Cost-Effectiveness Analysis: Average and incremental ratios
Transcript of Cost-Effectiveness Analysis: Average and incremental ratios
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Cost-Effectiveness Analysis
Henry A. Glick, Ph.D.
Pharmacoeconomics
April 19, 2012
www.uphs.upenn.edu/dgimhsr/fda2012.htm
Outline
• Introduction to cost-effectiveness analysis (CEA)• Choice criteria for CEA• The cost-effectiveness frontier• Net benefits (a transformation of CEA) and choice
criteria• Additional topics
Cost-Effectiveness Analysis (I)
• Estimates costs and outcomes of intervention• Costs and outcomes are expressed in different units
– If outcomes are aggregated using measures of preference (e.g., quality-adjusted life years saved), referred to as cost utility analysis
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Cost-Effectiveness Analysis (II)
• Results meaningful if:– They are compared with other accepted and rejected
interventions (e.g., against league tables), or– There exists a predefined standard (i.e., a maximum
acceptable cost-effectiveness ratio or an acceptability criterion) against which they can be compared (e.g., $50,000 per year of life saved might be considered the maximum acceptable ratio), or
– We can define utility curves that trade off health and cost (not discussed further)
Cost-Effectiveness “History”
• $/Life saved• $/Year of life saved (YOL)• $/Quality adjusted life year saved (QALY)
Why CEA Rather Than CBA?
• Not precisely clear– Potential difficulties in measurement– Discomfort with placing a dollar value directly on a
particular person's life (rather than years of life in general)
– Potential ethical issues
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Potential Ethical Issues
• QALYs / life years more equally distributed than wealth– Gini Coefficients for life expectancy and wealth
(measure of equality between 0 and .5, with larger values representing greater inequality)
• Birth cohort: 0.11• Current population: .31• Wealth: 0.41
• Health more a “right” than a commodity, thus 1 person 1 vote may be more appropriate than 1 dollar 1 vote– Cost-effectiveness analysis uses 1 QALY/year
1 vote
Cost-Effectiveness Ratios
• Cost-effectiveness ratio
• A ratio exists for every pair of options– 1 option (case series), no ratios calculated– 2 options, 1 ratio– 3 options, 3 ratios (option 1 versus option 2, option 1
versus option 3, and option 2 versus option 3)• In the “efficient” selection algorithm, we don’t necessarily
calculate all the possible ratios
1 2
1 2
Costs - CostsEffects - Effects
Average Vs. Incremental C-E Ratios
• Some dispute about definitions– e.g., Some use “average cost-effectiveness ratio” to
refer to the practice of dividing a therapy’s total cost by its total effect (including Treeage, a fairly ubuiqitious piece of decision analysis software)
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Dividing a Therapy’s Costs by Its Effects is “Generally Uninformative”
Example 1
(1200 -500) / (.04-.025) = 46,667
30,000.041200Rx2
20,000.025500Rx1
Example 2
(780 -500) / (.026-.025) = 280,000
30,000.026780Rx2
20,000.025500Rx1
RatioEffectCost
Average Vs. Incremental C-E Ratios
• We don’t define the average CER by dividing a therapy’s total cost by its total effect– Treeage, a fairly ubuiqitious piece of decision analysis
software, does• We recommend against calculation of these ratios
– They provide little to no information• We instead define the average cost-effectiveness ratio
as the comparison of costs and effects of each intervention with a single option, often the "do nothing" or usual care option
* (Ci – C1) / (Ei – E1)16,480.0071942017.63614,279.0071941716.31511,783.0071938514.8148852.0071900413.0235495.0071442410.772
--.006594697.751
Avg Cost/ Case Detected *Cases DetectedCost
# GuaiacTests
Example: Average Ratios and the Sixth Stool Guaiac
• Neuhauser and Lewicki, NEJM, 1975;293:226-8.
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Incremental Cost-Effectiveness Ratios
• Comparison of costs and effects among the alternative options (i.e., excluding the comparator used for the average cost-effectiveness ratios)
• When there are only 2 options being evaluated, the average and incremental cost-effectiveness ratios are the same
• Neuhauser and Lewicki, NEJM, 1975;293:226-8.
