysis Full economic evaluation

Source: Drummond et al, 2005 4

Economic Evaluation MethodsMethods Cost Outcome Results

Cost-Minimization Analysis (CMA) ฿ Usually clinical values

(Assume to be equivalent in comparable groups)

Cost per case

Cost-Benefit Analysis (CBA) ฿ ฿ Net benefit

Benefit-to-cost ratioReturn on investment (ROI)

Cost-Effectiveness Analysis (CEA) ฿ Clinical values

Life year gained (LYG)ICER (cost per LYG)

Cost-Utility Analysis (CUA) ฿ Quality-adjusted life

years (QALYs)ICER (cost per QALY)

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Incremental cost-effectiveness ratio (ICER)

The cost that on average needs to be sustained to obtain “an additional success”

(cost of treatment A) – (cost of treatment B)(clinical success treatment A) – (clinical success treatment B)

Or (cost of treatment A) – (cost of treatment B)(LYG A – LYG B)

Or (cost of treatment A) – (cost of treatment B)(QALY A – QALY B)

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Cost-effectiveness threshold or WTP

UK: < £30,000 per QALY gained USA: < $50,000 per QALY gained Countries in the World: < 3 x GDP per DALY

averted Thailand: < 1.2 GNI per capita per QALY

gained (160,000 THB)

Source: (1) Devlin, N. and Parkin, D. Health Economics, 2004; 13: 437-452. (2) Towse, A., Devlin, N., Pritchard, C (eds) (2002) Cost effectiveness thresholds: economic and ethical issues. London: Office for Health Economics/King's Fund. (3) Thavorncharoensap et al. Assessing a societal value for a ceiling threshold in Thailand. 2013. Health Intervention and Technology Assessment Program (HITAP), Ministry of Public health, Nonthaburi, Thailand. 7

How to conduct health economic evaluation

results?

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PE/HEE Study Designs

1. Prospective: alongside clinical trial

2. Model based

Combining different sources e.g. a model, based on input from clinical trials, retrospective data, expert opinion.

1.1 Decision trees

1.2 Markov models

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How to conduct HEE results?Define the problem

Identify the alternative interventions

Identify and measure cost and outcomes

Value costs and effectiveness

Interpret and present results10

Example

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Source: Thavorn et al. Tobacco Control 2008;17:177–182. doi:10.1136/tc.2007.022368

Define the problem

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Perception of the problem• Specific intervention • Specific strategy • Specific drug• Specific surgical

procedure

Define the problem

Selection of objectives• A decision must be made

about how cost-effectiveness will be evaluated.

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Perspective• Patient • Provider • Third Party Payer• Healthy System• Public/Government• Societal

Define the problem

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P.15

Cost Valuation by perspective Category Subcategory Patient Provider 3rd -party

payer Health system

Public/ government

Societal

Direct medical

Treatment/ health care: Study setting

charge cost Reimburse Copay premium

- cost cost

Other health facilities

charge - -/+ reimburse

charge charge charge

Direct non medical

Personal facilities

charge - - - - charge

Travel charge - - - - charge Food charge - - - - charge House charge - - - - charge Time loss income loss - - - - Productivity cost Informal care income loss - - - - Productivity cost Personal care charge - - - - charge Indirect Morbidity cost income loss - - - - Productivity cost

Mortality cost income loss - - - Productivity cost

Other sectors

Welfare travel/food/ fee/material

- -/+ reimburse

- cost cost

Education travel/food/ fee/material

- -/+ reimburse

- cost cost

Identify the alternative interventions

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Choice of comparator(s)

• An intervention should be compared to the comparator (s) which is most likely to be replaced by the intervention in real practice• Current practice may be :

• The most effective clinical practice• The most used practice• May not always reflect the appropriate care that is

recommended according to evidence-based medicine• Minimum clinical practice

• A practice which has the lowest cost and is more effective than a placebo.

• “doing nothing” or no treatment

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Identify the costs

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Sources of cost data• Hospital (charges, unit

cost)• Ministry of Public

Health website• DRG• Reimbursement list• Standard costing menu

Example of cost estimates

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Identify the outcomes

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Quality Adjusted Life Years (QALYs)

Integrate mortality, morbidity, and preferences into a comprehensive index number

Related to outcomes • Life duration• Quality of life

Allows comparisons of the cost-effectiveness results with other medical interventions

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Quality-Adjusted Life Years (QALYs)

Patient 1: • Utility = 0.9• Number of years = 10• QALYs = 0.9 x 10 = 9 QALY

Patient 2:• Utility = 0.5• Number of years = 10• QALYs = 0.5 x 10 = 5 QALYs

* Utility can be ranged from 0 (worst health state) to 1 (best health state/healthy)

QALYs = number of years lived x utility*

Quality weight that represents

HRQOL

Quantity or life

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Valuing costs and outcomes

Model based• Decision tree model• Markov model

Discounting to present value if its been more than one year

Uncertainty analysis

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What is an Incremental cost-effectiveness ratio

(ICER)?

