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Session 7: Defining & Assessing Benefits for Economic Evaluation

Session 7: Defining & Assessing Benefits for Economic Evaluation. 1. Why, what and how of benefits. 2. Benefit assessment for CEA. 3. Benefit assessment for CUA. 4. Practical exercise in estimating benefits for CUA. Why Measure Benefits?. Efficiency Maximise benefits for given resources.

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Session 7: Defining & Assessing Benefits for Economic Evaluation

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  1. Session 7: Defining & Assessing Benefits for Economic Evaluation 1. Why, what and how of benefits. 2. Benefit assessment for CEA. 3. Benefit assessment for CUA. 4. Practical exercise in estimating benefits for CUA. HEA PTP: M212 Economic Evaluation 1

  2. Why Measure Benefits? Efficiency Maximise benefits for given resources HEA PTP: M212 Economic Evaluation 2

  3. Key Features of Economic Evaluation Economic evaluation is “The comparative analysis of alternative courses of action in terms of both their costs and consequences in order to assist policy decisions”. 1. Costs and consequences - efficiency! 2. Comparative - relative efficiency HEA PTP: M212 Economic Evaluation 3

  4. Intervention Direct Benefits Indirect Benefits Reduced health services resource use eg. LoS. Improved patient health status / utility. Savings in productivity. Family and friends quality of life. Benefit Categories HEA PTP: M212 Economic Evaluation 4

  5. Should Changes in Productivity be Included? • May depend upon viewpoint (govt., societal, NHS) • Main issues are level of ‘true’ loss and comparability • Measurement of value of loss (gross wage, friction cost) • Double-counting, especially with CUA/CBA • Comparability with ‘health’ focus (viewpoint again) • Comparability with other studies (applies to other variables also) • Solution? • Provide a good reason why they should be measured/included • Report separately from other results • Differentiate measurement and valuation HEA PTP: M212 Economic Evaluation 5

  6. Should Benefits be Discounted? • Why not discount? • Health, unlike resources, cannot be traded over time • Inter-generational equity (cf environmental economics) • If are discounted, may be different rate to cost • Why discount? • Inconsistent treatment costs and benefits • Inconsistent policy, especially in comparison with other sectors • Counter-intuitive conclusions for investment. eg always postpone! • Individuals do trade health over time ((dis)invest in health) HEA PTP: M212 Economic Evaluation 6

  7. Negative And Positive Benefits (and Costs!) C/E ratio = net cost/net benefits Net cost = positive cost + negative cost Net benefit = positive benefit + negative benefit Negative cost = cost saving, eg reduced LoS Negative benefit = reduced health, eg adverse event HEA PTP: M212 Economic Evaluation 7

  8. Types of Economic Evaluation Type of Analysis Costs Consequences Result Dollars Cost Minimisation Identical in all respects. Least cost alternative. Cost Effectiveness Dollars Different magnitude of a common measure eg., LY’s gained, blood pressure reduction. Cost per unit of consequence eg. cost per LY gained. Cost Utility Dollars Single or multiple effects not necessarily common. Valued as “utility” eg. QALY Cost per unit of consequence eg. cost per QALY. Cost Benefit Dollars As for CUA but valued in money. eg willingness-to-pay Net $ cost: benefit ratio. HEA PTP: M212 Economic Evaluation 8

  9. How Can Health Be Measured? • Length of life • Mortality (numbers, rates, SMRs) • Life expectancy • Life years lost • Quality of life • Numerous QoL measures (generic and specific) • SF-36, Nottingham Health Profile, Guttman Scale, Rotterdam Symptom Checklist, Hospital Anxiety and Depression scale etc…. HEA PTP: M212 Economic Evaluation 9

  10. 1. Identification: 2. Measurement: 3. Valuation: Mortality. Quality of life. Measure in natural physical units (eg. number of deaths averted). Value benefits if appropriate ie. if performing CUA or CBA. Process of Benefit Assessment HEA PTP: M212 Economic Evaluation 10

  11. Issues in Assessing Benefits for CEA 1. Efficacy vs effectiveness vs efficiency. 2. Intermediate versus final outcome. 3. Sources of data for CEA. HEA PTP: M212 Economic Evaluation 11

  12. Efficacy Vs Effectiveness Vs Efficiency Efficacy = measure of effect under ideal conditions. Effectiveness = effect under ‘real life’ conditions. Efficacy does not imply effectiveness Efficiency = relationship between costs & benefits. Effectiveness does not imply efficiency HEA PTP: M212 Economic Evaluation 12

  13. Intermediate Vs Final Outcome Measures Final = change in health (status) resulting from the programme. Intermediate = change in clinicalindicator resulting from the programme. Need to establish causal link between intermediate and final outcome measure. HEA PTP: M212 Economic Evaluation 13

