Transcript Disparities in Treated Prevalence among Medicaid

Cost-effectiveness Analysis
Mihail Samnaliev, PhD
Senior Health Economist
Children's Hospital Boston
_______________
The speaker for this session has reported NO FINANCIAL
RELATIONSHIPS with a commercial entity producing healthcarerelated products and/or services
1
Outline
Definitions, applications
 Measuring costs
 Measures of effectiveness: QALYs , other
 Estimation of health-related quality of life
 Uncertainty analyses

2
Cost-effectiveness analysis (CEA)

Effects are not monetized

Incremental cost-effectiveness ratio (ICER)

CEA compares at least 2 alternatives
Compare new HT to current practice
Comparisons need to be relevant in order to inform
health policies


Cost-effectiveness of new health technology vs.
current practice
$900,000
Incremental costs
I
II
Less effective & more costly
$400,000
More effective & more costly
(dominated)
-$100,000
III
IV
Less effective &less costly
More effective &less costly
-$600,000
(dominant)
-$1,100,000
-12
-9
-6
-3
0
3
6
9
12
Incremental life expectancy
4
When is an intervention cost-effective?
1. If it is both less expensive and more effective

Often would not present ICER, but differences in costs and
effectiveness only
OR
2. If it is more expensive (than alternatives) but costs <
willingness to pay /additional unit of effectiveness
 Cost-effectiveness does not necessarily mean cost saving
5
Calculating maximum (threshold) WTP per
additional life year or QALY
1. The human capital approach
◦ Easy to implement
◦ Based on one’s earnings (economic output)
Limitations
 Underestimates value for persons who are not working
 Not based on economic theory
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Calculating WTP per additional life year or QALY
2. Hypothetical valuations
+ based on economic theory
- methodological limitations
Example: Ask individuals with persistent asthma about
willingness to pay for a medication that reduces
symptom days by 1 per week.
7
Calculating WTP per additional life year or QALY
3. Revealed preferences, e.g. wage differentials between
jobs associated with different risk of death
Recommendations

$50,000 and $100,000 /QALY often used in the US

WHO thresholds based on GDP/per capita

Depends for other measures of effectiveness; WTP
threshold may or may not exist

Common practice: p [ cost-effective ] at different WTP
◦ Very cost-effective if ICER < GDP /QALY, Cost effective if 1 to 3
times GDP /QALY, Cost-ineffective if > 3 times GDP /QALY
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ICER: More than 2 interventions
ICER : Cost per QALY
80
70
D
60
C
50
40
B
30
(‘weakly dominated’)
A
20
Note: Always aim to include ALL relevant
comparators in a CEA
10
0
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
$180,000
$200,000
CEA applications
UK: cost/QALY considered by NHS in reimbursement
decisions
Not mandatory in most other countries; with varying
degree of impact on decision makers
Cost/QALY not used for federal reimbursement
decisions in the US ; sometimes used by private
payers; impacts reimbursement decisions more
indirectly; widely used in research
Example
Blood cancer drug Adcetris (Brentuximab vedotin)
approved by the FDA in 2011



Effective compared to no treatment
A course of treatment can exceed $100,000
Q: Decision makers (e.g. a payer): Reimburse or are
public health gains expected to be higher if
resources are invested elsewhere ?
◦ If no alternative/rare condition, CEA may have much less
impact on decision making
◦ If many alternatives already used, CEA more relevant
Example

Babashov, Vusal, "Preliminary Economic Evaluation of
Brentuximab Vedotin in Relapsed and Refractory Hodgkin
Lymphoma: An "Early Look" Model Based on Phase II
Results" (2012). University of Western Ontario Electronic Thesis and Dissertation Repository

> $300,000/QALY
“weak evidence for adoption and appropriate utilization”
in Canada according to best available information so far.
The substantial reduction (e.g., 72%) in the cost of unit
dose of brentuximab can reduce ICER dramatically and
make the drug cost effective..”
Example 2. How existing CEA can be used (but are not)
by policy makers to improve public health outcomes
Intervention
Cost per (qualityadjusted) life year
Extended buprenorphine-naloxone Tx for opioiddependent youth (Polsky et al. 2010 Addiction)
$25,049
Screening every 5 years, vs. a one-time screening
program for HIV (Sanders et al. 2005 NEJM)
$57,138
Airline security (paying for air marshals on planes) > $4 million1
(Stewart and Mueller 2008)
($180 million / life
saved)
1
Own calculation
More cost-effective interventions buy more QALY-s / each additional
dollar
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Outline
Definitions, applications
 Measuring costs
 Measures of effectiveness: QALYs , other
 Estimation of health-related quality of life
 Uncertainty analyses and presentation of results
 CEA in clinical trials

