Advancing Health Economics,
Services, Policy and Ethics
Stuart Peacock
Canadian Centre for Applied Research in Cancer Control
University of British Columbia
British Columbia Cancer Agency

• A little bit about the Canadian Centre for Applied
Research in Cancer Control (ARCC)
• Why is economic evidence important?
• Economic evidence – a personalized medicine case study in colorectal cancer
• Some challenges ahead relating to personalized medicine amongst other things
• The importance of preferences as part of evidence

How can we inform and promote cancer control policies and practices (from prevention to palliative care and survivorship) that are evidence-based,
sustainable and ethical in order to reduce the burden of cancer for Canadians?
5

• In the mid-2000s, the Canadian Cancer Society committed to invest in a national centre dedicated to health economics, services, policy and ethics in cancer control
• Identified a need for an organization that both
– brings together these multiple disciplines to address cancer control questions and
– provides national leadership in research, knowledge translation and capacity building in this area
6

• Interdisciplinary, inter-provincial and inter-professional with a commitment to cross-national collaboration
• ARCC is an unique partnership of 30 investigators, 30 associates and over 40 research staff from across Canada
• Two leadership hubs at the British Columbia Cancer Agency
(BCCA)/University of British Columbia (UBC) and at Cancer
Care Ontario (CCO)/University of Toronto (U of T)
7

• Five thematic program areas:
Health Technology
Assessment
Patients and
Families
ARCC
Societal Values and
Public Engagement
Knowledge
Translation
Health Systems,
Services and Policy
8

“ Allocation of funds and facilities are nearly always based on the opinion of consultants but, more and more, requests for additional facilities will have to be based on detailed arguments with ‘hard evidence’ as to the gain to be expected from the patient’s angle and the cost. Few could possibly object to this.”
Cochrane AL. Effectiveness and Efficiency: random reflections on health services. Nuffield Provincial
Hospitals Trust, London, 1972.

$200,000,000
$180,000,000
$160,000,000
$140,000,000
$120,000,000
$100,000,000
$80,000,000
$60,000,000
$40,000,000
$20,000,000
$0
28%
19%
9%
19%
22%
11%
14%
14%
16%
0
1/
02
0
2/
03
0
3/
04
0
4/
05
0
5/
06
0
6/
07
0
7/
08
0
8/
09
0
9/
10
1
0/
11
15%

$14 000
$12 000
$10 000
$8 000
$6 000
$4 000
$2 000
$0
2002
2003
2004
2005
2006
2007
12

Monthly and median costs of
FDA approved cancer drugs (2007 US$)
Aldesleukin
Alemtuzumab
Nelarabine
Denileukin
Cetuximab
Source: Bach, NEJM 2009

Safety Efficacy Quality Cost-
Effectiveness
The Fourth Hurdle

• Many jurisdictions now require economic evaluation for reimbursement decisions (primarily for drugs)
– Accompanied by guidelines for pharmaceutical companies
– Pricing decisions maybe linked with reimbursement decisions
• Australia: Pharmaceutical Benefits Advisory Committee
(PBAC)
• England and Wales: National Institute for Health and
Clinical Excellence (NICE)
• Based on ‘Acceptable’ Incremental Cost-Effectiveness
Ratios (ICERs)

Britain:
NICE evaluates the cost effectiveness of medicines.
Guidelines updated April 2004.
Norway:
Pharmacoeconomic data required for reimbursement; official guidelines in operation.
Finland:
Pharmacoeconomic evidence mandatory for evaluating new therapies for reimbursement and may also be requested for existing therapies.
Sweden:
Cost-effectiveness data required for reimbursement .
Ireland: Guidelines for pharmacoeconomic studies prepared; costeffectiveness data may be requested.
Denmark:
Cost-effectiveness data may be requested for reimbursement decisions.
France:
Not a formal requirement but increasingly used in reimbursement decisions.
Guidelines prepared .
Netherlands:
Pharmacoeconomic evidence explicitly required for reimbursement of new products.
Belgium:
Formal requirement for economic evaluation.
Spain:
Health technology assessment at a regional level.
Portugal:
Cost-effectiveness data incorporated into reimbursement decisions.
Italy:
Cost-effectiveness considered in pricing and reimbursement decisions.
Germany:
Guidelines prepared.
Institute for Quality and
Efficiency in the Health
Service established in
2004.
Greece: Guidelines for pharmacoeconomic studies prepared; cost-effectiveness data may be requested.
Source: National Centre for Pharmacoeconomics, Ireland

New Program
Impact on health status 
Survival
 Quality of life
Impact on health care costs

Hospitalisations
 Drugs, procedures etc.
Target patient group
Old Program
Impact on health status  Survival
 Quality of life
Impact on health care costs
 Hospitalisations

Drugs, procedures etc.