  14. Examples of Intermediate Vs Final Outcomes Indicators (PBAC (PBS) Oz) Condition being Final outcome Surrogate Outcome Indicators treated indicator Coronary thrombosis Quality-adjusted Number surviving Number with specified Number achieving coronary (thrombolysis survival level of left ventricular re-perfusion function Stable angina Quality-adjusted Number with Number who can walk Number with adequate (various interventions) survival acceptable a specified distance relief of pain quality of life Asthma Quality-adjusted Number surviving Number with adequate Number achieving a target (various drugs) survival control of bronchial level of airways functions hyperreactivity Depression Quality-adjusted Number avoiding Quality of life (may be Number achieving a target (various drugs) survival suicide improved by drugs) Hamilton or Montgomery- Asberg Depression Rating Scale Hypertension Quality-adjusted Number avoiding Quality of life (may be Number achieving a target (various drugs) survival a stroke worsened by drugs) blood pressure HEA PTP: M212 Economic Evaluation 14

  15. Sources of Effectiveness Data 1. Clinical trials, eg RCT’s. 2. Epidemiological studies, eg cohort studies. 3. Synthesis methods, eg meta-analyses. 4. Use of modelling. HEA PTP: M212 Economic Evaluation 15

  16. Randomised Controlled Trials ‘Gold standard’ - minimal bias and confounding. Disadvantages: 1. Often establishes efficacy, not effectiveness. 2. Selective subjects used. 3. Limited opportunity to conduct. 4. Limited time horizon. 5. Costly to conduct. 6. Often unethical and/or unfeasible. HEA PTP: M212 Economic Evaluation 16

  17. Epidemiological Studies Real life setting - establish effectiveness Disadvantages: 1. Potential for significant bias and confounding. 2. Causal link can be weak. HEA PTP: M212 Economic Evaluation 17

  18. CEA result = CEI (c/e). eg cost per LY gained Decision rule = adopt lowest CEI Application = technical efficiency Qst addressed = “Should we undertake program “X” or program “Y” to treat condition “A”? Decision Rules: CEA HEA PTP: M212 Economic Evaluation 18

  19. Limitations of Measurements/Need for Valuation • Ambiguity in assessing overall improvement or detriment in health • Allocative efficiency - value of benefits > (opportunity) cost HEA PTP: M212 Economic Evaluation 19

  20. Valuation Versus Measurement • Value is determined by benefits sacrificed elsewhere (weighted preference) • Valuation requires a trade-off between benefits - measurement does not HEA PTP: M212 Economic Evaluation 20

  21. Methods of Valuing Health • ‘Utility’ or ‘preference’ assessment • Quality-Adjusted Life Years (QALYs) • Variants on QALY - Years of Health Life (YHL), Health-Adjusted Person Years (HAPY), Health-Adjusted Life expectancy (HALE) • Healthy-Year Equivalents (HYEs) (based on ‘sequence’ of SG) • Saved-young-life equivalent (SAVE) (based on PTO) • Monetary terms eg WTP • Willingness-to-pay (WTP) • Human Capital HEA PTP: M212 Economic Evaluation 21

  22. Quality Adjusted Life Years(QALYs) Adjusts data on quantity of life years saved to reflect a valuation of the quality of those years If healthy: QALY = 1 If unhealthy: QALY < 1 HEA PTP: M212 Economic Evaluation 22

  23. QL Weighting 0 5 10 15 No Life Years = 15 No QALYs = 11 Qol Profile HEA PTP: M212 Economic Evaluation 23

  24. QALY Procedure • Identify possible health states - cover all important and relevant dimensions of QoL • Derive ‘weights’ for each state • Multiply life years (spent in each state) by ‘weight’ for that state HEA PTP: M212 Economic Evaluation 24

  25. “Utility” Weight Utility = satisfaction/well-being - reflects a consumers (weighted) preferences Utility weights are necessarily subjective - they elicit an individual’s preferences for, or value of, one or more health states. Must: 1. Have interval properties 2. Be ‘anchored’ at death and ‘good health’ HEA PTP: M212 Economic Evaluation 25

  26. Techniques For Measuring “Utility” Variety of techniques available, including: • Time Trade off • Person Trade Off • Standard Gamble • Rating Scale HEA PTP: M212 Economic Evaluation 26

  27. Obtaining “Utility” Weights Two means of obtaining “utility” weights: 1. Evaluation specific/’holistic’ measures - develop evaluation specific (‘holistic’) description of health state and then derive weight for that specific state directly by population survey 2. Use ‘generic’ or ‘multi-attribute’ instruments - use predetermined weights, based on combination of dimensions of health yielding a finite number of health states/values HEA PTP: M212 Economic Evaluation 27

