Session 7: Defining & Assessing Benefits for Economic Evaluation

1. Why, what and how of benefits.

2. Benefit assessment for CEA.

3. Benefit assessment for CUA.

4. Practical exercise in estimating benefits for CUA.

HEA PTP: M212 Economic Evaluation 1

Why Measure Benefits?

Efficiency

Maximise

benefits

for given resources

HEA PTP: M212 Economic Evaluation 2

Key Features of Economic Evaluation

Economic evaluation is “The

comparative

analysis of alternative courses of action in terms of both their costs

and consequences

in order to assist policy decisions”.

1. Costs

and

consequences - efficiency!

2. Comparative -

relative

efficiency HEA PTP: M212 Economic Evaluation 3

Benefit Categories

Intervention Direct Benefits Indirect Benefits Reduced health services resource use eg. LoS.

Improved patient health status / utility.

HEA PTP: M212 Economic Evaluation Savings in productivity.

Family and friends quality of life.

4

Should Changes in Productivity be Included?



May

depend upon viewpoint (govt., societal, NHS)  Main issues are level of ‘true’ loss and comparability • Measurement of value of loss (gross wage, friction cost) • Double-counting, especially with CUA/CBA • Comparability with ‘health’ focus (viewpoint again) • Comparability with other studies (applies to other variables also)  Solution?

• Provide a good reason why they should be measured/included • Report separately from other results • Differentiate measurement and valuation HEA PTP: M212 Economic Evaluation 5

Should Benefits be Discounted?

 Why

not

discount?

• Health, unlike resources, cannot be traded over time • Inter-generational equity (cf environmental economics) • If are discounted, may be different rate to cost  Why discount?

• Inconsistent treatment costs and benefits • Inconsistent policy, especially in comparison with other sectors • Counter-intuitive conclusions for investment. eg always postpone!

• Individuals

do

trade health over time ((dis)invest in health) HEA PTP: M212 Economic Evaluation 6

Negative And Positive Benefits (and Costs!)

C/E ratio =

net

cost/

net

benefits

Net cost Net benefit

= = positive cost + negative cost positive benefit + negative benefit Negative cost = Negative benefit = HEA PTP: M212 Economic Evaluation cost saving, eg reduced LoS reduced health, eg adverse event 7

Types of Economic Evaluation

Type of Analysis

Cost Minimisation Cost Effectiveness Cost Utility Cost Benefit

Costs

Dollars Dollars Dollars Dollars HEA PTP: M212 Economic Evaluation

Consequences Result

Identical in all respects.

Least cost alternative.

Different magnitude of a common measure eg., LY’s gained, blood pressure reduction.

Cost per unit of consequence eg. cost per LY gained.

Single or multiple effects not necessarily common. Valued as “utility” eg. QALY Cost per unit of consequence eg. cost per QALY.

As for CUA but valued in money. eg willingness-to-pay Net $ cost: benefit ratio.

8

How Can Health Be Measured?



Length of life

• Mortality (numbers, rates, SMRs) • Life expectancy • Life years lost 

Quality of life

• Numerous QoL measures (generic and specific) • SF-36, Nottingham Health Profile, Guttman Scale, Rotterdam Symptom Checklist, Hospital Anxiety and Depression scale etc….

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Process of Benefit Assessment

1.

Identification:  Mortality.

 Quality of life.

2.

Measurement:  Measure in natural physical units (eg. number of deaths averted).

3.

Valuation:



Value benefits if appropriate ie. if performing CUA or CBA.

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Issues in Assessing Benefits for CEA

1. Efficacy

vs

effectiveness

vs

efficiency.

2. Intermediate versus final outcome.

3. Sources of data for CEA.

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Efficacy Vs Effectiveness Vs Efficiency

Efficacy = measure of effect under ideal conditions.

Effectiveness = effect under ‘real life’ conditions.

Efficacy does not imply effectiveness

Efficiency = relationship between costs & benefits.

Effectiveness does not imply efficiency

HEA PTP: M212 Economic Evaluation 12

Intermediate Vs Final Outcome Measures

Final = change in

health

(status) resulting from the programme.

Intermediate = change in

clinical indicator

resulting from the programme.

Need to establish

causal link

between intermediate and final outcome measure.

