economic evaluation - health...

Economic Evaluation -Health Economics

Dr. Jarir At Thobari, MSc, DPharm, PhD

Faculty of Medicine, UGM1. Dept. Pharmacology and Therapy Div.

Pharmacoepidemiology & Pharmacoeconomy2. Clinical Epidemiology & Biostatistics Unit

1

Increasing demand of healthcare

2

Budget & resources constraint

3

Financing HIV in developing countries

4

Increasing choices of technology

5

HTA for decision making

• Increase expenditure on drug therapy

• Resources limited (scarcity of budget)

♦ Solution?

– Efficient use of resources within the health care setting – Efficient use of resources within the health care setting (e.g. switch to cheaper generic drugs1,2)

– Making choices � priority

6

Clinical

effectiveness

Social

aspects

Medical &

biological

knowledge

HTACosts and

financing

Organisatio-

nal aspectsEthical

conse-

quences

EpidemiologyHTA

Based on Habbema et al., 1989

What is health technology assessment

(HTA)?

HTA is a multidisciplinary field of policy analysis. It studies the medical, social,

ethical, and economic implications of development, diffusion, and use of

health technology.

Any intervention that may be used to promote health, to prevent, diagnose or Any intervention that may be used to promote health, to prevent, diagnose or

treat disease or for rehabilitation or long-term care. This includes the

pharmaceuticals, devices, procedures and organizational systems used in

health care.

Source: INAHTA/glossary http://www.inahta.net/

Using HTA to inform priority setting

• Applied HTA can be considered as a process for considering scientific evidence, economic evidence andsocial values, to inform decisions as to whether to fund a treatment / service– Includes cost -effectiveness analysis (CEA); not just clinical – Includes cost -effectiveness analysis (CEA); not just clinical

effectiveness– Drawing comparisons : Compared to the status quo, what do we

gain out of the new treatment, and at what extra cost?– Not a merely technical exercise: The process and social values

are equally important• NOTE: HTA is one component to support overall quality improvement…

Definition of areas

10

HTA system

11

Economic evaluation (PE)

INPUT PHARMACEUTICAL OUPUT

PRODUCT OR SERVICE

Cost Analysis

(a partial economic evalution) Clinical or Outcome Study

(not an economic study)

Pharmacoeconomic Analysis

Economic Evaluations

Intervention A Consequences A Cost A

Cost B

Difference in costs?

Consequences BIntervention B

Difference in consequences?

Relationship?

Cost Effectiveness

new drug/device is cost-effective!

• Reduce the cost

• More benefit

• Which one more effective and lower costs

• Optimal balance costs and effect

• Good effect for lowest cost• Good effect for lowest cost

• Highest benefit and lowest cost and safe

• Willingness to pay for optimal balance

• Cheaper and better!

• More expensive and better

• Cheaper and lower benefit

• Cheaper and same benefit

Negative

Consequences

Positive

Consequences

More Expensive

Consequences Consequences

Less Expensive

Components of economic evaluation (Torrance, 1986)

Economic

Economicbenefits

Value ofhealth

improvementper se

Ad hoc

Resourcesconsumed

(costs)

Direct costs

Indirect

Health careprogramme

Health improvement

(consequences)

Healtheffects

Intangible benefits

Indirect benefits

(prod. gains)

Economicbenefits

direct

Ad hocnumericscales

Willingnessto pay

Utilities(Qaly’s)

Indirectcosts

(prod. Loss)

Intangible cost

mortality

morbidity

1st ed 1987

Costs from what perspective?Health care costs

- Direct medical costs Procedures

Treatment

Care

Healthcare payments

- Indirect medical costs As above but due to a longer

life (expectancy)

