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HEA PTP: M212 Economic Evaluation 1 Session 7: Defining & Assessing Benefits for Economic Evaluation 1.Why, what and how of benefits. 2.Benefit assessment.

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Presentation on theme: "HEA PTP: M212 Economic Evaluation 1 Session 7: Defining & Assessing Benefits for Economic Evaluation 1.Why, what and how of benefits. 2.Benefit assessment."— Presentation transcript:

1 HEA PTP: M212 Economic Evaluation 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.

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

3 HEA PTP: M212 Economic Evaluation 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

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

5 HEA PTP: M212 Economic Evaluation 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

6 HEA PTP: M212 Economic Evaluation 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)

7 HEA PTP: M212 Economic Evaluation 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

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

9 HEA PTP: M212 Economic Evaluation 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….

10 HEA PTP: M212 Economic Evaluation 10 Process of Benefit Assessment 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.

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

12 HEA PTP: M212 Economic Evaluation 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

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

14 HEA PTP: M212 Economic Evaluation 14 Examples of Intermediate Vs Final Outcomes Indicators (PBAC (PBS) Oz) Condition beingFinal outcome SurrogateOutcomeIndicators treatedindicator Coronary thrombosisQuality-adjusted Number survivingNumber with specifiedNumber achieving coronary (thrombolysissurvival level of left ventricularre-perfusion function Stable anginaQuality-adjustedNumber withNumber who can walkNumber with adequate (various interventions)survivalacceptable a specified distancerelief of pain quality of life AsthmaQuality-adjustedNumber survivingNumber with adequateNumber achieving a target (various drugs)survivalcontrol of bronchiallevel of airways functions hyperreactivity DepressionQuality-adjustedNumber avoidingQuality of life (may beNumber achieving a target (various drugs)survivalsuicideimproved by drugs)Hamilton or Montgomery- Asberg Depression Rating Scale HypertensionQuality-adjustedNumber avoidingQuality of life (may beNumber achieving a target (various drugs)survival a strokeworsened by drugs)blood pressure

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

16 HEA PTP: M212 Economic Evaluation 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.

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

18 HEA PTP: M212 Economic Evaluation 18 Decision Rules: CEA 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?

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

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

21 HEA PTP: M212 Economic Evaluation 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

22 HEA PTP: M212 Economic Evaluation 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

23 HEA PTP: M212 Economic Evaluation 23 Qol Profile 051015 No Life Years = 15 No QALYs=11 QL Weighting

24 HEA PTP: M212 Economic Evaluation 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

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

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

27 HEA PTP: M212 Economic Evaluation 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

28 HEA PTP: M212 Economic Evaluation 28 Evaluation Specific/holistic Measure Advantages:1.Sensitive 2.Account for wider QoL (eg process, duration, prognosis) Disadvantages1.Cost and time intensive 2.Lack of comparability

29 HEA PTP: M212 Economic Evaluation 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

30 HEA PTP: M212 Economic Evaluation 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.

31 HEA PTP: M212 Economic Evaluation 31 Decision Rules: CUA 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?

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

33 HEA PTP: M212 Economic Evaluation 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

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

35 HEA PTP: M212 Economic Evaluation 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

36 HEA PTP: M212 Economic Evaluation 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

37 HEA PTP: M212 Economic Evaluation 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

38 HEA PTP: M212 Economic Evaluation 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

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

40 HEA PTP: M212 Economic Evaluation 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)

41 HEA PTP: M212 Economic Evaluation 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

42 HEA PTP: M212 Economic Evaluation 42 Oregon List Version 2 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

43 HEA PTP: M212 Economic Evaluation 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!


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