University of Michigan School of Public Health Cost-Effectiveness Analysis and Ageism Daniel Eisenberg, PhD Dept of Health Management and Policy School of Public Health University of Michigan AcademyHealth Annual Research Meeting 2006 Allez Les Bleus! 2 Go Blue! 3 Background: Economic Methods for Evaluating Health Interventions • Cost effectiveness analysis (CEA): $/life-year ($/LY) or $/disability-adjusted-life-year ($/DALY) • Cost utility analysis (CUA): $/quality-adjusted-life-year ($/QALY) • In CEA and CUA, the unit of health, whether it’s a LY, DALY, or QALY, is typically weighted the same at all ages (e.g. 1 QALY at age 10 = 1 QALY at age 70) • Cost benefit analysis (CBA) often uses single “value of a statistical life” for all ages • Thus, CEA and CUA account for life expectancy whereas CBA typically does not 4 Background: Economic Methods (cont’d) Decreasing priority for health of young CBA w/ single value-of-life Standard CEA/CUA Modified CEA/CUA? Increasing priority for health of young 5 Policy Context • Debate within federal government about whether agencies should be doing CEA vs CBA vs CUA • Who gets influenza vaccines first? – Recent article in Science (Emanuel and Wertheimer 2006) critiquing priorities of National Vaccine Advisory Committee (NVAC) and the Advisory Committee on Immunization Policy (ACIP) 6 Key Question • How can we modify cost effectiveness analysis (CEA) methods to reflect more accurately our society's valuation of health improvements by age? 7 Synthesis of Related Theoretical and Methodological Literature 8 Synthesis of Arguments in Literature on Why CEA Should Be Modified 1. Future health gains should be weighted more to reflect society’s increase in willingness-topay over time for health • 1-2 % increase per year 2. Net resource use should be included in costs • Consumption minus productivity (Meltzer) 3. Younger life-years should receive priority for equity reasons • “Fair innings” argument: young have not had their share of life yet 9 Evidence on Argument #1 • Value of health gains rises at least in proportion to income: – Costa, Dora L. and Matthew E. Kahn (2004) J of Risk and Uncertainty. – Hammitt, James K., Jin-Tan Liu, and Jin-Long Liu (2004). Harvard Univ. mimeo. – Hall, Robert, and Chad Jones. (2006). Forthcoming in Quarterly J of Economics. 10 Evidence on #2 (Net Resource Use) • Net resource use (consumption minus productivity) (Meltzer 1997 J of Health Econ): – Positive for children and adolescents – Negative for adults until retirement age – Positive for adults after retirement age 11 Evidence on #3 • Equity concern is supported consistently in a variety of survey studies 12 Survey Evidence on Valuation of Health by Age Suppose a choice must be made between two medical programs. The programs cost the same but there is only enough money for one. • Program A will save 100 lives from diseases that kill 20-year-olds. • Program B will save 200 lives from diseases that kill 60-year-olds. Which program would you choose? Example from Cropper et al (1994). Journal of Risk and Uncertainty 8: 243-265. 13 Survey Evidence (cont’d) • Several studies (from a variety of countries) find that respondents not only place higher values on younger lives, but they do so more so than can be explained by differences in life expectancy • These preferences are consistent for all age groups of survey respondents 14 Translating Survey Evidence Into Modifications for CEA Methods Age Weights from World Bank Guidelines and Rodriguez & Pinto 2000) 2 Age Weights weight 1.5 1 0.5 Standard CEA 0 age 10 19 28 37 46 55 64 73 82 15 Implications for CEA Methods 1. Increasing valuation of health over time -> weight life-years by increasing amount: (1+x)^t 2. Net resource use -> add it to costs 3. Equity concerns -> construct age weights based on survey data on preferences Does it make sense to do all of these at once? That depends on interpretation of survey data. 16 Example: Re-analysis of Recently Conducted CEAs 17 CEAs to be Re-Analyzed • We selected for re-analysis CEAs that: – Were published within last 10 years – Evaluated interventions for people of ages under 21 – Yielded cost-effectiveness ratios between $50,000 and $500,000 per LY (i.e. dubious cost effectiveness) 18 Two CEAs Identified for Re-analysis • Jacobs et al (2003). Regional variation in the cost effectiveness of childhood hepatitis A immunization. Pediatr Infect Dis J 22: 904-14. – Universal immunization in low prevalence states • Kulasingam, S.L. and E.R. Myers (2003). Potential health and economic impact of adding a human papillomavirus vaccine to screening programs. JAMA 290(6): 781-9. – Vaccine plus screening starting at age 24 versus vaccine plus screening starting at age 18 19 Methods for Re-analyses We separately applied the following methods: 1) Standard CEA 2) Increasing value of health over time (2% year) 3) Age-weights 4) #2 and #3 20 Results: Cost Effectiveness Under Each Method Units (1) HepA vac. $/QALY 63,000 HPV vac. $/LY 96,000 Study (1) Standard CEA (discount rate = 3%) 21 Results: Cost Effectiveness Under Each Method Units (1) (2) HepA vac. $/QALY 63,000 52,000 HPV vac. $/LY 96,000 46,000 Study (1) Standard CEA (discount rate = 3%) (2) Increasing valuation of health effects (2% per year) 22 Results: Cost Effectiveness Under Each Method Units (1) (2) (3) HepA vac. $/QALY 63,000 52,000 49,000 HPV vac. $/LY 96,000 46,000 72,000 Study (1) Standard CEA (discount rate = 3%) (2) Increasing valuation of health effects (2% per year) (3) Age-weighting by formula in Rodriguez & Pinto (2000) (w/ 3% discounting) 23 Results: Cost Effectiveness Under Each Method Units (1) (2) (3) (4) HepA vac. $/QALY 63,000 52,000 49,000 39,000 HPV vac. $/LY 96,000 46,000 72,000 37,000 Study (1) Standard CEA (discount rate = 3%) (2) Increasing valuation of health effects (2% per year) (3) Age-weighting by formula in Rodriguez & Pinto (2000) (w/ 3% discounting) (4) Combination of (2) and (3) 24 Conclusion • Standard CEA methods do not reflect societal preferences related to age • Modifications grounded in theoretical and empirical evidence lower CE ratios substantially for interventions targeted at young people 25 Implications • CEA practitioners can use adjustments for increasing value of health over time and age weights to reflect these concerns • Readers of CEAs should bear in mind that the technique, as currently practiced, does not reflect societal preferences with respect to age 26 Acknowledgements • Gary Freed, MD, MPH • R. Jake Jacobs, MPA and co-authors on Jacobs et al (2003) • Shalini L. Kulasingam, PhD and Evan R. Myers, MD, MPH • R. Douglas Scott, PhD 27