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Measurement of costs

Opportunity costs (economic costs): the forgone value of the
best alternative use of the same resources used for the
intervention

In theory , reflected in competitive market prices

Expressing in $ allows within/cross sector comparisons

Perspective: societal, payer, provider
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Measurement of costs







Focus on resources expected to change as a result of the
intervention
Often go a step further and focus on major cost drivers
Exclude protocol-driven costs (not incurred otherwise)
Use local costs (whenever possible), at the level of decision
making
Use costs from the perspective of the decision maker (e.g.,
societal, payer, provider)
Aim to capture all costs over entire analytic timeframe
Note: there is often a great deal of variability around cost
estimates (theoretical and empirical reasons), much larger
than clinical outcomes
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Commonly used categories of costs/resources
Start up (fixed) cost of the intervention
Ongoing/variable costs of the interventions
Overhead
Labor: physician fees, other staff
Health utilization costs (not part of intervention but impacted by it)
Costs by place /setting (inpatient, outpatient hospital, primary care)
Medication costs
Diagnostic costs
Costs of side effects
Informal care giving resources
Patient out-of pocket costs
Patient time
Patient travel costs
Patient productivity costs
School absenteeism
Often distinguish between



Intervention costs
Future related costs/savings (main condition and
comorbidities)
Non-health care costs
Q. Disagreement whether to include unrelated future medical
care costs
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Outline





Definitions, applications
Measuring costs
Measures of effectiveness: QALYs , other
Estimation of health-related quality of life
Uncertainty analyses and presentation of results
Issues specific to pediatric populations
 CEA in clinical trials
 Incorporating CEA into grant proposals
 Review of a CEA (if time permits/leave for 3rd lecture)

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II Measures of effectiveness: QALYs

Quality-adjusted life years (QALYs)
◦ The recommended measure in CEA
◦ Allows comparisons across interventions
◦ Comprehensive: combines life expectancy & health-related
QoL (HRQL)

Treatment can result in
◦ Better HRQL
◦ Increased life expectancy
◦ Both
20
Example: QALYs associated with 3 treatments
Source: NIH.gov
Example for B: 3x1 +2.5x0.8 + 2.5 x 0.65 = 6.625 QALYs
A and B have same life expectancy, but different QALYs
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Health related quality of life (HRQL)

Utility (weights): elicited from patients, based on their
preferences

Typically measured on a scale 0 to 1, however some
instruments allow utility < 0 (worse than death)

In contrast, many surveys capture clinical status but
are not preference – based. These are not
recommended for CEA
◦ For example, 0.75 scored on PedsQL does not mean that
patients value their health at 0.75

How do we measure patient preferences /utilities
associated with specific health states?
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Measuring HRQL

Direct methods
◦ Standard Gamble, Time Trade Off, Visual Analogue Scale

Preference based surveys
◦ Generic: HUI, EQ-5D, SF-36, Quality of Well-Being
◦ Disease specific surveys

Borrow from published studies
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Measuring HRQL: standard gamble (SG)
Subject is told that hypothetical treatment will lead to perfect health,
for a defined remaining lifetime, with a probability of P or immediate
death with a probability of 1 – P
Expected Utility = U*p + U*(1-p) = p
Probability P is varied until the subject is indifferent between A and B
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Measuring HRQL: Time trade-off (TTO)
Subject is offered 2 alternatives:
1. State i for time t (life expectancy for the individual with
the chronic condition)
2. Healthy for time x < t, followed by death
Utility for state i= x/t
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Measuring HRQL: visual analogue scale (VAS)
(Source : EuroQol.org)
Subject is asked to score their health on a scale from 0 to 100.
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Measuring HRQL

Direct methods
◦ Standard Gamble, Time Trade Off, Visual Analogue Scale

Preference based surveys
◦ Generic: EQ-5D,HUI, SF-36, Quality of Well-Being
◦ Disease specific

Borrow from published studies
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HUI and EQ-5D

HUI (versions 2 and 3) and Eq-5D : based on preferences
elicited from the general population

A representative sample is administered SG /TTO or VAS

These are then mapped onto select health states

One can then directly use a health classification system and a
scoring formula based on the responses from above samples
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Example: EQ-5D
By placing a checkmark in one box in each group below, please indicate which
statements best describe your own health state today.
Mobility
I have no problems in walking about
I have some problems in walking about
I am confined to bed