HEA PTP: M212 Economic Evaluation 13

Examples of Intermediate Vs Final Outcomes Indicators (PBAC (PBS) Oz)

Condition being treated

Coronary thrombosis (thrombolysis Stable angina (various interventions) Asthma (various drugs) Depression (various drugs)

Final outcome indicator

Quality-adjusted survival Quality-adjusted survival Quality-adjusted survival Quality-adjusted survival

Surrogate Outcome

Number surviving Number with specified level of left ventricular function Number with acceptable quality of life Number who can walk a specified distance Number surviving Number with adequate control of bronchial hyperreactivity Number avoiding suicide Quality of life (may be improved by drugs) Hypertension (various drugs) Quality-adjusted survival HEA PTP: M212 Economic Evaluation Number avoiding a stroke Quality of life (may be worsened by drugs)

Indicators

Number achieving coronary re-perfusion Number with adequate relief of pain Number achieving a target level of airways functions Number achieving a target Hamilton or Montgomery Asberg Depression Rating Scale Number achieving a target blood pressure 14

Sources of Effectiveness Data

1.

Clinical trials, eg RCT’s.

2. Epidemiological studies, eg cohort studies.

3. Synthesis methods, eg meta-analyses.

4. Use of modelling.

HEA PTP: M212 Economic Evaluation 15

Randomised Controlled Trials

‘Gold standard’ - minimal bias and confounding.

Disadvantages:

1. Often establishes efficacy, not effectiveness.

2. Selective subjects used.

3. Limited opportunity to conduct.

4. Limited time horizon.

5. Costly to conduct.

6. Often unethical and/or unfeasible.

HEA PTP: M212 Economic Evaluation 16

Epidemiological Studies

Real life setting - establish effectiveness Disadvantages:

1. Potential for significant bias and confounding.

2. Causal link can be weak.

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Decision Rules: CEA

CEA result Decision rule Application Qst addressed = = = = CEI (c/e). eg cost per LY gained adopt lowest CEI technical efficiency “Should we undertake program “X” or program “Y” to treat condition “A”?

HEA PTP: M212 Economic Evaluation 18

Limitations of Measurements/Need for Valuation

 Ambiguity in assessing overall improvement or detriment in health  Allocative efficiency - value of benefits > (opportunity) cost HEA PTP: M212 Economic Evaluation 19

Valuation Versus Measurement

 Value is determined by benefits

sacrificed

elsewhere (weighted preference)  Valuation requires a trade-off between benefits - measurement does not HEA PTP: M212 Economic Evaluation 20

Methods of Valuing Health

 ‘Utility’ or ‘preference’ assessment • Quality-Adjusted Life Years (QALYs) • Variants on QALY - Years of Health Life (YHL), Health-Adjusted Person Years (HAPY), Health-Adjusted Life expectancy (HALE) • Healthy-Year Equivalents (HYEs) (based on ‘sequence’ of SG) • Saved-young-life equivalent (SAVE) (based on PTO)  Monetary terms eg WTP • Willingness-to-pay (WTP) • Human Capital HEA PTP: M212 Economic Evaluation 21

Quality Adjusted Life Years (QALYs)

Adjusts data on quantity of life years saved to reflect a valuation of the quality of those years If healthy: If unhealthy: QALY = 1 QALY < 1 HEA PTP: M212 Economic Evaluation 22

Qol Profile

QL Weighting 0 5 10 No Life Years = 15 15 No QALYs

HEA PTP: M212 Economic Evaluation

= 11

23

QALY Procedure

 Identify possible health states - cover all important and relevant dimensions of QoL  Derive ‘weights’ for each state  Multiply life years (spent in each state) by ‘weight’ for that state HEA PTP: M212 Economic Evaluation 24

“Utility” Weight

Utility = satisfaction/well-being - reflects a consumers (weighted) preferences Utility weights are necessarily subjective - they elicit an individual’s preferences for, or value of, one or more health states.

Must: 1.

2. Have interval properties Be ‘anchored’ at death and ‘good health’ HEA PTP: M212 Economic Evaluation 25

Techniques For Measuring “Utility”

Variety of techniques available, including:  Time Trade off  Person Trade Off  Standard Gamble  Rating Scale HEA PTP: M212 Economic Evaluation 26

Obtaining “Utility” Weights

Two means of obtaining “utility” weights: 1.

Evaluation specific/’holistic’ measures - develop evaluation specific (‘holistic’) description of health state and then derive weight for that specific state directly by population survey 2.

Use ‘generic’ or ‘multi-attribute’ instruments - use predetermined weights, based on combination of dimensions of health yielding a finite number of health states/values HEA PTP: M212 Economic Evaluation 27

Evaluation Specific/‘holistic’ Measure

Advantages: 1.

2.

Sensitive Account for wider QoL (eg process, duration, prognosis) Disadvantages 1.