Guaiac Average and Incremental Ratios
* (Ci – C1) / (Ei – E1)** (Ci – Ci-1) / (Ei – Ei-1)
44,000,00016,480.0071942017.6364,687,50014,279.0071941716.315469,81611,783.0071938514.814491278852.0071900413.02354955495.0071442410.772
----.006594697.751
IncremCER **
Average CER *
Cases DetectedCost
# Guaiactests
Cost-Effectiveness Plane
• Axes• Origin• Average
ratios• Incremental
ratios
Alternativetherapy dominates
Alternative therapy moreeffective but more costly
New therapy moreeffective but more costly
New therapydominates(-
) D
iffer
ence
in C
ost
(+)
(-) Difference in Effect (+)
oo
oo-oo
-oo
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Choice Criteria For Cost-Effectiveness Ratios• Choose options with acceptable average and
incremental cost-effectiveness ratios (i.e., whose ratios with all other options are acceptable)
• Subject to:– Budget Constraint?– Acceptable Ratio?
• Not accounting for uncertainty around the ratios• Consider 3 mutually exclusive options
Choice Criteria, Example 1
Adopt?27,000--Option 2
26,00025,000Option 1
Option 3Option 2Ratios
302520Expected QALYs
270,000135,00010,000Expected Costs
Option 3Option 2Option 1
Choice Criteria, Example 2
Adopt?100,0000--Option 2
37,50025,000Option 1
Option 3Option 2Ratios
262520Expected QALYs
235,000135,00010,000Expected Costs
Option 3Option 2Option 1
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Choice Criteria, Example 3
Adopt?40,000--Option 2
146,667200,000Option 1
Option 3Option 2Ratios
21.52120Expected QALYs
230,000210,00010,000Expected Costs
Option 3Option 2Option 1
Multitherapy Example
• Suppose 6 screening strategies have the following discounted costs and life expectancies:
Frazier AL, et al. JAMA. 2000;284:1954-61.
17.4072034U+Sig, Q5 (S6)17.3962028C Q(10) (S5)17.4021810U+Sig, Q10 (S4)17.3871536Sig Q5 (S3)17.3781288Sig Q10 (S2)17.3481052No screening (S1)YOLSCostTreatment
Choice Among Screening Strategies
• Which therapy should be adopted if the acceptability criterion is $40,000 / YOL Saved? $50,000 / YOL Saved?
• In what follows, demonstrate 3 methods for selecting a single therapy from among these candidates– All 3 methods are based on selecting the therapy with
an acceptable ratio– All 3 methods are transformations of one another --
they use same information in slightly different ways --and all yield identical choices
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Method 1: Efficient Algorithm (EA) forChoosing among Multiple Therapies (I)
• Suppose 6 therapies have the following discounted costs and life expectancies
17.4072034U+Sig, Q5 (S6)17.3962028C Q(10) (S5)17.4021810U+Sig, Q10 (S4)17.3871536Sig Q5 (S3)17.3781288Sig Q10 (S2)17.3481052No screening (S1)YOLSCostTreatment
Efficient Algorithm: Step 1
• Rank order therapies in ascending order of either outcomes or costs (the final ordering of the nondominated therapies will be the same which ever variable you choose)
17.4021810U+Sig, Q10 (S4)17.3962028C Q(10) (S5)
17.4072034U+Sig, Q5 (S6)
17.3871536Sig Q5 (S3)17.3781288Sig Q10 (S2)17.3481052No screening (S1)YOLSCostTreatment
Efficient Algorithm: Step 2
• Eliminate therapies that are strongly dominated (i.e., that have increased costs and reduced effects compared with at least one other alternative
17.4021810U+Sig, Q10 (S4)17.3962028C Q(10) (S5)
17.4072034U+Sig, Q5 (S6)
17.3871536Sig Q5 (S3)17.3781288Sig Q10 (S2)17.3481052No screening (S1)YOLSCostTreatment
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Efficient Algorithm: Step 3
• Compute incremental cost-effectiveness ratios for each adjacent pair of outcomes (e.g., between options 1 and 2; between options 2 and 3; etc.)