Self-Care
I have no problems with self-care
I have some problems washing or dressing myself
I am unable to wash or dress myself



Usual Activities (e.g. work, study, housework, family or
leisure activities)
I have no problems with performing my usual activities
I have some problems with performing my usual activities
I am unable to perform my usual activities



Pain/Discomfort
I have no pain or discomfort
I have moderate pain or discomfort
I have extreme pain or discomfort



Anxiety/Depression
I am not anxious or depressed
I am moderately anxious or depressed
I am extremely anxious or depressed



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Utility score (based on above answers) = 0.732
Example: HUI
Attribute
VISION
Level
1
2
3
4
5
6
HEARING
1
2
3
4
5
6
SPEECH
1
2
Description
Able to see well enough to read ordinary newsprint and recognize a friend on
the other side of the street, without glasses or contact lenses.
Able to see well enough to read ordinary newsprint and recognize a friend on
the other side of the street, but with glasses.
Able to read ordinary newsprint with or without glasses but unable to
recognize a friend on the other side of the street, even with glasses.
Able to recognize a friend on the other side of the street with or without
glasses but unable to read ordinary newsprint, even with glasses.
Unable to read ordinary newsprint and unable to recognize a friend on the
other side of the street, even with glasses.
Unable to see at all.
Able to hear what is said in a group conversation with at least three other
people, without a hearing aid.
Able to hear what is said in a conversation with one other person in a quiet
room without a hearing aid, but requires a hearing aid to hear what is said
in a group conversation with at least three other people.
Able to hear what is said in a conversation with one other person in a quiet
room with a hearing aid, and able to hear what is said in a group
conversation with at least three other people, with a hearing aid.
Able to hear what is said in a conversation with one other person in a quiet
room, without a hearing aid, but unable to hear what is said in a group
conversation with at least three other people even with a hearing aid.
Able to hear what is said in a conversation with one other person in a quiet
room with a hearing aid, but unable to hear what is said in a group
conversation with at least three other people even with a hearing aid.
Unable to hear at all.
Able to be understood completely when speaking with strangers or friends.
Able to be understood partially when speaking with strangers but able to be
understood completely when speaking with people who know me well.
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Example: HUI
VISION
Level
2
HEARIN
AMBULA DEXTER EMOTIO COGNIT
SPEECH
G
TION
ITY
N
ION
1
1
2
1
2
1
PAIN
3
u = 1.371 (0.98 * 1.00 * 1.00 * 0.93 * 1.00 * 0.95 * 1.00 *
0.90) - 0.371 = 0.70
The scoring formula above is based on the standard gamble
utilities measured on the general public
Source: HUI ® (http://www.healthutilities.com/)
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HRQL : Disease-specific instruments


Example: Asthma Quality of Life Questionnaire
32 questions in 4 domains (symptoms, activity limitation,
emotional function and environmental stimuli)
+ More sensitive to changes in health status
- My miss other important impacts on health (e.g. associated
with comorbidities
-Often not scored (but some are mapped onto the generic
based instruments)
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Measuring HRQL

Direct methods
◦ Standard Gamble, Time Trade Off, Visual Analogue Scale

Preference based surveys
◦ Generic: HUI, EQ-5D, SF-36, Quality of Well-Being
◦ Disease specific

Borrow from published studies
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Borrowing HRQL

Easy to do especially as the number of published CEA
increases

Disadvantage: may not be representative of your population

When more than one study: often combine estimates across
studies, e.g.:
Table1. Utility weight associated with a one unit increase in BMI
Source
Age
design
Hakim et al (2002)
≥ 18 longit
Own estimate (MEPS ) ≥ 18 X-secti
Belfort et al 2011
≥ 8 X-secti
Combined
population
Obese adults
BMI 34-42, adults
All ranges, children
Mean
St error n
.0166
.0083
.0040
.0041
.0021
.0036
.0087
.0016
weight
402
2010
76
16%
63%
21%
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END OF HRQL SECTION
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Disability –adjusted life years (DALYs)

Alternative to QALYs, developed more recently (1993), initially
to quantify global burden of disease

Often used in studies conducted in developing countries;

WHO recommends DALYs for CEA to facilitate comparisons,
they don’t reject the validity of QALYs (WHO-CHOICE)

IN CEA: $/averted DALYS (rather $/QALYs gained)
DALYS = YLL + YLD
YLL = years of life lost
YLD = years lost to disability
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Other measures of effectiveness

When measuring QALYs is not feasible (i.e. HRQL
data were not collected during the trial)

