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Economic Evaluation. Ken Stein Public Health Physician North & East Devon Health Authority University of Exeter. Questions. Can it work? Efficacy Does it work? Effectiveness Should it be used, given other calls on a fixed budget? Economics Is it reaching those whom it should?

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economic evaluation

Economic Evaluation

Ken Stein

Public Health Physician

North & East Devon Health Authority

University of Exeter

  • Can it work?
    • Efficacy
  • Does it work?
    • Effectiveness
  • Should it be used, given other calls on a fixed budget?
    • Economics
  • Is it reaching those whom it should?
    • Availability





a national problem
A national problem
  • Higgenbottom’s syndrome is now recognised as a national problem
  • There are grave concerns about “a lottery of postcode dancing”
  • NICE takes action...
  • Your PCT is not convinced and asks you to review the evidence
  • You need some background to deal with the results of your search and the NICE evaluation
economic analysis involves
Economic analysis involves

Identification of alternatives

… their consequences

… and their costs

… the values of these

… and how they compare

… to inform the decision on whether you should do it

spotting economic analyses
Spotting economic analyses
  • Is there a comparison of two or more alternatives?
  • Are both costs and consequences examined?
  • If not - the study is not an economic evaluation but may be:
    • description of costs or outcomes
    • evaluation of efficacy or effectivenes
    • cost analysis











types of economic analysis
Types of economic analysis
  • Cost minimisation
  • Cost effectiveness
  • Cost utility
  • Cost benefit
cost effectiveness
Cost effectiveness
  • How much it costs to get an effect
  • e.g. how much per fight prevented by ballet therapy?
  • i.e the RATIO of COSTS to EFFECTS
  • How might different cost effectiveness ratios for alternative treatments appear?
    • The cost effectiveness plane

E.g. £20,000

per QALY


more effective

but more costly


less effective

and more costly





cheaper but less




more effective

and less costly




marginal syn incremental or average analysis
Marginal (syn: incremental) or average analysis?
  • An analysis of different doses of a cholesterol lowering drug shows that 80mg per day gives a cost effectiveness of £25,000 per life year gained (LYG)
  • 40mg per day gives £15,000 per LYG
  • So it’s probably worth giving 80mg where possible as the extra LYG costs only £10,000?
  • Well...









Marginal cost effectiveness = what’s the extra cost

to get the extra effectiveness?

i.e. Difference in costs

Difference in effectiveness

quality adjusted life years
Quality Adjusted Life Years
  • A 1985, good quality, 10 year cohort study of HS showed:
    • Life expectancy is reduced by one year compared to national life tables
    • HS sufferers spent, on average:
      • 120 person days per year with:
        • limited mobility
        • episodic incontinence
        • moderate pain
        • depression of mood
qaly burden of hs
QALY burden of HS
  • 100 people with HS will, over 10 years:
    • lose 100 life years
    • lose 100 x 0.3 years of full quality of life
utilities and qalys
Utilities and QALYs
  • Utility is a measure of preference about an outcome (a health state), giving an indication of the relative value placed on the health state
    • Scaled 0 (death) to 1 (full health)
  • Utilities are used to “weight” time according to quality of life spent during that time
    • A health state with a utility of 0.5 lasting two years is equivalent to one year in full health
  • Allows us to consider differences in treatments which involve changes in quality as well as quantity of life
qaly gains example


LYG gained

QALYs - patient 1

QALYs - patient 2




QALY gains - example


utitilies and hs
Utitilies and HS
  • Description of HS health states to experts for opinion (Dr Phillips says utlity = 0.95)
  • Eliciting utilities with HS sufferers
      • Visual analogue scale
      • Time trade off (utility = 0.67)
      • Standard Gamble
  • Mapping onto health state measures for which preferences are known e.g. EQ5D
      • Mobility
      • Self-care
      • Usual activity (utility = 0.85)
      • Pain / discomfort
      • Anxiety / depression

PS - these are the real values for utilities associated with impotence

used in an evaluation of the cost utility of viagra

the nice appraisal
The NICE appraisal
  • Was a well defined question posed?
  • TITLE: Cost effectiveness and Cost Utility of Ballet Therapy for Higginbottom’s Syndrome - a report to NICE, January 2001
  • Perspective was the NHS, with potential impacts on non-health sector identified but not included in the analysis
was a comprehensive description of competing alternatives given
Was a comprehensive description of competing alternatives given?
  • Intervention: Fonteyn’s model for ballet therapy
  • Comparator: do nothing
was the analysis based on valid evidence
Was the analysis based on valid evidence?
  • Fonteyn M et al. 2000
  • five year RCT of Ballet therapy for HS
  • Number of fights prevented = 13 per year
were all important and relevant resources identified for each alternative
Were all important and relevant resources identified for each alternative?
  • Costs
    • Ballet therapy - GP, specialist community dancing support team, capital for ballet schools, trainer costs, follow up, replacement dresses. Identified from micro-costing study
  • Savings
    • Healthcare costs associated with HS, estimated from National reference costs for HRGs
  • Outcomes
      • Number of fights
      • QALYs based on healthstates associated with fights and treatment, valued by expert opinion
  • Ballet therapy costs an average of £14,756 per year
  • Savings to the NHS: £4,875 per year
  • Total costs to the NHS of implementing ballet therapy would be £483m over 5 years
  • Incremental benefits would be:
    • 13 fights prevented
    • 0.24 QALYs gained



Cost per fight averted = £744




per QALY



Cost per QALY = £41,230


Were healthcare use and health outcome consequences adjusted for the different times at which they occurred?
  • Undiscounted
    • Year 1 costs = 1,000
    • Year 2 costs = 1,000
    • Year 3 costs = 1,000
    • Year 4 costs = 1,000
    • Year 5 costs = 1,000

Discounted @ 6%

Year 1 = £1000

Year 2 = £943

Year 3 = £890

Year 4 = £840

Year 5 = £792

TOTAL = £4,465

was an adequate sensitivity analysis performed
Was an adequate sensitivity analysis performed?
  • One way sensitivity analysis on costs and outcomes (number of fights, utilities associated with health states) showed results reasonably stable
      • Cost effectiveness: £530 to £2400 / FP
      • Cost utility: £35,000 to £56,000 per QALY (over 5 years - no modelling beyond the end of the trial undertaken)
  • Dress and ballet trainer costs were most influential in the sensitivity analysis
will the results help you
Will the results help you?
  • Were the conclusions justified?
  • Can the results be applied to your population?
    • Effectiveness of ballet therapy?
    • Implementation costs different (shortage or excess of ballet trainers, availability of dresses, dispersed population)?
    • Costs of healthcare (savings) different? Organisation of the healthcare system?
    • Discounting rate may differ?
appraisal decision
Appraisal decision
  • “Ballet therapy is an effective treatment but benefits are modest compared to other calls on the NHS budget. Considerable uncertainty remains over the long term effects of ballet therapy and further research is required, incorporating an economic analysis from a broader societal perspective…”
  • The International Confederation of Ballet Trainers has contested this decision