Assessing cost-effectiveness – what is an ICER?- Incremental analysis

1. Assessing cost-effectiveness – what is an ICER?- Incremental analysis Usa Chaikledkaew, Ph.D.

2. Outline • How to conduct health economic evaluation results? • What is an Incremental cost-effectiveness ratio (ICER)?

3. Costs Outcomes $ What is health economic evaluation? LYGs QALYs$ Source: Drummond et al, 2005 Refers to a study that considers both the comparative costs associated with two or more health care interventions, and the comparative clinical effects, measured either in clinical units, health preferences, or monetary benefit

4. What Counts As An Economic Evaluation? Source: Drummond et al, 2005

5. Economic Evaluation Methods

6. Incremental cost-effectiveness ratio (ICER) • (cost of treatment A) – (cost of treatment B) • (clinical success treatment A) – (clinical success treatment B) • Or (cost of treatment A) – (cost of treatment B) • (LYG A – LYG B) • Or (cost of treatment A) – (cost of treatment B) • (QALY A – QALY B) 6 • The cost that on average needs to be sustained to obtain “an additional success”

7. Cost-effectiveness threshold or WTP • Source: (1) Devlin, N. andParkin, D. Health Economics, 2004; 13: 437-452. • (2) Towse, A., Devlin, N., Pritchard, C (eds) (2002) Costeffectivenessthresholds: economicandethicalissues.London: Office for Health Economics/King's Fund. • (3) Thavorncharoensap et al. Assessing a societal value for a ceiling threshold in Thailand. 2013. Health Intervention and Technology Assessment Program (HITAP), Ministry of Public health, Nonthaburi, Thailand. UK: < £30,000perQALYgained USA: < $50,000per QALY gained Countries in the World: < 3 x GDP per DALY averted Thailand: < 1.2 GNI per capita per QALY gained (160,000 THB)

8. How to conduct health economic evaluation results? 8

9. PE/HEE Study Designs 9 • Prospective: alongside clinical trial • Model based Combining different sources e.g. a model, based on input from clinical trials, retrospective data, expert opinion. 1.1 Decision trees 1.2 Markov models

10. How to conductHEE results? Define the problem Identify the alternative interventions Identify and measure cost and outcomes Value costs and effectiveness Interpret and present results

11. Example Source: Thavorn et al. Tobacco Control 2008;17:177–182. doi:10.1136/tc.2007.022368

12. Definetheproblem • Perceptionoftheproblem • Specificintervention • Specific strategy • Specificdrug • Specific surgicalprocedure

13. Definetheproblem • Selectionofobjectives • A decisionmustbemadeabouthowcost-effectivenesswillbeevaluated.

14. Define theproblem • Perspective • Patient • Provider • Third Party Payer • Healthy System • Public/Government • Societal

15. P.15

16. Identify the alternative interventions 16

17. Choice of comparator(s) • An intervention should be compared to the comparator (s) which is most likely to be replaced by the intervention in real practice • Current practice may be : • The most effective clinical practice • The most used practice • May not always reflect the appropriate care that is recommended according to evidence-based medicine • Minimum clinical practice • A practice which has the lowest cost and is more effective than a placebo. • “doing nothing” or no treatment 17

18. Identify the costs • Sources of cost data • Hospital (charges, unit cost) • Ministry of Public Health website • DRG • Reimbursement list • Standard costing menu 18

19. Example of cost estimates 19

20. Identify the outcomes

21. Quality Adjusted Life Years (QALYs) 21 • Integrate mortality, morbidity, and preferences into a comprehensive index number • Related to outcomes • Life duration • Quality of life • Allows comparisons of the cost-effectiveness results with other medical interventions

22. Quality-Adjusted Life Years (QALYs) QALYs = number of years lived x utility* Quality weight that represents HRQOL Quantity or life 22 • Patient 1: • Utility = 0.9 • Number of years = 10 • QALYs = 0.9 x 10 = 9 QALY • Patient 2: • Utility = 0.5 • Number of years = 10 • QALYs = 0.5 x 10 = 5 QALYs * Utility can be ranged from 0 (worst health state) to 1 (best health state/healthy)

23. Valuing costs and outcomes • Model based • Decision tree model • Markov model • Discounting to present value if its been more than one year • Uncertainty analysis

24. What is an Incremental cost-effectiveness ratio (ICER)? 24

25. Interpretation and presentation of results 25 • (cost of treatment A) – (cost of treatment B) • (clinical success treatment A) – (clinical success treatment B) • Or (cost of treatment A) – (cost of treatment B) • (LYG A – LYG B) • Or (cost of treatment A) – (cost of treatment B) • (QALY A – QALY B) 25 Incremental cost-effectiveness ratio (ICER) The cost that on average needs to be sustained to obtain “an additional success”

26. The need for incremental thinking • Marginal analysis: requires assessment of relative costs and benefits of each marginal addition or reduction in production or consumption 26

27. Source: 1975 article from Neuhauser and Levicky: “what do we gain from the sixth stool-guaic” (N Engl J Med) on stool tests do detect colonic cancer 27

28. Interpretation and presentation of results 28 • (cost of CPSC) – (cost of treatment of Usual Care) • (Life Years of CPSC) – (Life Years of Usual Care) 28 Incremental cost-effectiveness ratio (ICER) The cost that on average needs to be sustained to obtain “one Life Year gained”

29. ICER of CPSC compared to Usual Care by Age and Sex *Negative ICER due to higher effectiveness and lower costs of CPSC compared with Usual Care 29

30. D A C • Cost-effectiveness plane more costly B Intervention is more effective and more costly Intervention is less effective and more costly decrease in health effects increase in health effects Intervention is more effective and less costly Intervention is less effective and less costly less costly 30

31. Conclusions

32. Cost-effectiveness league table of selected interventions in Thailand

33. Thank you, Any question? usa.c@hitap.net