Economics and Health

1. South Asian Cardiovascular Research Methodology Workshop Economics and Health Thomas Songer, PhD

2. Economics and Health

3. Human Development Income/Economic Population Health & Nutrition Education Political

4. Transitions in Human Development Epidemiologic Disease - Infectious to Chronic Demographic Younger to Older populations Rural to Urban Economic Developing to Developed Economies

5. Transitions in Human Development Health Care Systems Centralized to Decentralized, Cost Containment Political Controlled to Free Market Economies

6. Trends in Death in Developing Areas NCDs Comm. Dis. Injuries 40 30 Deaths (millions) 20 10 0 1990 2000 2010 2020 Global Burden of Disease

7. DALYs in Developing Areas 1990 2020 Infectious Disease NCDs Injury

8. Economic Transition

9. Economic Growth • Many Differing ways of defining growth • Goods and services produced • GNP - money value of all goods and services produced • GNP per capita; reflects the average income of a country’s citizens • GNP per capita; outlines general standard of living

10. Gross National Product, per capita Average Annual 1991 Growth Rate, $ 1980-91(%) Sub-Saharan Africa 350 - 1.2 East Asia & Pacific 650 6.1 South Asia 320 3.1 Europe & C.Asia 2,670 0.9 Mideast/N.Africa 1,940 - 2.4 Latin America 2,390 - 0.3 OECD members 21,530 2.3 World 4,010 1.2

11. GNP per capita Monetary value of goods and services population

12. GNP per capitaImpact of Population Changes • An increasing population makes it more difficult to increase GNP per capita • With a stable population, increases in GNP will increase GNP per capita

13. How does the development level of an economy relate to health?

14. Economics and Health

15. Higher GNP per capita is associated with …. Longer life expectancy lower infant mortality better access to safe water better education

16. Income and Health Spending World Bank Development Report 12 10 8 6 Share of GDP spent on health 4 2 0 5000 10000 15000 20000 25000 GDP per capita (1991 dollars)

17. Economics and Health malnutrition poor sanitation Poverty poor education poor housing - crowding no quality health care

18. Low economic growth High fertility Poverty Poor health

19. UNDP Poverty Report 2000 OVERCOMING HUMAN POVERTY

20. Increased productivity Low fertility Rising incomes Better health

21. Economic growthEconomic development

22. Economic growthincrease in the amount of goods and services producedEconomic developmentcombines economic growth with an improvement in living standards

23. Economic growth does not always translate to economic development

24. In the 1950s and 1960s, a large number of 3rd world countries achieved UN growth targets, yet the levels of living for most remained unchanged GNP per capita is a narrow definition of growth and development Todaro 1997

25. Health used to be viewed as an end product of the growth process: New thinking is that health enhances economic growth

26. Economics and Health

27. Economics and Health

28. WHO: Commission on Macroeconomics and Health • Ill-health undermines economic development and efforts to reduce poverty. Investments in people’s health are vital pre-conditions for economic growth and human development. www.who.int/macrohealth/en

29. The human being is an investment of capitalHealthy people are productive people Chadwick:

30. Chadwick: The human being is an investment of capital Healthy people are productive people Better sanitation is a good investment Prevention of disease is a good investment

31. The Commission on Macroeconomics and Health • established in January 2000 • Mandate: To examine the links between investment in health, economic development and poverty reduction • CMH Structure: 6 working groups, 18 Commissioners, hundreds of experts in public health, finance and economics.

32. Summary of key CMH findings • Ill health undermines economic development and efforts for poverty reduction • A few health conditions account for most of the avoidable deaths in low / middle-income countries • HIV/AIDS, TB, malaria, maternal & child health, and tobacco-related illness • The HIV/AIDS pandemic is a “distinct and unparalleled catastrophe” not only in its human dimension but in its implications for economic development

33. HIV/AIDS and Economic Development • High HIV/AIDS prevalence leads to… • decline in labor force participation • decline in productivity • decline in human capital

34. HIV/AIDs in Russia, 2001 World Bank 2002

35. HIV/AIDs in Russia • 5.4 to 14.5 million cases • -2 to -14% change in effective labor supply • -5 to -25% decline in GDP by 2020

36. Health Economics

37. Why is there an interest in health economics? Economics and health are related Rising costs of health care Limited resources for health care Variations in health outcomes exist Economic data influence government decisions regarding health care

38. Economic Approaches in Health Care Descriptive Cost studies Evaluative Cost-Benefit Analysis Cost-Effectiveness Analysis Cost-Utility Analysis Explanatory Demand/Supply issues Regulation/Taxation

39. Cost Effectiveness Analysis • Primary form of economic analysis of health care interventions • Very often included in clinical trials that are testing new interventions • A method for evaluating the outcomes and costs of interventions designed to improve health.

40. The purpose of economic evaluation, such as cost effectiveness analysis, is to identify, measure, value, and compare the costs and consequences of alternative interventions.

41. Cost Effectiveness CalculationComparison of interventions examines differences in cost by the differences in benefits gained • Cost with intervention [A] - Cost with intervention [B] • Benefit with [A] - Benefit with [B] in other words Δ Cost Δ Benefit

42. Cost Effectiveness Calculation Intervention A B Costs $4,000 $5,000 Effectiveness 3 months 8 months . Incremental CE = (5,000 – 4,000)/8-3= $200/month

43. Cost-effectiveness analysis – Important Steps • Define the question to be analyzed • Define the audience for the evaluation • Specify the perspective of the analysis • Define the relevant time frame for the analysis • Identify relevant outcomes • Identify relevant costs • Determine the summary measure to be reported

44. Defining interventions or the question to be assessed • Major increase or decrease in an existing activity Or • Adding a new activity to replace an existing one or adding a new activity when there is no current activity Mulligan/Mills

45. Selected interventions in malaria control Mulligan/Mills

46. Defining the Audience and Perspective of the study • Health care payers • Health care providers • Patients • Government health plans • Society • among others

47. Identify Time frame • Short-term • Within the time period of the trial • Long-term • e.g 5 years • e.g. 10 years • Lifetime • Many interventions in chronic disease show benefits years later

48. Summary Outcome Measures • Quality-adjusted Life Years • Survival weighted by patients’ value of health-related quality of life • Patients value health states on a 0 (death) to 1 (optimal health) scale • Recommended as a gold standard • Other Clinical Outcomes: pain, test results • Non-Clinical Outcomes: health status, patient satisfaction

49. Examples of outcome measures Logan et al. (1981) Hypertension mmHg Hypertension 3:2:211-18 treatment blood pressure reduction Hull et al. (1981) Diagnosis of deep cases of DTV NEJM 304:1561-67 vein thrombosis detected Sculpher and Buxton (1993) Asthma episode-free PharmacoEconomics 4:5:345-52 days Mark et al. (1995) Thrombolysis years of life NEJM 332:21:1418-24 gained

50. Cost-Effectiveness Analysis in the TODAY (Treatment Options for Diabetes in Adolescents and Youth) Study • Results expressed as • Cost per change in HbA1c • Cost per unit of treatment failure • e.g. cost per day of treatment failure avoided • Cost per unit of clinical improvement • e.g. change in weight, BMI, obesity • Cost per quality-adjusted life year (QALY)