(Cost new
– Cost old
)
(Effectiveness new
– Effectiveness old
)
= ICER
Incremental resources required by the intervention
ICER =

C /

E
Incremental health effects gained by using the intervention

Number
15
16
17
18
19
10
11
12
13
14
7
8
5
6
9
3
4
1
2
22
21
22
23
24
25
Incremental cost per additional life-year gained at 1998/1999 prices ($AU)
38237
39821
42697
43550
43550
56175
57901
63703
71582
75286
5517
8374
8740
17387
18762
18983
19807
22255
26800
85385
88865
98323
229064
231650
256950
Source: George et al. Pharmacoeconomics 2001
PBAC decision
Recommend at price
Recommend at price
Recommend at price
Recommend at price
Recommend at price
Recommend at price
Recommend at lower price
Recommend at price
Recommend at price
Recommend at price
Recommend at price
Reject
Reject
Recommend at price
Reject
Recommend at price
Reject
Recommend at price
Recommend at price
Recommend at lower price
Reject
Reject
Recommend at lower price
Reject
Reject

Source: Rawlings. Lancet Oncology 2007



21



22

• Treatment for advanced colorectal cancer (CRC) – improves overall and progression-free survival compared to best supportive care 1
• Mechanism of action - monoclonal antibody that targets epidermal growth factor receptor (EGFR), modulating tumor cell growth 2
• Resistance to cetuximab is common (>50% after one treatment) - Caused by mutations in component of
EGFR: K-ras protein, which occur in ~40% of patients 3

Effectiveness of cetuximab (overall and progression-free survival) is significantly associated with k-
ras mutation status (p>0.001)
- Patients with wild-type k-ras tumors did benefit (overall survival 9.5 months)
- Patients with mutated k-ras tumors did not benefit (overall survival 4.8 months) 3
Source: Karapetis et al, NEJM, 2009

Cost-effectiveness
– Cetuximab may increase the already significant cost of managing advanced CRC, especially when provided to all patients
– Drug and administration cost of cetuximab
$71,000/patient 4
– K-ras testing $450/patient 4

Cost-effectiveness cont…
– Providing drug to all patients is not cost effective
– Incremental cost effectiveness ratio (ICER) ~$300,000 per
QALY gained 5
– Targeting the therapy to patients with wild-type k-ras improves cost-effectiveness
– ICER ~$180,000/QALY 5
– Theoretical cost-savings associated with treating only wildtype k-ras, $740 million (US), accounting for cost of k-ras testing

• Current reimbursement systems for diagnostic tests are cost based rather than value based
• Tests for multiple markers cost thousands of dollars
• Technology is changing – cost per single-nucleotide polymorphism (SNP) analyzed is falling rapidly
• True opportunity cost is often unknown – testing may result in changes to medical utilization
• Difficult to estimate a true economic value at any given time

• Genetic tests share the same concerns about sensitivity and specificity as older diagnostics
• But, we have many years of experience modeling screening interventions
• Patient outcomes are likely to be influenced by multiple genes, and each gene can influence multiple outcomes
• Each outcome is modified by interactions with other genes and environmental exposures – including diets, drugs and disease states

• Lack of data on patient and clinician behaviour following the results of diagnostic tests, and associated patient outcomes
• Issue gets more complicated if the test indicates a patient should not get a drug
• Are there alternatives?
• If so, how does the analysis factor in the timing and sequencing of alternatives?

• Inconclusive or contradictory results from small (n <
200) RCTs may be insufficient for robust estimates of effectiveness
• More decision analytic modelling required, with careful consideration of parameter and decision uncertainty
• Use of surrogate end-points, e.g. progression free survival, is likely to increase
• Cumulative synthesis of RCTs needed

• Uncertainty with the clinical value of new technologies will likely mean that the value of additional research and policy options, such as CED, should be considered
• CED = provisional approval for coverage by payers on condition that additional data on effectiveness are collected through RCTs or patient registries
• Registries and linkable administrative data sets will only become more important

• Is personalized medicine more likely to lead to smaller and smaller sub-group analyses rather than
‘individualized’ care?
• Possibly, because the marginal cost of developing new drugs will outweigh the marginal benefits for pharmaceutical companies
• RCTs and economic evaluation will not become redundant – but they will be more complex and costly
• Linkable administrative data will be very important

• Personalized medicine promises to provide tailored therapies that take into account individual differences in risk and values
• The balance of risks and benefits for each person will differ because of preference heterogeneity
• Tailoring therapy and determining the optimal strategy will mean listening to patients preferences
• Economic evaluations need to model patient preferences about different treatment options

• PSA screening appears to prolong life expectancy but shortens quality-adjusted life expectancy i.e. it is a preference sensitive decision
• Men who receive decision support are more knowledgeable, have less decisional conflict, and are less inclined to undergo
PSA screening
• Sexual and urinary dysfunction after treatment have modest effects on global quality of life
• Men with low literacy do not understand many prostate cancer terms
• Preferences should be part of guideline development (Krahn and Naglie, JAMA 2008)
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• ... on inflating community expectations

At the February 1, 2012 data cut-off, median follow-up was 12.5 months for vemurafenib and 9.5 months for dacarbazine. In patients not censored at crossover, median OS was 13.6 months for vemurafenib vs. 10.3 months for dacarbazine (HR 0.76; P<0.01 post-hoc). In those censored at crossover, OS was 13.6 months for vemurafenib and 9.7 months for dacarbazine (HR 0.76;
P<0.001 post-hoc). (BRIM3 Trial presentation at ASCO
2012)
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ARCC is funded by the Canadian Cancer Society
Email: speacock@bccrc.ca
ARCC website: www.cc-arcc.ca
A d v a n c i n g H e a l t h E c o n o m i c s , S e r v i c e s , P o l i c y a n d E t h i c s