1. EHC Workshop on Economics and HTA’s for EU Member Organisations
Basic economic concepts Health economics, cost-effectiveness and QALYs
EHC Workshop on Economics and HTA’s for EU Member Organisations
September 20th, 2014
Keith Tolley
Director
Tolley Health Economics Ltd

2. The purpose of the presentation
Provide an understanding of key concepts and language of health economics and cost-effectiveness
Focus on Quality Adjusted Life Years (QALYs)
Set up for session on payer perspective in the afternoon.

3. Climate change in haemophilia
Previously little
Funding restriction
But growth in use and cost of factor VIII (prophylaxis)
New expensive recombinant products
Payers concern to control costs

4. Growth in Health Technology Assessment around the globe
Organisations assessing clinical and cost- effectiveness of new medicines
They use the tools of health economics
To aid decisions about drug and health technology reimbursement and funding

5. HTA bodies in Europe Univ of Tartu VSMTA VASPVT MoH MoH AAZ
FinOHTA
NOKC
TVL,
SBU
SMC
Univ of Tartu
VSMTA
DACEHTA
NCPE
VASPVT
AWMSG
NICE
CVZ/NVTAG
AHTAPol
DAHTA/
IQWiG
KCE
MoH
HAS
LBI of HTA
SNHTA, MTU- SFOPH
HunHTA
MoH
AAZ
AET + AETSA,
AVALIA, CAHTA,
OSTEBA, UETS
AIFA + regional HTA
MoH
ANHTA
Lots of sun, but not so much HTA

6. Developing HTA in Europe
Well established in countries such as Sweden, UK, Netherlands, Germany, Belgium
Using cost-effectiveness criteria in all countries for pharmaceutical reimbursement decisions (including Italy and France recently)
With some exceptions (Germany) the main outcome measure being used in assessments of cost-effectiveness is the QALY – “Quality Adjusted Life Years”
HTA and the use of cost-effectiveness criteria has emerged in CEE countries in last 5-10 years (e.g. Poland, Estonia, Croatia, Romania, Bulgaria, Czech Republic)

7. Health Economics principles
Scarcity of resources: resource allocation decisions in a population
Value of resources used (costs/savings) and benefits of treatments (e.g. survival and quality of life)
Efficiency: choosing treatments with the greatest net value for the population
Equity: choosing treatments due to fairness criteria as well as efficiency

8. Health economic evaluation concepts
Health economic evaluation is the tool of health economics concerned with assessing value, efficiency and equity in use of resources on health care interventions and technologies.
Key principles/terms you will learn about today:
Different types of health economic evaluation
Perspective and types of cost
QALYs and the concept of utility
Incremental cost-effectiveness ratio (ICER)
Utility (for QALY) measurement – time trade-off, standard gamble, EQ 5D

9. Comparing the Main Methods of Economic Evaluation
Type of Analysis
Result
Measurement of
Consequences
Costs
Cost Benefit
Cost Minimisation
Cost Utility
Money
Same outcomes for all interventions
Quality Adjusted Life Years (QALYs)
Cost per life year.
Cost per QALY
Cost
Benefits valued in money.
Net £
cost: benefit ratio.
Single unit of outcome e.g. life years, blood pressure
Cost Effectiveness

10. Identification of resources & costs
Intervention
Direct cost
Indirect cost
Wider cost implications to society e.g. lost production/wages
Non-health services resource use.
eg. patient transportation, informal caregiving
Health services resource use.
e.g. inpatient, outpatient, tests, drugs, overhead costs 93

11. Perspective The perspective determines the types of costs included
A health care perspective would only include direct medical costs
Currently preferred by UK HTA bodies, but likely to change (to some extent) to a broader perspective)
A society perspective would also cover non-direct health-related and indirect costs
Currently preferred basis in Sweden

12. Cost-effectiveness and cost utility analysis (CEA and CUA)
The tool for assessing value, efficiency (vs equity)
Health economic principle is to maximise the population health benefit with the resources available
Expressed as cost per unit of benefit for a new treatment B over current treatment A e.g:
Incremental cost per bleed avoided by primary prophylaxis over on-demand treatment (‘cost-effectiveness’ analysis)
Incremental cost per QALY gained (‘cost-utility’ analysis)
QALY = life years multiplied by quality of life (utility) score on 0-1 scale (the HTA favourite and sometimes enemy !)