Health care perspective

Societal perspective

Non-health care costs

- Direct non-medical costs Informal care

Non-healthcare payments

Travel and time

- Indirect non-medical costs Productivity costs

Other societal sectors

Intangibles Happiness

Well-being Decision makers’ perspective

Hospitalized Tarif (in IDR million)

for Non-bacterial Infection based on JKN tariff 2014

Hospital Class Severity Level

Mild Moderate Severe

Hospitalization

- Hospital Class A

o Class 3

o Class 2

o Class 1

- Hospital Class B

o Class 3

3408

4090

4771

1948

4244

5093

5942

3081

4530

5435

6341

3522o Class 3

o Class 2

o Class 1

- Hospital Class C

o Class 3

o Class 2

o Class 1

- Hospital Class D

o Class 3

o Class 2

o Class 1

1948

2338

2727

1557

1868

2980

1299

1559

1818

3081

3697

4314

1989

2387

2784

1676

2011

2347

3522

4226

4930

2123

2547

2972

2075

2490

2905

Types of Pharmacoeconomic Studies

Methodology Cost

Measurement Unit

Outcome

Measurement UnitMeasurement Unit Measurement Unit

Cost-Minimization Analysis (CMA) Dollars or Monetary Units Assumed to be equivalent in

comparable groups

Cost-Effectiveness Analysis (CEA) Dollars or Monetary Units Natural units (life years gained, mm

Hg blood pressure, mMol/L blood

glucose)

Cost-Utility Analysis (CUA) Dollars or Monetary Units Quality-adjusted life year (QALY) or

other utilities

Cost-Benefit Analysis (CBA) Dollars or Monetary Units Dollars or monetary units

Rascati, 2009

• Cost Consequences Analysis (CCA)

– List of costs and various outcomes presented but

no comparisons made

• Cost of illness

Other Types of economic evaluation

• Cost of illness

– Estimate of total economic burden (prevention,

treatment, losses in productivity) of particular

condition (illness) or disease on society

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Different effects �� different economic evaluations

Effects Economic Evaluation

• Natural effects - Cost Effectiveness Analysis (CEA)

• Utilities - Cost Utility Analysis (CUA)

• Monetary terms - Cost Benefit Analysis (CBA)

Broad comparison

Narrow comparison

Level of analysis

Cost-Minimization Analysis (CMA)

Definition

Sample Problem

Common Applications

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Dollars or Monetary Units Assumed to be equivalent in

comparable groups

Common Applications

Advantages and Disadvantages


– PE analysis where outcomes of two or more

interventions are assumed to be equivalent

• Thus, only costs of intervention are compared


• Thus, only costs of intervention are compared

– Objective: choose the least costly alternative

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Example Problem: Administration of prostaglandin E2 gel intracervically to expectant

mothers on the day before labor was to be induced.

• Outpatient Group: administer medication � monitor 2 hours � send home overnight

�� admit next day � induce labor

• Inpatient Group: administer medication � monitor 2 hours � send to maternity unit

for the night � induce labor

Type of Cost Costs for Outpatients

(n = 40)

Costs for Inpatients

(n = 36)

Statistical Difference


Would you recommend the outpatient program?

(n = 40)

Mean (SD)

(n = 36)

Mean (SD)

Labor cost $575 ($366) $902 (482) Yes (p = 0.002)

Delivery cost $471 ($247) $453 ($236) No (p = 0.754)

Pharmacy cost $150 ($102) $175 ($139) No (p = 0.084)

Hospital Costs $3835 ($2172) $5049 ($2060) Yes (p = 0.015)

Farmer KC, Schwartz III WJ, Rayburn WF, Turnbull G. A cost-minimization analysis of intracervical prostaglandin for cervical

ripening in an outpatient versus inpatient setting. Clin Ther. 1996;18(4):747-756.; as reported in Rascati, 2009

Common Applications

– Common CMA application:

• Cost comparison of two generic medications rated as

equivalent by Drug Regulatory


equivalent by Drug Regulatory

• Cost comparison of same drug therapy in different

settings

– Not appropriate for comparing different classes of

medications

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– Advantage: simplest analysis to conduct

– Disadvantage: cannot be used when outcomes of

each intervention are different


each intervention are different

28

29

Stroke. 2000;31:1032-1037

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Stroke. 2000;31:1032-1037

31

Stroke. 2000;31:1032-1037

Cost-Effectiveness Analysis (CEA)

Definition

Sample Problem

Common Applications

32

Dollars or Monetary Units Natural units

(life years gained, mm Hg

blood pressure, mmol/L

blood glucose)

Common Applications


Exercise

Cost-Effectiveness Analysis– PE analysis where outcomes are measured in natural

or clinical units

– CEA is most common type of PE analysis


Two methods of reporting cost-effectiveness:• Average Cost-Effectiveness Ratio (CER) =

