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

HEA PTP: M212 Economic Evaluation 2

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

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


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


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)
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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

Type of Analysis Costs
Cost Minimisation
Cost Effectiveness
Cost Utility
Cost Benefit
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


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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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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1. Efficacy vs effectiveness vs efficiency.
2. Intermediate versus final outcome.
3. Sources of data for CEA.
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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
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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.
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Condition being treated
Final outcome indicator
Surrogate Outcome
Coronary thrombosis Quality-adjusted Number surviving Number with specified
(thrombolysis survival level of left ventricular function
Stable angina
(various interventions)
Quality-adjusted survival
Number with acceptable quality of life
Number who can walk a specified distance
Asthma
(various drugs)
Depression
(various drugs)
Quality-adjusted survival
Number surviving Number with adequate control of bronchial hyperreactivity
Quality-adjusted Number avoiding Quality of life (may be survival suicide improved by drugs)
Indicators
Hypertension
(various drugs)
Quality-adjusted survival
HEA PTP: M212 Economic Evaluation
Number avoiding a stroke
Quality of life (may be worsened by drugs)
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

1.
Clinical trials, eg RCT’s.
2. Epidemiological studies, eg cohort studies.
3. Synthesis methods, eg meta-analyses.
4. Use of modelling.
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‘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.
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Real life setting - establish effectiveness
Disadvantages:
1. Potential for significant bias and confounding.
2. Causal link can be weak.
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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”?
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Limitations of Measurements/Need for Valuation

Ambiguity in assessing overall improvement or detriment in health

Allocative efficiency - value of benefits >
(opportunity) cost
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
Value is determined by benefits sacrificed elsewhere (weighted preference)

Valuation requires a trade-off between benefits
- measurement does not
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 ‘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
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Adjusts data on quantity of life years saved to reflect a valuation of the quality of those years
If healthy: QALY = 1
If unhealthy: QALY < 1
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QL Weighting
0 5 10
No Life Years = 15
15
No QALYs
HEA PTP: M212 Economic Evaluation
= 11
23


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
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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.
Have interval properties
2. Be ‘anchored’ at death and
‘good health’
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Variety of techniques available, including:

Time Trade off

Person Trade Off

Standard Gamble

Rating Scale
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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

Advantages: 1.
Sensitive
2.
Account for wider QoL
(eg process, duration, prognosis)
Disadvantages 1.
Cost and time intensive
2.
Lack of comparability
HEA PTP: M212 Economic Evaluation 28

Advantages: 1.
Supply weights “off the shelf”
2.
Comparability
Disadvantages: 1.
Insensitive to small changes in health
2.
Dimensions may not be sufficiently comprehensive
3.
Weights may not be transferable across groups
HEA PTP: M212 Economic Evaluation 29


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

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

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


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

Explicit rationing
Political processes
Technical methods
Lay participation
Medical paternalism
Equity Efficiency
(
Coast et al, Priority setting: the health care debate, John Wiley, 1996)
HEA PTP: M212 Economic Evaluation 34


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


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


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

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

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

“... 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


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

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

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