Introduction to Economic Evaluation in Health Care

1. Introduction to Economic Evaluation in Health Care Gabrielle van der Velde, DC, PhD Scientist Toronto Health Economics & Technology Assessment (THETA) Collaborative Assistant Professor Leslie Dan Faculty of Pharmacy, University of Toronto

2. Workshop Objectives To introduce concepts and terms associated with economic evaluations. To explain the statistics used to determine cost-effectiveness. To review and critically assess a published cost-effectiveness analysis of CAM treatment.

3. 1. Concepts and terms

4. 1. Concepts and terms Why do we need economic evaluation in health care?

5. 1. Concepts and terms Why do we need economic evaluation in health care? • Constrained budgets • Resource scarcity • Resource allocation decisions

6. 1. Concepts and terms A (full) economic evaluation is a: - comparison of alternative options in terms of their costs and consequences.

7. 1. Concepts and terms A (full) economic evaluation is a: - comparison of alternative options in terms of their costs and consequences. - joint assessment of costs and health consequences (effects, outcomes) of any type of health technology.

8. 1. Concepts and terms Economic evaluation is: - The comparative analysis of alternative courses of action in terms of both their costs and consequences.

9. 1. Concepts and terms Aspects of study design: - Types of economic evaluations - Perspective - Time horizon - Health technologies (e.g., treatment) - Measurement of costs - Measurement of health outcomes - Willingness-to-pay (cost-effectiveness threshold)

10. 1. Concepts and terms Types of (full) economic evaluations: • Cost-effectiveness analysis Effectiveness measures • Cost-utility analysis Quality-adjusted life expectancy • Cost-benefit analysis Monetary units

11. 1. Concepts and terms Types of economic evaluations: Economic evaluations alongside RCTs Economic modeling studies

12. 1. Concepts and terms Perspectives: • Societal • Patient • Payer

13. 1. Concepts and terms Time horizon: • Valid time horizon = appropriate length of follow-up.

14. 1. Concepts and terms Health technology* Costs Health outcomes (consequences, effects) Note: health technology assessment (HTA)

15. 1. Concepts and terms Examples of health outcomes (effects): Cost per additional disability day averted Cost per additional life year gained Cost per additional infection avoided Cost per additional DVT case detected Cost per addtional quality-adjusted life year (QALY)

16. 1. Concepts and terms *Willingness-to-pay (WTP) threshold or cost-effectiveness threshold The quality-adjusted life year (QALY) is a measure of effectiveness that: • Allows direct comparison of therapies across a number of domains, • Allows comparison across therapeutic areas and illnesses, and • is generally understood how much a payer is willing to pay for a unit of health effect*.

17. 1. Concepts and terms A quality-of-life weight is based on a patient preference score (e.g., EQ-5D, SF-6D, HUI 2/3. etc) A preference score represents the desirability of a health outcome or state. 0.00 0.65 1.00 Heart Failure Death Good Health

18. 1. Concepts and terms Willingness-to-pay (WTP) is: - the amount a payer is willing to pay for an additional unit of health measure. • a.k.a. cost-effectiveness threshold.

19. 2. Statistics

20. 2. Statistics Descriptive statistics by group: • Participant characteristics (Table 1) • Health resources consumed (including quantities and unit prices) • Mean cost per subject • Mean health effect per subject

21. 2. Statistics Incremental Cost-Effectiveness Ratio ICER = ∆C / ∆E ICERs represent the additional cost per additional health effect gained. e.g., additional cost per additional QALY gained. e.g., additional cost per additional disability day averted.

22. 3. Statistics ICERs: Plotted on a cost-effectiveness (C/E) plane. Uncertainty represented by 5%, 50%, 95% confidence ellipses.

23. C/E plane

24. ICER (with confidence ellipses)

25. Sensitivity analyses Examples: - Include ‘productivity changes’ - Use different quality-of-life weights (e.g., SF-6D vs. EQ-5D) - Probabilistic sensitivity analyses (e.g., Cost-effectiveness Acceptability Curves [CEACs])

26. C/E Acceptability Curve 10 20 30 40 50 Willingness-to-pay (thousands)

27. 3. Critical assessment • Critical appraisal (study quality) checklists: • BMJ (Drummond) criteria list • Phillips criteria list (for economic modeling studies) • Etc......

28. Contact informatin: Dr. Gabrielle van der Velde, DC, PhD Toronto Health Economics & Technology Assessment (THETA) Collaborative gabrielle.vandervelde@theta.utoronto.ca

29. Net-benefit Regression Analysis Statistic: Incremental Net Benefit = (∆E x λ) - ∆C Computes net benefit of a health effect in dollars, by valuing additional health effect (∆E) in dollars, then subtracting associated additional cost (∆C). If INB > 0 (i.e., ∆E x λ > ∆C), decision maker values extra effect more than extra cost. If INB < 0, extra benefit not considered to be worth extra cost

30. Net-benefit Regression Analysis Concept of ‘willingness-to-pay’: An intervention that is cost-effective is defined as ICER < λ, where λ (threshold value) = maximum decision maker willing to pay for an extra unit of health effect.

31. Net-benefit Regression Analysis INB: Will measure the incremental C/E of ‘Education and Activation’, and ‘Soft Tissue Injury Care Model’, compared to ‘Pre-approved Framework’, against various threshold values λ (where λ described as society’s maximum willingness-to-pay for an additional health effect gained).