Cost of Intervention

Effectiveness of Intervention

• Incremental Cost-Effectiveness Ratio (ICER) = Cost of Intervention B – Cost of Intervention A

Effectiveness of Intervention B – Effectiveness of Intervention A

• Effectiveness of oral antidiabetic (OAD)

– OAD- A (new drug) : 25/100 patients

– OAD- B (standard drug) : 19/100 patients


• Clinical outcome:

– number of patients with ≥ 1% decrease in ‘HBA1c’ over one year

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Cost/unit(USD)*

No. ofunits

No. ofpatients

Total cost(USD)

Medicine AMedicine cost 40 12 100 48,000Lab cost 20 1 100 2,000Adverse event 50 2 100 10,000


Adverse event 50 2 100 10,000Physician 25 2 100 5,000Total 65,000

Medicine BMedicine cost 25 12 100 30,000Lab cost 20 2 100 4,000Adverse event 50 3 100 15,000Physician 25 3 100 7,500Total 56,500

*USD = U.S. dollar

• Comparison between OAD - A and B for 100 patients for 1 year

Medicine A Medicine B

• Net costs USD* 65,000 56,500

• Effectiveness

No. patients with ≥ 1%


No. patients with ≥ 1%

decrease in glycosylated

hemoglobin 25 19

• Incremental Cost Effectiveness Ratio =

(65,000-56,500)/(25-19) = USD1,416.67 per extra patient with ≥ 1% decrease in glycosylated hemoglobin

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CBTreatment B

EB - EA

CB-CAEB-EA

ICER = CB-CA

Average and incremental ratios

ICER: Incremental Cost-Effectiveness Ratio

CA

O EA

Treatment A

Effect ( Utility, Benefit)EB

Programme Costs Effects

A

B

Breast screening

110

120

20

29

C/E ΔC/ΔE

5.50

4.14

-

1.11

Average vs. ICER

B

C

D

E

120

150

190

240

29

50

60

70

4.14

3.00

3.17

3.42

1.11

1.43

4.00

5.00

Average ratios have no role in decision making

Common Applications

– Common CEA application: medications with the

same type of primary outcomes, and most often

for treatment of the same types of health


for treatment of the same types of health

condition

– CEA is only performed when the outcome of one

intervention is both better than another AND the

cost is greater.

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Advantages and Disadvantages– Advantages:

• Health units are common outcomes routinely measured in clinical trials – familiar to clinicians

• Outcomes are easier to quantify than CUA or CBA

– Disadvantages:


– Disadvantages: • Interventions with different types of outcomes cannot be

compared

• Can’t combine more than one important outcome

• Difficult to collapse both the effectiveness and the side effects into one unit of measurement

• CEA estimates extra cost associated with each additional unit of outcome, but who is to say that added cost is worth added outcomes? Requires judgment call.

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The Cost Effective Plane of ICER

I

+

>> Effective

>> Costs

<< Effective

>> Costs

IV

Dif

fere

nce

in

co

st

-

+

+

<< Effective

<< Costs

>> Effective

<< Costs

IIIII

Dif

fere

nce

in

co

st

Differences in effectiveness

Note: Origin is reference intervention

-

-

Maximum acceptable ratio

New treatment

more costly

Maximum ICER

New treatment

less effective

New treatment

more effective

New treatment

less costly

Maximum acceptable ratio

Go / No Go

• Introduce Cost-saving programs if health gains >= 0

• Laupacis et al (1992)

– < Can$20,000 Go ; > Can$100,000 No Go

– Inbetween → professional judgment required – Inbetween → professional judgment required

• Owens (1998)

– < US$50,000 Go ; > US$50,000 No Go

• NICE: ₤ 30,000 � ₤ 50,000

• Netherlands: € 20,000 � € 50,000

• Belgium: € 50,000

Maximum acceptable

• Willingness to pay

• WHO Commission on Macroeconomics and Health

– cost-effective:

• interventions had a positive net benefit at a • interventions had a positive net benefit at a

willingness-to-pay of three times the per capita GDP

– highly cost-effective:

– interventions had a positive net benefit at a

willingness-to-pay of one times the per capita GDP

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Cost-Utility Analysis (CUA)

