Cost-Effectiveness Analysis and Ageism Daniel Eisenberg, PhD Dept of Health Management and Policy School of Public Health University of Michigan AcademyHealth Annual Research Meeting 2006 University of Michigan School of Public Health

2 Allez Les Bleus!

3 Go Blue!

4 Background: Economic Methods for Evaluating Health Interventions Cost effectiveness analysis (CEA): $/life-year ($/LY) or $/disability-adjusted-life-year ($/DALY) Cost utility analysis (CUA): $/quality-adjusted-life-year ($/QALY) In CEA and CUA, the unit of health, whether it’s a LY, DALY, or QALY, is typically weighted the same at all ages (e.g. 1 QALY at age 10 = 1 QALY at age 70) Cost benefit analysis (CBA) often uses single “value of a statistical life” for all ages Thus, CEA and CUA account for life expectancy whereas CBA typically does not

5 Background: Economic Methods (cont’d) Standard CEA/CUA CBA w/ single value-of-life Modified CEA/CUA? Increasing priority for health of young Decreasing priority for health of young

6 Policy Context Debate within federal government about whether agencies should be doing CEA vs CBA vs CUA Who gets influenza vaccines first? –Recent article in Science (Emanuel and Wertheimer 2006) critiquing priorities of National Vaccine Advisory Committee (NVAC) and the Advisory Committee on Immunization Policy (ACIP)

7 Key Question How can we modify cost effectiveness analysis (CEA) methods to reflect more accurately our society's valuation of health improvements by age?

8 Synthesis of Related Theoretical and Methodological Literature

9 Synthesis of Arguments in Literature on Why CEA Should Be Modified 1.Future health gains should be weighted more to reflect society’s increase in willingness-to- pay over time for health 1-2 % increase per year 2.Net resource use should be included in costs Consumption minus productivity (Meltzer) 3.Younger life-years should receive priority for equity reasons “Fair innings” argument: young have not had their share of life yet

10 Evidence on Argument #1 Value of health gains rises at least in proportion to income: –Costa, Dora L. and Matthew E. Kahn (2004) J of Risk and Uncertainty. –Hammitt, James K., Jin-Tan Liu, and Jin-Long Liu (2004). Harvard Univ. mimeo. –Hall, Robert, and Chad Jones. (2006). Forthcoming in Quarterly J of Economics.

11 Evidence on #2 (Net Resource Use) Net resource use (consumption minus productivity) (Meltzer 1997 J of Health Econ): –Positive for children and adolescents –Negative for adults until retirement age –Positive for adults after retirement age

12 Evidence on #3 Equity concern is supported consistently in a variety of survey studies

13 Survey Evidence on Valuation of Health by Age Suppose a choice must be made between two medical programs. The programs cost the same but there is only enough money for one. Program A will save 100 lives from diseases that kill 20-year-olds. Program B will save 200 lives from diseases that kill 60-year-olds. Which program would you choose? Example from Cropper et al (1994). Journal of Risk and Uncertainty 8:

14 Survey Evidence (cont’d) Several studies (from a variety of countries) find that respondents not only place higher values on younger lives, but they do so more so than can be explained by differences in life expectancy These preferences are consistent for all age groups of survey respondents

15 Translating Survey Evidence Into Modifications for CEA Methods Standard CEA Age Weights

16 Implications for CEA Methods 1.Increasing valuation of health over time -> weight life-years by increasing amount: (1+x)^t 2.Net resource use -> add it to costs 3.Equity concerns -> construct age weights based on survey data on preferences Does it make sense to do all of these at once? That depends on interpretation of survey data.

17 Example: Re-analysis of Recently Conducted CEAs

18 CEAs to be Re-Analyzed We selected for re-analysis CEAs that: –Were published within last 10 years –Evaluated interventions for people of ages under 21 –Yielded cost-effectiveness ratios between $50,000 and $500,000 per LY (i.e. dubious cost effectiveness)

19 Two CEAs Identified for Re-analysis Jacobs et al (2003). Regional variation in the cost effectiveness of childhood hepatitis A immunization. Pediatr Infect Dis J 22: –Universal immunization in low prevalence states Kulasingam, S.L. and E.R. Myers (2003). Potential health and economic impact of adding a human papillomavirus vaccine to screening programs. JAMA 290(6): –Vaccine plus screening starting at age 24 versus vaccine plus screening starting at age 18

20 Methods for Re-analyses We separately applied the following methods: 1)Standard CEA 2)Increasing value of health over time (2% year) 3)Age-weights 4)#2 and #3

21 Results: Cost Effectiveness Under Each Method Study Units(1) HepA vac. $/QALY63,000 HPV vac. $/LY96,000 (1)Standard CEA (discount rate = 3%)

22 Results: Cost Effectiveness Under Each Method Study Units(1)(2) HepA vac. $/QALY63,00052,000 HPV vac. $/LY96,00046,000 (1)Standard CEA (discount rate = 3%) (2)Increasing valuation of health effects (2% per year)

23 Results: Cost Effectiveness Under Each Method Study Units(1)(2)(3) HepA vac. $/QALY63,00052,00049,000 HPV vac. $/LY96,00046,00072,000 (1)Standard CEA (discount rate = 3%) (2)Increasing valuation of health effects (2% per year) (3)Age-weighting by formula in Rodriguez & Pinto (2000) (w/ 3% discounting)

24 Results: Cost Effectiveness Under Each Method Study Units(1)(2)(3)(4) HepA vac. $/QALY63,00052,00049,00039,000 HPV vac. $/LY96,00046,00072,00037,000 (1)Standard CEA (discount rate = 3%) (2)Increasing valuation of health effects (2% per year) (3)Age-weighting by formula in Rodriguez & Pinto (2000) (w/ 3% discounting) (4)Combination of (2) and (3)

25 Conclusion Standard CEA methods do not reflect societal preferences related to age Modifications grounded in theoretical and empirical evidence lower CE ratios substantially for interventions targeted at young people

26 Implications CEA practitioners can use adjustments for increasing value of health over time and age weights to reflect these concerns Readers of CEAs should bear in mind that the technique, as currently practiced, does not reflect societal preferences with respect to age

27 Acknowledgements Gary Freed, MD, MPH R. Jake Jacobs, MPA and co-authors on Jacobs et al (2003) Shalini L. Kulasingam, PhD and Evan R. Myers, MD, MPH R. Douglas Scott, PhD