Lecture 1: Introduction to Health Economic Evaluation

1. Lecture 1: Introduction to Health Economic Evaluation Yot Teerawattananon, M.D., Ph.D. yot@ihpp.thaigov.net

2. Health economics: how to make decisions based on scarcity of resources 2

3. ท่านเลือกช่วยใคร? 1) เอก 30 ปียาต้านไวรัสช่วยให้มีอายุยืนยาว 20 ปี 100% 2) ชูใจ 40 ปีแม่ของน้องเดชอายุ 5 ปี โรคมะเร็งปากมดลูก ยาใหม่โอกาสรอด เกิน 5 ปี 80% เกิน 10 ปี 10% 3) ปอง 2 ปีโรคหัวใจพิการแต่กำเนิด ผ่าตัดโอกาสรอด 50/50 3

4. John Stuart Mills Utilitarianism • Happiness was the greatest goods • Happiness and unhappiness can be measured in discrete units and calculated mathematically e.g. sum of happiness, subtracting the pain • The goal is the production of maximal happiness, or utility 4

5. Economic evaluation 5

6. What counts as an “economic” evaluation? Often confusion with economic evaluation Clinical studies or trials Source: Drummond et al 2005 6

7. Type of economic evaluation 7

8. To compare therapy A vs. therapy B Cost (A) Outcome (A) Cost (B) Outcome (B) 1 Cost (A) - Cost (B) Outcome (A) - Outcome (B) 2

9. The need for incremental thinking Marginal analysis: requires assessment of relative costs and benefits of each marginal addition or reduction in production/consumption 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 9

10. 10

11. 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 11

12. Key elements & major recommendations Defining the scope of the study and selection of comparator(s) Defining the type of evaluation “comparators”: common practice, the most effective, known cost-effective, the least expensive Cost-utility analysis (Baht/QALY) 12

13. Key elements & major recommendations Measuring of costs Measuring clinical effects Societal perspective and include opportunity cost Using local data Systematic review and meta-analysis of RCT Clinical endpoints, not surrogate outcomes Modelling is allowed 13

14. Key elements & major recommendations Handling time Handling uncertainty Long enough to capture the full costs and effects of the interventions 3% discount rate Mandatory requirement Probabilistic sensitivity analysis 14

15. Numbers of Thai economic evaluation publications, international and domestic, 1982-2005 15

16. Extent to which the published economic evaluations set in Thailand met the standard recommendations for good reporting Teerawattananon et al. A Systematic Review of Economic Evaluation Literature in Thailand: Are the Data Good Enough to be Used by Policy-Makers? Pharmacoeconomics 2007;25(6):467-79. 16

17. Sources of finance for economic evaluation studies in Thailand 17 Teerawattananon et al. A Systematic Review of Economic Evaluation Literature in Thailand: Are the Data Good Enough to be Used by Policy-Makers? Pharmacoeconomics 2007;25(6):467-79.

18. Comparison of the proportion of overall disease burden and the economic evaluation publications in Thailand 18 Teerawattananon et al. A Systematic Review of Economic Evaluation Literature in Thailand: Are the Data Good Enough to be Used by Policy-Makers? Pharmacoeconomics 2007;25(6):467-79.

19. Who Uses Economic Evidence? 26

20. A 2007 survey amongst decision makers on the potential use of economic evaluation in Thailand 27 Chaikledkaew et al. A national survey on human capacity for health technology assessment in Thailand (a draft manuscript for submissionto international journal)

21. How make decisions based on health economic evaluation results? • Technical efficiency • cheapest option CMA • Lowest incremental cost-effectiveness ratio CEA, CUA • Allocative efficiency • cost savings exceed the cost of the interventionCBA • CEA, CUA??

22. CEA, CUA for allocative efficiency • Tubular approach  League tables • 2) Threshold value approach

23. Tubular approach (League tables) • Ideal for maximizing health benefit  selecting programs to be adopted in sequence from the top down until a line where the budget is exhausted • familiar to decision makers & general population

25. Budget 10,000 20,000 15,000 35,000 10,000 15,000 20,000 5,000 10,000 10,000 10,000 10,000 Limited budget = 100,000

26. Disadvantage of league tables • Enormous work of analysis of possible options • Review  methodology differences e.g.perspective used, time-horizon, comparator(s), discount rate, type of cost and outcome estimation • Usually, not taking into account about uncertainty

27. Threshold approach • Originated by Weinstein & Zeckhauser 1973  the need of consistency decisions • determine the maximum price that society is willing to pay for unit of health effects • Level of cost and effects that an interventions must achieve to be acceptable for in a given healthcare system • Threshold may be implicit or explicit

28. PBAC’s threshold Implicit threshold Incremental cost/extra QALY gained Evaluations Source: Towse and Pritchard, 2002

29. Is there a NICE’s threshold? Source: Towse and Pritchard, 2002

30. What’s about Thailand? Cost-effectiveness league table of selected interventions