Making Decisions in Health Care: Cost-effectiveness and the Value of Evidence

1. Making Decisions in Health Care: Cost-effectiveness and the Value of Evidence Karl Claxton Centre for Health Economics, Department of Economics and Related Studies, University of York, NICE Appraisals Committee

2. Overview • What decisions need to be made? • Should a technology be adopted? • How uncertain is this decision? • Is more evidence needed? • What can and should NICE do?

3. What are the decisions? • Should a technology be adopted given existing information? • Which clinical strategies are worthwhile? • For which patient groups? • Is current evidence sufficient to support use in NHS? • Do we need more evidence? • What type of evidence is required? • What additional research should be conducted to provide this evidence?

4. What are the decisions? • Should a technology be adopted given existing information? • Which clinical strategies are worthwhile? • For which patient groups? • Is current evidence sufficient to support use in NHS? • Do we need more evidence? • What type of evidence is required? • What additional research should be conducted to provide this evidence?

5. B A Does it improve health? Is it worthwhile? • What is an improvement in health? • Gain in life expectancy • Improvement in quality of life Quality adjusted life years (QALYs) A = 4.2 QALYs B = 7.7 QALYs Health Gain = 3.5 QALYs

6. £20,000 per QALY £40,000 £40,000 per QALY £20,000 1 2 But what about costs? Cost £10,000 per QALY QALYs gained

7. Additional cost QALYs gained £20,000 2 QALYs ICER = = = 2 – £20,000 £20,000 Is it worthwhile? Is it cost-effective? Is the ICER less than the cost-effectiveness threshold? = £10,000 per QALY If the cost-effectiveness threshold is £20,000 per QALY, B is cost-effective Is net benefit positive? Net health benefit = QALYs gained – QALYs lost = 2 – 1 = 1 QALY Net money benefit = £ value of QALYs gained – additional costs = 2 x £20,000 – £20,000 = £20,000 = 1 QALY

8. What do we need? • Estimate QALYs gained and costs • Over time (often patient’s life time) • For each alternative • For each patient group • Relevant evidence? • Clinical evidence of effect • Progression of disease and events • Quality of life • Resource use and costs

9. Model Structure Treatment B Treatment A Clinical effect 1 3 0 3 2 2 4 1 £10,000 £30,000 £20,000 £30,000 £10,000 £40,000 £ 5,000 £15,000 Asymptomatic Asymptomatic Progressive Progressive Random sampling Dead Dead QALY Need to Combine evidence Disease Progression Costs

10. 1 3 2 0 4 1 2 3 £15,000 £ 5,000 £10,000 £10,000 £40,000 £30,000 £20,000 £30,000 Additional cost QALYs gained £20,000 2 QALYs ICER = = = 2 – £20,000 £20,000 Should a technology be adopted? = £10,000 per QALY Is the ICER less than the cost-effectiveness threshold? £10,000 per QALY < £20,000 per QALY, B is cost-effective Is net benefit positive? Net health benefit = QALYs gained – QALYs lost = 2 – 1 = 1 QALY Net money benefit = £ value of QALYs gained – additional costs = 2 x £20,000 – £20,000 = £20,000 = 1 QALY

11. What are the decisions? • Should a technology be adopted given existing information? • Which clinical strategies are cost-effective? • For which patient groups? • Is current evidence sufficient to support use in NHS? • Do we need more evidence? • What type of evidence is required? • What additional research should be conducted to provide this evidence?

12. How uncertain is a decision? What’s the best we can do now? But we are not always right Choose B and expect 13 QALYs Chance that B is the best = 3/5 = 0.6 Chance that A is the best = 2/5 = 0.4 Chance that C is the best = 0/5 = 0 So if we adopt B the probability of error = 0.4

13. How uncertain is the decision? Choose A Choose B B A ICER = £25,000 per QALY C

14. Why does uncertainty matter? What’s the best we can do now? Could we do better? Choose B and expect 13 QALYs If we knew we get 13.6 QALYs Maximum benefit of more evidence is 0.6 QALYs But is it worth it?

15. Cost of research Cost of research Do we need more evidence? Choose A Choose B

16. Do we need more evidence?

17. What type of evidence? Quality of life

18. Is current evidence sufficient? • Summary • Uncertainty matters because we might need more evidence • Value of evidence (information) • How uncertain is the decision? • Consequences of getting the decision wrong • Number of patients who could benefit • Costs of getting more evidence

19. Decisions in a joined up world? • Adopt technologies if we expect them to be cost effective based on existing evidence But only if we simultaneously address question: Is the evidence sufficient? • Demand or commission further research to inform this choice in the future

20. In a fragmented world? • Sponsored research? • No powers to demand research (or disclosure or access to ipd) • A remit for ‘coverage with evidence’? • Could it be enforced? • Publicly funded research? • Separation of the remit for adoption and research commissioning • NICE can’t control research prioritising and commissioning • Some limited influence • Prioritising and commissioning not consistent with adoption decisions

21. What can NICE do? • Separation of adoption and research decisions • Adoption decisions without accountability for impact on future research • Research decisions without accountability for relevance to adoption decisions • Dangers • Adoption decisions undermine evidence base for practice • Incentives and ethics • Commissioned research does not inform decisions • Adoption becomes the only policy instrument

22. Account for the cost of uncertainty What we loose if we reject a technology What we loose if we accept technology

23. Clear signals and incentives Provide more evidence!

24. Clear signals and incentives Reduce price (but don’t tell)

25. Why only in research? • Clear signals • No because it is not a cost-effective use of resources • No because there is currently insufficient evidence to justify NHS use • Spell out the key evidence needed (not the research) • Clear incentives • If and when additional evidence is made available then considered for early review • Incentives to sponsors (evidence and price) • Incentives for others stakeholders to lobby for publicly funded research • Clear signals to research commissioners

26. What should NICE do? • Appraisal process • Already generates much of the analysis and information • Explicit consideration of which uncertainties are most important • Clear consideration of the evidence (not the research) needed • STA makes this the most pressing issue • Issuing guidance when evidence base is least mature • Piecemeal nature of STA guidance

27. Dangers and opportunities? • Real danger • Potential damage to evidence base for current and future NHS practice • Costs to the NHS of changing guidance • Real opportunity • Address evidence needs of the NHS • Provide clear signals and incentives