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Basic Economic Analysis

This guide delves into basic economic analysis in healthcare, focusing on resource use, costs, health benefits, and economic evaluations for decision-making. Learn key concepts, methods, and considerations in conducting economic evaluations alongside clinical trials.

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Basic Economic Analysis

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  1. Basic Economic Analysis David Epstein, Centre for Health Economics, York

  2. Contents • Introduction • Resource use and costs • Health Benefits • Economic analysis • Conclusions

  3. Introduction • What is economics? • Choices under scarcity • In health care, to allocate available resources to maximise health benefits • Why conduct an economic evaluation alongside your clinical trial? • Inform decision making by quantifying expected health benefits and costs and the uncertainty around them

  4. Example : RITA-3 trial • Randomised intervention for treatment of angina • Patients with unstable angina or non-ST-elevation MI • Routine early angiography with myocardial revascularisation as indicated versus a conservative strategy • Nt = 895 ; Nc = 915 ; 5 years

  5. Contents • Introduction • Resource use and costs • Health Benefits • Economic analysis • Conclusions

  6. Resource use • Costs per patient are volume of resource x unit cost of each resource • Which resource use? Identify ‘cost drivers’ • Angiography, revascularisation procedure, days in ward, ITU and CCU • Acute cardiac medication during admission • Long term cardiac medication • GP and other primary care • Hospitalisation for other events • What else? Non-cardiac related? Private costs? days lost from work? (Perspective)

  7. Collecting resource use • Patient specific • Trial case record forms • Patient questionnaires : Postal? Face-to-face interview? • Hospital notes, GP notes • Administration system records • Resource use diaries • Other • Questionnaire completed by trial coordinator at each centre • Collecting resource use on a sample of patients

  8. Unit costs • Try and obtain local costs if possible • Hospital administration / finance dept • NHS reference costs (detail available on CD from Quarry House) • Questionnaire • Expert opinion • National sources • Drugs – BNF and PPA website • Other trial reports, HTA reports and NICE appraisals (adjust for inflation) • PSSRU website • Manufacturers list prices (rarely disclose discounts!)

  9. Contents • Introduction • Resource use and costs • Health Benefits • Economic analysis • Conclusions

  10. Health Benefits • Disease-specific measures versus generic measures versus utility measures • Disease specific (eg blood pressure) easier to collect but do not easily relate to mortality or health-related quality of life • Generic measures may be measured on several dimensions eg SF36 • Utility measures create a single index number scaled between full health (1) and death (0) , and can be worse than death

  11. The EQ-5D Values of sample of 3400 members of the general public

  12. With programme Without programme Expressing Health Benefit in QALYs 1 Health Related Quality of Life (weights) QALYs gained 0 Death 2 Death 1 Health state duration (yrs)

  13. Contents • Introduction • Resource use and costs • Health Benefits • Economic analysis • Conclusions

  14. A - £1500 / QALY costs £6000 £3000 B - £2000 / QALY 2 3 QALY Economic analysis • What not to do… • Don’t use cost minimisation analysis • Costs and health benefits have a joint distribution, so t-tests of health benefits alone are not valid • Don’t use average cost-effectiveness ratio This only compares A with “do nothing” and B with “do nothing”. We want to compare A with B

  15. Economic Evaluation Potential Results + Difference in Costs - + 0 Difference in Benefits - New intervention more costly and less beneficial New intervention more costly and more beneficial New intervention less costly and less beneficial New intervention less costly and more beneficial

  16. Difference in mean costs Decision Rule Economic Analysis • Use incremental cost effectiveness ratio Societal valuation of health outcome < Difference in mean benefits • In previous example ICER = (6000-3000)/(3-2) = £3000 per QALY • Usually compared with other funded treatments, benchmark around £20-£40000 per QALY gained

  17. Intervention arm n=895 60 deaths 0.08 £7593 2.579 Conservative arm n=915 80 deaths 0.06 £6000 2.500 RITA-3 Results at 4 years Mortality Mean HRQol (change) Total costs Total QALYs Incremental cost effectiveness ratio = £1593 / 0.079 = 20170 Results are not yet published, therefore illustrative values given instead

  18. Other considerations • Discount health benefits and costs if>1 year • Do sensitivity analyses : test robustness of conclusions to changes in assumptions made • Is the length of the trial ‘sufficient’ ? Consider extrapolation. • If follow up time is of different lengths between patients (censoring) special analytical techniques are needed

  19. Conclusions • Economics is not about saving money. • It is about trying to do the most good within available resources. • We all make choices, economic evaluation makes those choices explicit.

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