AN INCONVENIENT
TRUTH (no 2):
Rationing in Healthcare and the role of
pharmacoeconomics.
Prof. Tienie Stander
17 July 2010
Evaluating the socio-economic benefits of innovation in healthcare
TODAY’S AGENDA
• HIV in context
• Illustrative pharmacoeconomics (PE)
• The theory of PE
• The practice of PE
• Case studies
• Q&A
Prevalence (M)
40
HIV in context
30
20
25 years
$150 billion
50k papers
10
1985
1990
1995
2000
2005
2010
Deaths (M/yr)
0
1980
www.unaids.org
Illustrative PE
How on earth am
I going to feed
these kids?
Meet the Simpsons …
Angela
Mary
Josh
Illustrative PE (cont.)
Mary has the following concerns:
• I only have €200 to feed the family
• What is the best food to buy given my financial
constraints?
• How should I allocate the food once bought?
Q&a
Illustrative PE (cont.)
What is the best food to buy given my financial constraints?
High
quality?
High
quantity?
Illustrative PE (cont.)
What is the best food to buy given my financial constraints?
High
quality?
High
quantity?
Illustrative PE (cont.)
How should I allocate the food once bought?
Josh
Angela
Illustrative PE (cont.)
How should I allocate the food once bought?
Josh
Angela
Illustrative PE (cont.)
• The Simpsons X 50 million = a country called
DRD (Democratic Republic of Dilemma)
• Mother Mary = Minister of Health of DRD
• Suffering from the same dilemmas:
•
•
•
•
Limited resources
Unlimited needs and expectations
What healthcare to buy
How to distribute it
Illustrative PE (cont.)
• Technical efficiency: Should we invest in drug A or drug B
• Allocative efficiency: Should we allocate resources to
disease A or B or even to healthcare or education
Practical question: If you, as the MoH of DRD, was given a
healthcare budget of DRD$50 billion …
Knowing that there is shortfall of DRD$20 billion …
How will you allocate the money? Will you rather invest in
cheaper lower quality drugs just to make sure everybody
gets access to some form of medicine, or …
The theory of pe
DECISION MAKING MODEL TO ALLOCATE SCARCE HEALTHCARE
RESOURCES
1. Clinical Filter
2. Economic Filter
3. Financial Filter
4. Funding Filter
5. Marketing Filter
The theory of pe
(cont.)
Importance
Marketing and Sales vs. Market Access and Reimbursement
100
90
80
70
60
50
40
30
20
10
0
1
2
3
4
5
6
7
Time
8
9 10 11 12 13
The theory of pe
• Rationing in healthcare
• Unfolding role of PE
• Tool for access and reimbursement
• Rational scarce resource allocation
• Cost vs. benefit tradeoff
(cont.)
The theory of pe
Types of PE analyses:
• Cost effectiveness analysis (CEA)
• Cost utility analysis (CUA)
• Cost benefit analysis (CBA)
(cont.)
The theory of pe
(cont.)
• Economic modeling: attempting to mimic the natural of complex
diseases in mathematical and epidemiological models.
• Example: Flu
Flu season
Intervention
Outcome
Survive
Vaccinate
Death
Healthy
No vaccine
Survive
The theory of pe
(cont.)
• Example: Flu (cont.)
Cohort
Cost
Probability
of death
Vaccinate
10,000
$1.50
.001
No vaccine
10,000
$0.00
.101
Total cost
Deaths
Vaccinate
$15,000
10
No vaccine
$0
1,011
Incremental
$15,000
-1,001
Incremental cost-effectiveness
ratio ($15,000 / 1,001)
$15/death
avoided
Flu season
Intervention
Outcome
Survive
Vaccinate
Death
Healthy
No
vaccine
Survive
The practice of pe
• Research question: are the new WHO ART treatment
guidelines cost effective?
• PE model comparing d4T, AZT and TDF in first line
treatment
• Model structure: Decision tree
Case study 1
Results d4T vs. TDF:
More costly
Not cost-effective
3x
Cost: Effectiveness
TDF
$20,426
17.68x QALY
d4T
$19,008
17.18 QALY
Incremental effect
ICER
=
$1,418
2x
$12,358
0.51
1x
$2,792
$2,79
2
Less effective
More effective
-$856
Less costly
$6,179
Case study 2
• Results AZT vs. TDF
More costly
Not cost-effective
3x
Cost: Effectiveness
TDF
$22,903
17.87x QALY
AZT
$22,128
17.79 QALY
Incremental effect
ICER
=
2x
$12,358
$9,161
$775 0.08
1x
$9,161
$2,686
Less effective
More effective
Less costly
$6,179
ROLE OF CBA
• Aimed at financiers of healthcare
• Provides ROI answers. Such as:
• What is the monetary value of economic benefits
compared to the economic costs (the investment)?
• What is the Net Present Value of the investment?
• When will we reach breakeven?
summary
• Think of the Simpson family when confronted with
tough healthcare choices
• Pharmacoeconomics assist decision makers to allocate
scarce healthcare resources in a rational way
• Price is not the same as cost
• The best way to help the poor is not to become part of
them (A Lincoln)