When the effect of the intervention on QALYs is not
easily captured
◦ Short time horizon (e.g. smoking cessation, lower cholesterol)
◦ Instruments not sensitive to changes in health status

For conditions for which no (immediate) Tx exists
◦ Cost per additional diagnosis (rather than cost/QALY)

Harder to determine whether HT is cost-effective
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Examples: Other measures of effectiveness
Study
Ramos et al 2013. Cost-effectiveness of
$8,209/additional
primary prevention of paediatric asthma: asthma case
a decision-analytic model
prevented
Lai et al. 2013 The cost-effectiveness of
call-back counseling for smoking
cessation
$A773 per quitter
Pinto et al. 2013. Cost Effectiveness of
Prenatal Screening Strategies for
Congenital Heart Disease
$580 per defect
detected
Peterson et al. 2014 A public health
economic assessment of hospitals' cost
to screen newborns for critical CHD
$14.2 per newborn
screened
Recommendation: Intermediate outcome should in theory
/empirically be linked with final outcomes (life expectancy,
HRQL, QALYs)
38
Incorporating uncertainty in CEA

How confident are we in the estimation of costeffectiveness (statistically)?

How confident should decision makers be that
the health technology is good value?

Results are more useful if they incorporate
uncertainty, e.g.
◦ Estimates may remain robust to various assumptions
◦ Estimates may be sensitive to parameter uncertainty
 Which parameters contribute most to the uncertainty?
 Points to future areas of research (Expected value of perfect
information analysis)
39
Example 1-way sensitivity analyses
Source: Reynolds et al. 2009. Cost-Effectiveness of Radiofrequency Catheter Ablation Compared
With Antiarrhythmic Drug Therapy for Paroxysmal Atrial Fibrillation. Circ Arrhythm Electrophysiol
40
Incorporating uncertainty in CEA

Sensitivity analyses: 1 way, 2 way, …, n-way
Probabilistic analyses (Monte Carlo simulations,
Bootstrapping). Used to construct:
◦ Confidence intervals
◦ Cost-effectiveness acceptability curves


When relying on external data: make sure to
record means, standard error and sample size
41
Incorporating uncertainty: ICER estimates
Incremental costs
$900,000
100k/QALY
I
$400,000
II
-$100,000
-$600,000
-$1,100,000
-12
-9
-6
-3
0
3
6
9
12
QALYs
42
Cost-effectiveness acceptability curve (CEAC)
Probability cost-effective
1.00
0.90
0.80
0.70
0.60
0.50
0.40
0.30
0.20
0.10
0.00
$0
$10,000
$20,000 WTP $30,000
$40,000
$50,000
Alternative representation of the ICER (Δ Cost / Δ E)

ICER can be converted to Net Monetary Benefit
(NMB) at given Willingness to pay (WTP):
NMB = WTP*Effectiveness – Cost

Example: Δ Cost =$80k, Δ E= 2QALYs, WTP = 50k
◦ ICER = $40,000
◦ NMB = $20,000


+ NMB is linear, always defined;
+ More intuitive to decision makers than ICER
44
CEA in clinical trials
100
90
80
70
60
50
Treatment
Clinical endpoints (as before)
40
Placebo
HRQL
30
Health care events/utilization
20
Non-health care costs (e.g. lost work days)
10
0
0
6
12
18
24
45
CEA in clinical trials: Advantages
Efficiency
Internal validity
Timeliness (Ramsey et al, ISPOR 2010)
Able to collect HRQL directly from the sample, as
opposed to borrowing from other studies
46
CEA in clinical trials : limitations

Effectiveness vs. efficacy
 Use intent-to-treat approach

Length of follow up
 Cost and benefits may occur beyond the trial duration
 Conduct within trial analysis as well as beyond (if needed)

Study (usually powered for clinical outcomes) may be
underpowered for economic outcomes
47
Incorporating CEA in grant proposals
Always limited by space
◦ Why is CEA important to include?
◦ List all cost categories that will be included
◦ Intervention /program costs vs. other costs
◦ How would costs be aggregated, e.g. total per patient
◦ Measures of effectiveness
◦ If QALYs: describe how HRQL will be measured
◦ Calculation of ICER ; statistical analyses; missing data
◦ Sensitivity analyses: 1-way, 2-way, PSA
◦ How would results be used by policy makers
48
Criticisms of CEA

ICER not always intuitive /easy to understand by
decision makers

Requires a threshold ICER (e.g. $100k / QALY)

Methodological challenges

Equity considerations: cost-effectiveness can depend on
age, gender, disability, etc.

Equity (or other considerations may be more important
than economic efficiency)
49