Definition

Sample Problem

Common Applications

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Dollars or Monetary Units Quality-adjusted life year

(QALY) or other utilities

Common Applications


Question

Cost-Utility Analysis (CUA)– A PE analysis which measures outcomes based on years of life that are adjusted by

“utility” weights (patient preferences); range [0, 1]

– Most common utility is the Quality-Adjusted Life Year (QALY)

• 1.0 QALY = 1 year of life in perfect health

• 0.0 QALY = death


• 0.0 QALY = death

• 0.0 < QALY < 1.0: a year when health is diminished by disease or treatment

Quality Adjusted Life Years (QALYs) weight the life years remaining by the utility

weight (QALY)

• Ex: 4 years of life post cancer treatment at 0.6 utility wt = 2.4 QALYs

– Average vs. Incremental Cost per QALY: (similar to CEA):

• Average Cost per QALY = Incremental Cost per QALY =

– Cost of Intervention Cost of Intervention B – Cost of Intervention A

– QALYs of Intervention QALYs of Intervention B – QALYs of Intervention A

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1

HRQoL - Health state value or utility 4 * 0.9 = 3.6

3 * 0.7 = 2.1

2 * 0.2 = 0.4

Total QALY: 6.3

5 * 1.0 = 5.0

2 * 0.8 = 1.6

4 * 0.2 = 0.8

7.4

Health Related Quality of Life (HRQoL)Cost-Utility Analysis (CUA)

0

Life expectancy 9 years 11 years

11974

Quality

of Life

ExampleHuman papillomavirus (HPV) vaccine +screening vs. screening only.

A. Current Screening Program

Only

(“PAP test”)

B. HPV Vaccine at 90% Efficacy

+ Screening

Total Lifetime Costs $1111 $1400

Quality-Adjusted Life 25.9815 QALYs 25.9934 QALYs


Would you recommend the new HPV vaccine program?

Would you recommend the new HPV vaccine program?

Adapted from Goldie SJ, Kohli M, Grima D, Weinstein MC, Wright TC, Bosch FX, et al. Projected Clinical Benefits and Cost-effectiveness of a

Human Papillomavirus 16/18 Vaccine. J Natl Cancer Inst. 2004;96(8):604-615; as reported in Arnold, 2010

Quality-Adjusted Life

Expectancy25.9815 QALYs 25.9934 QALYs

Average

Cost-Utility Ratio

(Cost / QALYs)

$1111 / 25.9815 QALYs

= $42.76 per QALY

$1400 / 25.9934 QALYs

= $53.86 per QALY

Incremental

Cost-Utility Ratio

(Δ Costs / Δ QALYs)

($1400 - $1111) / (25.9934 – 25.9815)

= $289 / 0.0119

= $24,286 per additional QALY

Example 2Dabigatran 150 mg twice daily vs. warfarin for stroke prophylaxis in 70-year-

old patients with atrial fibrillation.

A. Warfarin B. Dabigatran

Total Costs $23,000 $43,700


Would you recommend dabigatran over warfarin?

Would you recommend dabigatran over warfarin?

Adapted from Shah S, Gage B. Cost-effectiveness of dabigatran for stroke prophylaxis in atrial fibrillation. Circulation 2011;123(22):2562-70.

Quality-Adjusted Life

Expectancy8.40 QALYs 8.65 QALYs

Average

Cost-Utility Ratio

(Cost / QALYs)

$23,000 / 8.4 QALYs

= $2738 per QALY

$43,700 / 8.65 QALYs

= $5052 per QALY

Incremental

Cost-Utility Ratio

(Δ Costs / Δ QALYs)

($43,700 - $23,000) / (8.65 – 8.40)

= $20,700 / 0.25

= $82,800 per additional QALY

Common Applications

• CUA is useful when utility adjustments are needed, such as when:– Length of life (quantity) and quality of life are

different


different

– Length of life (quantity) is unaffected and quality of life is different

– Outcomes are very different

• CUA is not warranted when:– Number of life years saved (quantity) is different but

quality of each year of life is very similar

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Advantages and Disadvantages– Advantages:

• Can incorporate both morbidity and mortality

• Can compare multiple programs with either similar or unrelated outcomes (anticoagulation and diabetes clinics)

Can use a threshold or cutoff cost per QALY (such as


unrelated outcomes (anticoagulation and diabetes clinics)

• Can use a threshold or cutoff cost per QALY (such as $50,000) and decide somewhat objectively if an intervention is cost effective

– Main disadvantages: • No consensus on calculating utility weights

• Utility weights are “rough estimates”

• Many clinicians are not familiar with QALYs

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Question:

• Do negative QALYs make sense?