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Interpretation and presentation of results

Incremental cost-effectiveness ratio (ICER)

The cost that on average needs to be sustained to obtain “an additional success”

(cost of treatment A) – (cost of treatment B)(clinical success treatment A) – (clinical success treatment B)

Or (cost of treatment A) – (cost of treatment B)(LYG A – LYG B)

Or (cost of treatment A) – (cost of treatment B)(QALY A – QALY B)

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The need for incremental thinking

Marginal analysis: requires assessment of relative costs and benefits of each marginal addition or reduction in production or consumption

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Number of test Total casesdetected

Total costs ($) Average costs ($)

1 65.9469 77,511 1,1752 71.4424 107,690 1,5073 71.9003 130,199 1,8114 71.9385 148,116 2,0595 71.9417 163,141 2,2686 71.9420 176,331 2,451

Number of test Incremental casesdetected

Incremental costs($)

Incremental costs /case ($)

1 65.9469 77.511 1,1752 5.4956 30.179 5.4923 0.4580 22.509 49.1504 0.0382 17.917 469.5345 0.0032 15.024 4.724.6956 0.0003 13.190 47.107.214

Number of test Total cases detected

Total costs ($) Average costs ($)

1 65.9469 77,511 1,175 2 71.4424 107,690 1,507 3 71.9003 130,199 1,811 4 71.9385 148,116 2,059 5 71.9417 163,141 2,268 6 71.9420 176,331 2,451

Number of test Incremental cases detected

Incremental costs ($)

Incremental costs / case ($)

1 65.9469 77.511 1,175 2 5.4956 30.179 5,492 3 0.4580 22.509 49,150 4 0.0382 17.917 469,534 5 0.0032 15.024 4,724,695 6 0.0003 13.190 47,107,214

Source: 1975 article from Neuhauser and Levicky: “what do we gain from

the sixth stool-guaic” (N Engl J Med) on stool tests do detect colonic

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Interpretation and presentation of results

Incremental cost-effectiveness ratio (ICER)

The cost that on average needs to be sustained to obtain “one Life Year gained”

(cost of CPSC) – (cost of treatment of Usual Care)(Life Years of CPSC) – (Life Years of Usual Care)

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ICER of CPSC compared to Usual Care by Age and Sex

Gender/Age Incremental cost

Life years gained

ICERs of CPSCcompared to Usual

Care(year) (THB) (Years) (THB per LY gained†)

Male, 40 -17,504 0.181 -96,705 (Dominant)

Male, 50 -16,356 0.152 -107,603 (Dominant)

Male, 60 -12,387 0.121 -102,373 (Dominant)

Female,

40-21,500 0.244

-88,114 (Dominant)

Female,

50-20,074 0.205

-97,922 (Dominant)

Female,

60-14,889 0.161

-92,479 (Dominant)

*Negative ICER due to higher effectiveness and lower costs of CPSC compared with Usual Care

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B

A

D

C

increase in health effects

more costly

less costly

Intervention is less effective and more costly

Intervention is more effective and more costly

Intervention is less effective and less costly

Intervention is more effective and less costly

Cost-effectiveness plane

decrease in health effects

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Conclusions

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Cost-effectiveness league table of selected interventions in Thailand

Health Interventions Baht/QALY (2008)

Coverage

Antiretroviral treatment vs. palliative care 26,000 Yes

Prevention of vertical HIV transmission (AZT + NVP) vs. null

25,000 Yes

Statin (generic) in men >30% CVD risk vs. null 82,000 Yes

Cytomegalovirus retinitis: Gancyclovir vs. palliative 185,000 Yes

Antidiabetic: Pioglitazone vs. Rosiglitazone 211,000 No

HPV vaccine at age 15 vs. Pap smear, 35-60 years old, q 5 years

247,000 No

Osteoporosis: Alendronate vs. calcium + vitamin D 296,000 No

Osteoporosis: Residronate vs. calcium + vitamin D 328,000 No

Peritoneal dialysis vs. palliative care included anyway cs ethic issues/ surviability

435,000 Yes

Hemodialysis vs. palliative care included anyway cs ethic issues/ surviability

449,000 Yes

Osteoporosis: Raloxifene vs. calcium + vitamin D 634,000 No

Osteoporosis: Calcitonin vs. calcium + vitamin D 1,024,000 No

HPV vaccine at age > 25 vs. Pap smear, 35-60 years old, q 5 years

2,500,000 No

Anemia in cancer patients: Erythropoitin vs. blood transfusion

2,700,000 No

Transtuzumab in breast cancer 5,051,000 No

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Thank you, Any question?

usa.c@hitap.net