  28. Evaluation Specific/‘holistic’ Measure Advantages: 1. Sensitive 2. Account for wider QoL (eg process, duration, prognosis) Disadvantages 1. Cost and time intensive 2. Lack of comparability HEA PTP: M212 Economic Evaluation 28

  29. Generic (MAU) Instruments Advantages: 1. Supply weights “off the shelf” 2. Comparability Disadvantages: 1. Insensitive to small changes in health 2. Dimensions may not be sufficiently comprehensive 3. Weights may not be transferable across groups HEA PTP: M212 Economic Evaluation 29

  30. Some Other Issues • Choosing respondents for utility estimation - whose values count? • What constitutes a ‘correct’ health state description? • What is the appropriate ‘measurement’ technique? • Aggregation of values? • Biases - ageist, life enhancing versus life-saving etc. HEA PTP: M212 Economic Evaluation 30

  31. CUA result = CEI (c/e). eg cost per QALY gained Decision rule = adopt lowest CEI Application = 1. technical efficiency 2. possibly allocative efficiency within health care sector Qst addressed = 1. Should we undertake program “X” or “Y” to treat condition “Z”? 2. Should we treat condition “A” or “B”? Decision Rules: CUA HEA PTP: M212 Economic Evaluation 31

  32. 1. Perspective - Health Care Sector - Purchaser/Provider - Societal 2. Comparator 3. Budget constraint/indivisibility 4. NPV vs BCI 5. Limited nature of economic evaluation Decision Rules: Issues HEA PTP: M212 Economic Evaluation 32

  33. CUA and Rationing • Market system - price mechanism establishes equilibrium (efficient allocation) • Non-market system - absence of price as allocative tool leads to other, non-price, techniques • Issue is one of: (i) philosophical basis for rationing; and (ii) applied technique for rationing HEA PTP: M212 Economic Evaluation 33

  34. Methods of Explicit Rationing (Coast et al, Priority setting: the health care debate, John Wiley, 1996) HEA PTP: M212 Economic Evaluation 34

  35. Explicit Rationing: Technical Methods • Single principle • Little distinction between setting priorities at different levels • Examples • maximising health gain • need-based rationing • lotteries • age-based rationing HEA PTP: M212 Economic Evaluation 35

  36. Technical Method: ‘QALY League Tables’ • Economic evaluation produces information on cost-effectiveness • If using comparable outcomes (eg QALY) can ‘rank’ according to c/e • Can use resultant ‘league table’ to allocate resource to most c/e first HEA PTP: M212 Economic Evaluation 36

  37. League Tables: Handle With Care! • Studies show differences in methodology • choice of discount rate • method of estimating utility values • range of costs included • choice of comparator • Requires consistent methodology, ‘admission criteria’ for inclusion, applicability in local decision context HEA PTP: M212 Economic Evaluation 37

  38. The Oregon Plan • 1987 - decision to stop funding for organ transplantation • 1989 - Oregon Health Services Commission begins work • 1990 - List 1 • 1991 - List 2 • 1994 - plan begins HEA PTP: M212 Economic Evaluation 38

  39. Oregon List Version 1 • Efficiency principle • 1600 condition/treatment pairs • Cost/QALY gained • social values • outcome • cost HEA PTP: M212 Economic Evaluation 39

  40. Oregon List Version 1 “... looked at the first two pages of that list and threw it in the trash can” “... the presence of numerous flaws, aberrations and errors” (Harvey Klevit, member, Oregon Health Services Commission) HEA PTP: M212 Economic Evaluation 40

  41. Oregon List Version 2 • Equal treatment for equal need • 709 condition/treatment pairs • Method: • Development & ranking of categories • Ranking C/T pairs within categories • Public preferences • Outcome • Professional judgement HEA PTP: M212 Economic Evaluation 41

  42. Top Five C/T pairs 1 Pneumonia - medical 2 Tuberculosis - medical 3 Peritonitis - medical/surgical 4 Foreign body - removal 5 Appendicitis - surgical Bottom Five C/T pairs 705 Aplastic anaemia - medical 706 Prolapsed urethral mucosa - surgical 707 Central retinal artery occlusion - paracentesis of aqueous 708 Extremely low birth weight, < 23 weeks - life support 709 Anencephaly - life support Oregon List Version 2 HEA PTP: M212 Economic Evaluation 42

  43. Summary 1. Benefits must be assessed to establish efficiency. 2. Breadth and depth of benefits measured (& valued) varies across type of economic evaluation. 3. Difference between valuation and measurement. 4. Debate on role of CUA (& CEA) in allocative efficiency 5. Beware ‘league tables’! HEA PTP: M212 Economic Evaluation 43

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