13. Incremental CE ratio (ICER)*
[Cost (B) - Cost (A)] i.e Difference in Cost
[Effect (B) - Effect (A)] Difference in Effect
It reveals the additional cost per unit of benefit of switching from one treatment option (current practice) to another or new treatment option, i.e. from A to B
*Sometimes known as the incremental cost-utility ratio (ICUR)

14. Cost-effective footballers?:
€330k (£275k) weekly salary
Annual salary of €17,160,000
60 goals in 50 games
€286k per goal :
€288k (£240k) weekly salary
Annual salary of €14,976,000
55 goals in 55 games
€272k per goal
Incremental annual cost per extra goal by Messi = €437k
Goal per game adjusted: = €218k

15. Quality Adjusted Life Years

16. Calculating pre and post treatment cost per QALY figures
Without treatment (A)
Estimated survival
= 20 years
Estimated utility = 0.5
QALY = (20 x 0.5) = 10
Cost = €4,000
With treatment (B)
Estimated survival
= 20 years
Estimated utility = 0.6
QALYs = (20 x 0.6) = 12
Cost = €36,000
ICER = €36,000- €4,000/12-10 QALYs
= €32,000/2 QALYs
= €16,000/QALY gained

17. QALYs Whereas clinical outcomes only allow comparisons within diseases
e.g. Cost per bleed avoided for different haemophilia treatments
QALYs allow comparisons across disease areas
e.g. cost per QALY for haemophilia treatments vs cost per QALY for cancer treatments v cost per QALY for migraine treatments

18. Cost/QALY league tables
Treatment Cost/QALY
Stop smoking advice €
Hip replacement € 1,180
CABG € 2,090
Kidney transplant € 4,710
Haemophlia prophylaxis €41,000
Bevacizumab (col. cancer) €62,857

19. UK Benchmark for decisions: incremental cost per QALY gained
A = <£20,000 per
QALY gained:
Considered an
efficient use of
resources
B = >£30,000 per
QALY gained
Would need special
circumstances to
accept
Probability of rejection on grounds of cost ineffectiveness
Increasing cost/QALY (log scale)
Source: Rawlins and Culyer, BMJ 2005;329:

20. How does disease affect patients’ health related quality of life?
General Health Perceptions
Psychological Distress/Well being
Disease
Physical Functioning
Social/Role Functioning
Essentially, when we talk about HRQoL we are appreciating that there is more to disease than clinical signs and symptoms. If you ask a patient about asthma, they do not talk about inflammation in the lungs and bronchoconstriction, they talk about not being able to run for a bus, being bothered by pollen which means they stay indoors to avoid
Personal Functioning
Adapted from
Ware, 1984

21. QALYs...
The ‘Quality adjusted Life Year’ (QALY)
Survival (e.g. 10 years)
Health related QoL (Utility 0-1)
QALY = survival weighted by utility (10 life years x 0.5 = 5 QALYs)
To derive a utility need a health state and a valuation of that health state

22. Utility
The utility weight (typically on a 0-1 scale ) reflects the preference (or value) people have for different health states
HRQoL or Utility = preference or value
The more preferable a health state the more utility associated with it (i.e. health state with a value = is preferred to a health state with a value = 0.125).

23. Example of health states on the 0-1 utility scale
PERFECT HEALTH
0.9
Normal health
0.8
Headache once a week
0.7
Migraine once a week
0.6
3 migraines per week
0.5
Daily migraines
0.4
Regular severe migraines
0.3
Regular severe migraines and other pain
0.2
Regular pain (including severe migraines)
0.1
Constant migraines and pain
DEATH
Using migraine/pain as an example
Utility scales are typically bounded by 0 (death) and 1 (perfect health)

24. How is a ‘utility measured’?
Time Trade-off
Standard gamble
Visual analogue scale
Generic questionnaire – e.g. EQ 5D, SF 6D

25. Time trade-off (TTO) - valuation
Ask respondent:
How much time in perfect health would you give up to avoid a longer time with the health state - haemophilia patient with 5 bleeds per 3 months
For example, accepting 6 years in perfect health followed by death instead of 10 years with the health state gives the utility of 0.6 (6 divided by 10)

26. Direct measurement using Time Trade-off
Applying TTO
Step 1:
Full health state description typically required
Step 2: Completing the TTO exercise
Direct measurement using Time Trade-off
How many years in perfect health followed by death would you accept?
Years Years
Versus
10 years in Health State A
Response:
= 6 years

