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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
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

slide2

Why Measure Benefits?

Efficiency

Maximise benefits for given resources

HEA PTP: M212 Economic Evaluation 2

key features of economic evaluation
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

benefit categories

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

should changes in productivity be included
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

should benefits be discounted
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

negative and positive benefits and costs
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

types of economic evaluation
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

how can health be measured
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

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.

Process of Benefit Assessment

HEA PTP: M212 Economic Evaluation 10

issues in assessing benefits for cea
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

efficacy vs effectiveness vs efficiency
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

intermediate vs final outcome measures
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

examples of intermediate vs final outcomes indicators pbac pbs oz
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

sources of effectiveness data
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

randomised controlled trials
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

epidemiological studies
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

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”?

Decision Rules: CEA

HEA PTP: M212 Economic Evaluation 18

limitations of measurements need for valuation
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

valuation versus measurement
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

methods of valuing health
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

quality adjusted life years qalys
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

qol profile

QL Weighting

0 5 10 15

No Life Years = 15

No QALYs = 11

Qol Profile

HEA PTP: M212 Economic Evaluation 23

qaly procedure
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

utility weight
“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

techniques for measuring utility
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

obtaining utility weights
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

evaluation specific holistic measure
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

generic mau instruments
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

some other issues
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

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”?

Decision Rules: CUA

HEA PTP: M212 Economic Evaluation 31

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

Decision Rules: Issues

HEA PTP: M212 Economic Evaluation 32

cua and rationing
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

methods of explicit rationing
Methods of Explicit Rationing

(Coast et al, Priority setting: the health care debate, John Wiley, 1996)

HEA PTP: M212 Economic Evaluation 34

explicit rationing technical methods
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

technical method qaly league tables
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

league tables handle with care
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

the oregon plan
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

oregon list version 1
Oregon List Version 1
  • Efficiency principle
  • 1600 condition/treatment pairs
  • Cost/QALY gained
    • social values
    • outcome
    • cost

HEA PTP: M212 Economic Evaluation 39

oregon list version 140
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

oregon list version 2
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

oregon list version 242
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

summary
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