55

Question:

• Do negative QALYs make sense?

Answer:


Answer:

• Some researchers point out that there are disease states worse than death – such as living in uncontrollable, excruciating pain, or living in a coma –so negative QALYs may be needed to depict these values. Whether or not negative QALYs make sense is debatable.

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Intervention $ / QALYGM-CSF in elderly with leukemia 235,958

EPO in dialysis patients 139,623

Lung transplantation 100,957

End stage renal disease management 53,513

QALY League Table

11/6/2017 57

End stage renal disease management 53,513

Heart transplantation 46,775

Didronel in osteoporosis 32,047

PTA with Stent 17,889

Breast cancer screening 5,147

Viagra 5,097

Treatment of congenital anorectal malformations 2,778GM-CSF : Granulocyte-macrophage colony-stimulating, PTA: Percutaneous transluminal angioplasty

•• FunctioningFunctioning– Social: get along with family and

friends

– Physical: perform daily activities

– Emotional: stability and self-control

Health Related Quality of Life (HRQoL)

– Emotional: stability and self-control

– Intellectual: decision-making ability

• Perceptions– Life satisfaction: sense of well-

being

– Health Status: compared to others Quality of life is multi factorial. Being in a

wheelchair does not preclude a satisfying life

(Levine and Croog)

� Perfect health 1.00

� Influenza (2 weeks) 0.99

� Diabetes (without serious complications) 0.93

� Mild angina pectoris 0.92

Health Related Quality of Life (HRQoL)

� Mild angina pectoris 0.92

� Major outcomes of Chlamydia 0.89

� Serious asthma 0.64

� AIDS 0.44

� Death 0.00

Specific Instruments

• Arthritis Impact Measurement Scales (AIMS)

• Asthma Quality of Life Questionnaire (AQLQ)

• Diabetes Quality of Life (DQOL)

• Kidney Disease Quality of Life (KDQOL)• Kidney Disease Quality of Life (KDQOL)

• Quality of Life Epilepsy (QOLIE)

• Medical Outcomes Study HIV Health Survey (MOS-HIV)

Yogyakarta, October 2012

Methods to assess preferences

Direct method

– Individuals asked to choose (declare preferences)

between their current health state and alternative

health status scenarioshealth status scenarios

– Individuals make these choices based on their own

comprehensive health state (or the composite

described to them).

Direct measures of HealthDirect measures of Health--

State PreferencesState Preferences

• May be necessary if effects of intervention arecomplex:

– Multiple domains

– Effects not captured in disease-specific instrument– Effects not captured in disease-specific instrument

• Not the “community value” specified by Gold et al

• Methods:

– Visual Analog Scales

– Standard Gamble

– Time Trade Off

Value a health state

• You are in a wheelchair

• No pain or discomfort

• No psychosocial problems• No psychosocial problems

Visual Analogue Scale (VAS)100100

6060

5050

7070

8080

9090

• It is easy to use and achieve high

response rate

• It is a choice-less assessment

Best

imaginable

health state

Yogyakarta, March 2009Master Program of

Basic Medical Sciences

5050

4040

3030

2020

1010

00

Please draw a line at the point on

the scale that summarises your

current health status

Your own health state today

Worst

imaginable

health state

Standard Gamble

Healthy (p)

Dead (1-p)

taking gamble on a

new treatment for

which the outcome is

uncertain

Dead (1-p)

State i living in health state

i with certainty

Standard Gamble

95%

Alternative 2:

uncertain outcome

Complete health

Measures the preferences of individuals under risky situations

Alternative 1:

certain outcome

uncertain outcome

100%

5%

Death

Limited health

Standard Gamble (SG)

• Wheelchair

• Life expectancy is not important here

• How much are risk on death are you prepared

to take for a cure? to take for a cure?

