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##### Economic evaluation of health programmes

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**Economic evaluation of health programmes**Department of Epidemiology, Biostatistics and Occupational Health Class no. 20: More on dealing with uncertainty Nov 17, 2008**Plan of class**• Net benefit framework • Cost-effectiveness acceptability curves • ‘Marrying econometrics and cost-effectiveness analysis’**Bootstrapped replications that fall in all 4 quadrants**Source: Drummond & McGuire 2001, p. 193**Why is this a problem?**• How do we construct a confidence interval when values within the interval fall into several quadrants? • Recall problem is: • Negative ICERs are not transitive: an intermediate value can represent a more cost-effective ICER than more extreme values • When the difference in effects is close to zero, the ICER becomes very large – and there is a discontinuity at zero. • As example shows, not at all clear how to define a confidence interval when replicates fall into all quadrants**The net-benefit framework (1)**Intervention considered cost-effective if: ICER = λ : maximum amount decision-maker willing to pay per unit of health gain (or ceiling ratio)**The net benefit framework (2)**Intervention is cost-effective if: We can trace the NMB as a function of λ, based on the sample values of mean difference in cost and effect:**What is slope of NMB line?**Where does it intersect the y axis? How are the 95% C.I. lines calculated? Where NMB =0, λ (here represented as RT) is equal to the ICER (see formula on previous page)**CONSTRUCTING A CEAC: For various values of RT, we can**estimate the probability that the intervention is cost-effective by counting the proportion of points that lie below the corresponding line**Another cost-effectiveness acceptability curve (CEAC)**Source: Drummond & McGuire 2001, p. 195 95% CI undefined: Decision-maker cannot be willing to pay less than 0 for a gain in LYs**Using NMB to identify factors that influence**cost-effectiveness (1) It is true that: However the difference in mean benefit between the experimental (subscript 1) and control (subscript 0) inverventions can be written:**Using NMB to identify factors that influence**cost-effectiveness (2) We can define a NMB for each subject: We can then estimate the model, using OLS: (where t=1 if subject received new treatment, t=0 otherwise)**Using NMB to identify factors that influence**cost-effectiveness (3) We can then extend this framework to estimate the partial effects of other covariaates: It then becomes possible to estimate the effects of factors such as age and sex on net monetary benefit – hence on cost-effectiveness