27. Standard Gamble (SG) - valuation
Ask respondent would you:
Accept a gamble which gives perfect health (e.g. 10 yrs) or death Or
Choose a health state for 10 yrs – general health state with mobility etc problems, or haemophilia with 5 bleeds per 3 months
If accept gamble at odds of 60% chance of perfect health, the utility of the health state is 0.6

28. Visual analogue scale (VAS)-valuation
Ask respondent to:
Place a cross on a scale marked (0 being death and 100 perfect health) for the state - haemophilia patient with 5 bleeds per 3 months
If the cross is placed at 60, (then rescaled 0-1) the utility is 0.6.

29. Applying the VAS Step 2: Completing the VAS Step 1:
Full health state description typically required
Step 2: Completing the VAS
Visual Analogue Scale
100 Perfect Health 75 50 25
Death
Response = 30 on VAS – equates to a utility of 0.3
Health State A

30. Example health state in haemophilia
Few published examples - Naraine et al (Canada)
Health Related quality of life for severe haemophilia: used standard gamble technique.
Conducted in 30 healthy adults, 30 parents of children with haemophilia, and 28 adults with haemophilia.
Seven scenarios/health states for on-demand or prophylaxis, low, medium or high dose, level of bleeding frequency and infection risk were valued.

31. An illustration of a health state description
Scenario 1: Baseline on demand-therapy: low to moderate joint bleeding frequency (<3 in 3 months)
Your son was diagnosed with severe haemophilia shortly after birth.
He bleeds frequently and easily into muscles and joints, especially after a bang or fall and requires one or two infusions of FVIII.
Infusion means a needle is inserted into his vein. The needle is connected to a syringe containing the FVIII. You have to wait until all the FVIII is in the vein (15–20 min). He may need to go to the hospital for an infusion, if you’re not on homecare treatment.
With minor bleeding events, he has moderate pain that prevents a few activities.
Generally, he is able to walk around without difficulty or walking equipment.
He avoids activities and bodily contact sports that may result in a bleed.
A few times a year, he has a serious bleed into a joint and he experiences severe pain that prevents most activities for a few days.
He misses a week or more of school
After the joint has healed, he is able to walk around without difficulty

32. Utility valuation survey - Respondents
Can be patients, patient carers, members of public
If public complete the exercise, said to represent community based or society values for the health states

33. Generic utility questionnaires
Broad description of quality of life
Use direct measurement techniques (TTO/SG) to value general health states
Questionnaire then applied to find which health state a patient is in
Most popular questionnaires are:
EQ-5D (EuroQoL)
SF-36 (SF6D)
Health Utilities Index (HUI)

34. EQ 5D utility questionnaire
100 = best assessment
Mobility
Self-care
Usual activities
100 mm Visual analogue scale
Pain/ discomfort
Anxiety/ depression
0 = worst assessment

35. Applying the EQ 5D
Step 1:
Patient complete the EQ 5D questionnaire to reflect their health state
EQ-5D Questionnaire
Mobility
I have no problems in walking about
I have some problems in walking about
I am confined to bed
Self-Care
I have no problems with self-care
I have some problems washing or dressing myself 2
I am unable to wash or dress myself 3
Usual Activities (e.g. work, study, housework,
family or leisure activities)
I have no problems with performing my usual activities 1
I have some problems with performing my usual activities 2
I am unable to perform my usual activities 3
Pain/Discomfort
I have no pain or discomfort 1
I have moderate pain or discomfort 2
I have extreme pain or discomfort 3
Anxiety/ Depression
I am not anxious or depressed 1
I am moderately anxious or depressed 2
I am extremely anxious or depressed 3
Step 2: Apply valuation system (tariff):
Valued by members of the general public (in Europe, but available for other countries) using time trade-off (TTO) techniques
n=3,235 respondents (cross section of the public).