2.

Cost and time intensive Lack of comparability HEA PTP: M212 Economic Evaluation 28

Generic (MAU) Instruments

Advantages: 1.

2.

Supply weights “off the shelf” Comparability Disadvantages: 1.

2.

3.

HEA PTP: M212 Economic Evaluation Insensitive to small changes in health Dimensions may not be sufficiently comprehensive Weights may not be transferable across groups 29

Some Other Issues

 Choosing respondents for utility estimation - whose values count?

 What constitutes a ‘correct’ health state description?

 What is the appropriate ‘measurement’ technique?

 Aggregation of values?

 Biases - ageist, life enhancing versus life-saving etc.

HEA PTP: M212 Economic Evaluation 30

Decision Rules: CUA

CUA result Decision rule = = CEI (c/e). eg cost per QALY gained adopt lowest CEI Application = 1. technical efficiency 2.

possibly

allocative efficiency within health care sector Qst addressed = HEA PTP: M212 Economic Evaluation 1. Should we undertake program “X” or “Y” to treat condition “Z”?

2. Should we treat condition “A” or “B”?

31

Decision Rules: Issues

1. Perspective Health Care Sector Purchaser/Provider Societal 2. Comparator 3. Budget constraint/indivisibility 4. NPV vs BCI 5. Limited nature of economic evaluation HEA PTP: M212 Economic Evaluation 32

CUA and Rationing

 Market system - price mechanism establishes equilibrium (efficient allocation)  Non-market system - absence of price as allocative tool leads to other, non-price, techniques  Issue is one of: (i) philosophical basis for rationing; and (ii) applied technique for rationing HEA PTP: M212 Economic Evaluation 33

Methods of Explicit Rationing

Explicit rationing Political processes Technical methods Lay participation Medical paternalism Equity Efficiency

( Coast et al, Priority setting: the health care debate, John Wiley, 1996)

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Explicit Rationing: Technical Methods

 Single principle  Little distinction between setting priorities at different levels  Examples • maximising health gain • need-based rationing • lotteries • age-based rationing HEA PTP: M212 Economic Evaluation 35

Technical Method: ‘QALY League Tables’

 Economic evaluation produces information on cost-effectiveness  If using comparable outcomes (eg QALY) can ‘rank’ according to c/e  Can use resultant ‘league table’ to allocate resource to most c/e first HEA PTP: M212 Economic Evaluation 36

League Tables: Handle With Care!

 Studies show differences in methodology • choice of discount rate • method of estimating utility values • range of costs included • choice of comparator  Requires consistent methodology, ‘admission criteria’ for inclusion, applicability in local decision context HEA PTP: M212 Economic Evaluation 37

The Oregon Plan

HEA PTP: M212 Economic Evaluation  1987 - decision to stop funding for organ transplantation  1989 - Oregon Health Services Commission begins work  1990 - List 1  1991 - List 2  1994 - plan begins 38

Oregon List Version 1

 Efficiency principle  1600 condition/treatment pairs  Cost/QALY gained • social values • outcome • cost HEA PTP: M212 Economic Evaluation 39

Oregon List Version 1

“... looked at the first two pages of that list and threw it in the trash can” “... the presence of numerous flaws, aberrations and errors”

(Harvey Klevit, member, Oregon Health Services Commission)

HEA PTP: M212 Economic Evaluation 40

Oregon List Version 2

 Equal treatment for equal need  709 condition/treatment pairs  Method: • Development & ranking of categories • Ranking C/T pairs within categories – Public preferences – Outcome • Professional judgement HEA PTP: M212 Economic Evaluation 41

Oregon List Version 2

Top Five C/T pairs

1 Pneumonia - medical 2 Tuberculosis - medical 3 Peritonitis - medical/surgical 4 Foreign body - removal 5 Appendicitis - surgical

Bottom Five C/T pairs

705 Aplastic anaemia - medical 706 Prolapsed urethral mucosa - surgical 707 Central retinal artery occlusion paracentesis of aqueous 708 Extremely low birth weight, < 23 weeks - life support 709 Anencephaly - life support HEA PTP: M212 Economic Evaluation 42

Summary

1. Benefits

must

be assessed to establish efficiency.

2. Breadth and depth of benefits measured (& valued) varies across type of economic evaluation.

3. Difference between

valuation

and

measurement

.

4. Debate on role of CUA (& CEA) in

allocative

efficiency 5.

Beware ‘league tables’!

HEA PTP: M212 Economic Evaluation 43