– Max. risk is 20%

– 100% life on wheels = (100%-20%) life on feet

– V(Wheels) = 80% or .8

Time Trade Off

Healthy 1.0

txtime

State i hi

Dead 0.0

Time Trade off

How much reduction in total life willing to give up in order to up in order to live in perfect health

Time Trade-Off (TTO)

• Wheelchair

– With a life expectancy: 50 years

• How many years would you trade-off for a cure?

– Max. trade-off is 10 years– Max. trade-off is 10 years

• QALY(wheel) = QALY(healthy)

– Y * V(wheel) = Y * V(healthy)

– 50 V(wheel) = 40 * 1

• V(wheel) = .8

IndirectIndirect measures of Healthmeasures of Health--

State PreferencesState Preferences

• Short Form-6D

• EuroQol (EQ-5D)

• Health Utility Index (HUI)• Health Utility Index (HUI)

• Quality of Well-Being Scale (QWB)

Euro Qol 5D

• Mobility1. No problems walking

2. Some problem walking about

3. Confined to bed

• Self-care1. No problems with self-care

2. Some problems washing or dressing self

• Pain/discomfort1. No pain or discomfort

2. Moderate pain or discomfort

3. Extreme pain or discomfort

• Anxiety/depression1. Not anxious or depressed

2. Moderately anxious or depressed2. Some problems washing or dressing self

3. Unable to wash or dress self

• Usual activities1. No problems with performing usual

activities (e.g. work, study, housework,

family or leisure activities)

2. Some problems with performing usual

activities

3. Unable to perform usual activities

2. Moderately anxious or depressed

3. Extremely anxious or depressed

EQ-5D space: 35

= 243 health states

Scoring patient 11223

Full health = 1.000

Constant - 0.081

Mobility (level 1) - 0

Self-care (level 1) - 0

Usual activities (level 2) - 0.036Usual activities (level 2) - 0.036

Pain/discomfort (level 2) - 0.123

Anxiety/depression (level 3) - 0.236

N3 - 0.269

Estimated value for 11223 0.255

Healthy 1.0

0.8

DALYs

QALY vs. DALY

70

Life expectancy (years)

Dead 0.0

20 50

QALYs

Cost-Benefit Analysis (CBA)

Definition

Sample Problem

Common Applications

78

Dollars or Monetary Units Dollars or Monetary Units

Common Applications


Exercise


– A PE analysis in which both costs and benefits are valued in monetary units

– The results of a CBA can be presented in several formats:1. Net Benefit = Total Benefits – Total Costs


1. Net Benefit = Total Benefits – Total Costs

Cost beneficial if Net Benefit > 0

2. Benefit-to-Cost Ratio = Total Benefits / Total Costs

Cost beneficial if Benefit-to-Cost > 1

3. Internal Rate of Return (IRR) = The rate of return that equates the present value of benefits to the present value of costs

4. Break-Even Point = The time required to recoup the investment

79

Example problem: Implementation of a pharmacy bar-code system to reduce medication dispensing errors.

5-year time horizon Pharmacy Bar-Code System

Total (Incremental) Costs $2.24 million


Was the bar-code system a good financial decision?

Total (Incremental) Benefits $5.73 million

Net-Benefit =

Total Benefits – Total Costs$5.73 million - $2.24 million = $3.40 million

Benefit to Cost Ratio =

Total Benefits / Total Costs$5.73 million / $2.24 million = 2.56

Adapted from Saverio M, et al. Cost-Benefit Analysis of a Hospital Pharmacy Bar Code Solution. Arch Intern Med. Apr 23, 2007;167(8):788-94.

Internal Rate of Return 104% annualized return on investment

Break-Even Point Within the first year of operation

Common Applications

• CBA is most useful when– Analyzing a single intervention to determine whether its

total benefits exceed the costs, or


total benefits exceed the costs, or

– Comparing alternative interventions to see which one

achieves the greatest benefit.

81


– Major advantages:

• Can determine if benefits exceed costs of program


program

• Can compare multiple programs with either similar or unrelated outcomes

– Disadvantage:

• Difficult to place a monetary value on health outcomes

82

Other Methodology Issue

• Time Horizon

• Discounting

• Sensitivity Analysis

• Modelling• Modelling

• Transferability

83

THANK YOUTHANK YOU

85

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