1. Economic evaluation of health programmes Department of Epidemiology, Biostatistics and Occupational Health Class no. 6: Cost-effectiveness analysis – Part I Sept 17, 2008

2. Plan of class  Finish material from previous class  Term project topics  Valuing productivity gains or losses  Obtaining effectiveness data  Discounting future benefits

3. Term project topics  2 teams of 3 or 3 teams of 2  3 suggested types of topics:  Detailed design of a CEA, CUA or CBA (including draft questionnaires, etc.)  Analysis of an existing data set, including calculation of unit costs  Design and execution of a methodological study, e.g., a willingness-to-pay study, using a convenience sample of respondents  Open to other suggestions!

4. Valuing productivity gains or losses: Human capital approach  Conventional, usual method  Labor gained or lost valued at what it costs (Wage rate, including any benefits or other charges covered by employer) Use average wage rate for age and sex, or wage rate for particular workers affected  Value of production at the margin

5. Valuing productivity gains or losses: Friction cost approach  What does it actually cost to the economy if a worker misses a day of work to go to the doctor?  What if a sick person can go back to work – what is the gain to the economy?  Friction cost: Value of production lost due to time needed to find a replacement worker and restore production to previous level

6. Will the friction cost or the human capital approach yield the highest estimates of productivity losses due to people being taken out of the workforce? Will this vary according to the length of time the person is taken out of the workforce?

8. http://cadth.ca/media/pdf/186_ EconomicGuidelines_e.pdf Use the friction cost approach to value lost time from paid work. Report the friction period and unit cost used to value lost productivity. Gross wage rates plus the costs associated with recruiting and training replacement workers can be used to value long-term absences from work. Exclude the lost time from paid work due to premature death that occurs beyond the friction period. Source: 2.10 f, page 9 However: No Canadian estimates of the friction period exist; would vary by industry, type of worker

9. Equity considerations  What is the effect of taking into account effects of productivity changes on the relative attractiveness of different programs?  Is this a reason for favouring use of the friction cost method?

10. Risk of double counting Difference in cost of interventions Difference in outcome Change in productivity Valuation of effect on income + + ? ? Overlapping measures

11. Suggestions  Report productivity changes separately  Report quantities (e.g., days of work lost) separately from any value attributed to them  Use both human capital and some estimate of friction cost method  Consider equity implications  Double-counting?  Follow any official guidelines (in Canada, CADTH)

12. CEA or CUA?  Turtle soup was tangy  Tables were attractively decorated  Service was prompt and attentive  Salmon was ordinary  Decor was so-so  Price was moderate VS.  Overall value for money: 4/5! CEA or CCA

13. Need for good effectiveness data  Efficacy vs effectiveness  Study protocols may influence outcome  Adjust if possible  Selective use of studies?  If no evidence, use sensitivity analysis

14. Intermediate vs final outcomes  Intermediate outcomes: T4 cell counts, medication adherence, blood pressure, cholesterol levels…

15. Discounting benefits  Controversy whether to also discount benefits  But logical inconsistencies arise if benefits and costs not discounted at the same rate  So in practice best to discount at the same rate (report results with 5%, 3%, 0% for both)  See book for more detailed discussion