36. EQ 5D utility score and QALY calculation
Response to questionnaire = Utility
TTO tariff = 0.49
= 0.42
= 0.25
Step 3
QALY:
Calculation Life years = x 0.42
Utility = 0.42
QALYs = 4.2
Step 4

37. How are utilities for generic instrument health states derived?
Valuation system
Time trade-off (TTO)
Standard gamble (SG)
Rating scale/visual analogue scale (VAS)
Questionnaire
EQ 5D
SF 6D
Health Utilities Index
EQ 5D VAS

38. EQ 5D utilities EQ-5D - utility values 0,0 0.8 0.6 0.4 0.2
1) Kobelt G et al. HEPAC 2001, 2: 60-68
2) Meads et al. Value in Health 2004; Poster Presenation at ISPOR 2004
3) Groen et al. Am J Transplantation 2004; 4:
4) Lloyd A et al. Primary Care Respiratory J 2007,
5) Miners, Haemophilia, 2009
0.2
0.6
0.8
0.4
0,0
0.50 – patients before lung transplantation (3)
EQ-5D - utility values
1.00 – best health status
0.87 – severe haemophilia receiving prophylaxis (5)
0.76 – patients with mild multiple sclerosis (EDSS ≤ 3.0) (1)
0.66 – severe haemophilia receiving on-demand treatment (5)
0.58 – patients with pulmonary arterial hypertension NYHA III (2)
0.43 – patients with pulmonary arterial hypertension NYHA IV (2)
0.33 – patients hospitalized for exacerbation with asthma (4) )
0.23 – patients with severe multiple sclerosis (EDSS ≥ 6.5) (1)
death

39. Comparing the generic instruments
EQ 5D
SF 6D
HUI
5 health domains (mobility, self care, usual activities, pain/discomfort, anxiety depression)
Utilities based on TTO methods
Valued by general population (in several countries)
Only adult version currently validated
Has a greater range of scores than SF 6D
May lack sensitivity due to fewer domains especially in less severe health problems
Quick questionnaire to complete
Ceiling effects found (large percentage of respondents report no problem)
6 health domains (physical functioning, role limitation, social functioning, pain, mental health, vitality)
Derived from the validated generic quality of life questionnaireSF36
Based on SG methods
Valued by general population (in UK)
Only adult version currently validated
Floor effects found (large proportion of respondents report low scores)
7-8 health domains (HUI3) (speech, vision, ambulation, dexterity, emotion, cognition, pain)
Based on SG and VAS methods
Valued by general population (in Canada)
Includes a version available for use in children (HUI2)
Has stronger emphasis on sensory elements than other instruments

40. Some observations
HTA general preference is for societal valuation (general public) and/or using a generic questionnaire
The different techniques can easily produce different utility scores
What is important is difference between health state scores as that measures the QoL benefits of treatment:
If on-demand treatment utility is 0.6
If prophylaxis utility is 0.8
Means there is a 0.2 gain in utility score/quality of life

41. Whose QALY are we interested in?
The Patient certainly
The family caregivers?

42. QALY is a QALY is a QALY
“An assumption that underlies most of NICE's technology appraisals has been that “a QALY is a QALY is a QALY.” By this NICE means that a QALY gained or lost in respect of one disease is equivalent to a QALY gained or lost in respect of another. It also means that the weight given to the gain of a QALY is the same, regardless of how many QALYs have already been enjoyed, how many are in prospect, the age or sex of the beneficiaries, their deservedness, and the extent to which the recipients are deprived in other respects than health.”
Rawlins & Culyer. BMJ 2004;329:224

43. QALY is a QALY is a QALY not not ^ ^
“I am uneasy about the mantra of ‘a QALY is a QALY is a QALY.’ It means that an increase in utility from 0.3 to 0.5 is valued the same as an increase from 0.7 to 0.9. I am not sure this is fair.”
Rawlins. Value in Health 2012;15:568-9

44. Challenges for improving health economic evaluation in haemophilia
Improving but still limited clinical and outcomes data available
Lack of standard approach to utility measurement
Importance of adopting a societal perspective
Ensuring equity considerations incorporated
Reminding HTA bodies that haemophilia is an Orphan (rare) disease

45. Conclusions
HTA and health economics is increasingly being used to assess value by national and regional health authorities and payers
Patient organisations and health professionals working in haemophilia can contribute to the debate on what constitutes value in haemophilia by understanding the key concepts and tools of HTA and health economics
QALYs are here to stay for time being, so need to understand and work with them.
Although other outcomes options are being considered even in UK

46. Any questions?
Does Santa Exist?
How many shopping days to Christmas?

47. Further Reading
Tolley K - What are Health Utilities? What is...? Series April 2009 (revised in 2014 and available soon)
O’Mahoney B - An Introduction to Key Concepts in Health Economics for Hemophilia Organizations, World Federation of Hemophilia, 2010