17.40717.40217.39617.38717.37817.348YOLS
44,80018,250Dom
27,5507850
--ICER
1810U+Sig, Q10 (S4)2028C Q(10) (S5)
2034U+Sig, Q5 (S6)
1536Sig Q5 (S3)1288Sig Q10 (S2)1052No screening (S1)CostTreatment
Efficient Algorithm: Step 4• Eliminate therapies that are less effective (cost) but have
a higher cost-effectiveness ratio (weakly dominated) than the next highest ranked therapy
• Rationale: Rather buy more health for a lower cost per unit than less health for a higher cost per unit– e.g., eliminate S3 (sig,Q5), because:
• S3 is less effective than the next higher ordered S4 (U+sig,Q10) [17.387 YOLS vs. 17.402] AND
• The incremental ratio for moving from S2 to S3 (27,550) is greater than the incremental ratio for moving from S3 to S4 (18,250)
– Implies that moving from S2 to S4 is more cost-effective than is moving from S2 to S3
Efficient Algorithm: Step 5
• Recalculate the ICERs (e.g., between options 2 and 4)– Repeat steps 4 and 5 if necessary)
17.40717.40217.39617.38717.37817.348YOLS
44,80021,750Dom
27,5507850
--ICER
1810U+Sig, Q10 (S4)2028C Q(10) (S5)
2034U+Sig, Q5 (S6)
1536Sig Q5 (S3)1288Sig Q10 (S2)1052No screening (S1)CostTreatment
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Efficient Algorithm: Step 6
• Identify the acceptable therapy
S6S4S2S1
Therapy
21750 to 44,79944,800+
7850 to 21,749<7850Maximum WTP
Full Cost-Effectiveness Table
44,8000.00517.4072242034S6 U+Sig, Q5SD = strong dominance; WD = weak dominance
17.40217.39617.38717.37817.348YOLS
18102028153612881052Cost
0.024----
0.030--Δ Y
21,750SDWD
7850--
ICER
522S4 U+Sig, Q10--S5 C Q(10)--S3 Sig Q5
236S2 Sig Q10--S1 No screeningΔCTreatment
Reduced Cost-Effectiveness Table
44,8000.00517.4072242034S6 U+Sig, Q517.40217.37817.348YOLS
181012881052Cost
0.0240.030
--Δ Y
21,7507850
--ICER
522S4 U+Sig, Q10236S2 Sig Q10--S1 No screeningΔCTreatment
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Introduction to Method 2: Frontier Analysis (Geometry of Choice)
• We can also identify the optimal strategy using the cost-effectiveness plane. In many cases, we focus on the upper right quadrant, where new therapies increase both costs and outcomes
0 5 10 15 200
250000
500000
750000
1000000
Dis
coun
ted
Cos
ts ($
)
Discounted Years of Life Saved
CER = Slope
CHOOSING AMONG FRONTIER OPTIONS (1)
• Options 2 and 3 both have acceptable average cost-effectiveness ratios (i.e., below $50,000/YOLS)
0 2 4 6 8
Discounted QALYs
0
100000
200000
300000
400000
Dis
coun
ted
Cos
ts ($
)
O2
O3
Example 2 $50,000
Choosing Among Frontier Options (2)
• To evaluate the incremental ratios, shift the origin to the option with the lowest acceptable average cost-effectiveness ratio, and reimpose the $50,000 acceptability criterion
0 2 4 6 80
100000
200000
300000
400000
Dis
coun
ted
Cos
ts ($
)
Discounted Years of Life Saved
O2
O3
Example 2
$50,000
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Colorectal Cancer Screening Example
• The convex hull represents the therapies that for a given level of effect have the lowest cost (or for a given level of cost have the highest effect
0.000 0.010 0.020 0.030 0.040 0.050 0.060
Years of Life Gained
0
250
500
750
1000
Cos
ts ($
)
COL, Q10 years
$40,
000
per Y
OLS SIG2, Q5 years
U & SIG 2, Q10 years
U & SIG 2, Q5 years
SIG2, Q10 years
$7,850
$21,750
$44,800
Strong Dominance
0.000 0.010 0.020 0.030 0.040 0.050
Years of Life Gained
0
250
500
750
1000
Cos
ts ($
)
S5: COL, Q10 years
S3: SIG2, Q5 years
S4: U & SIG2, Q10 years
S2: SIG2, Q10 years
StrongDominance
S6
••
Weak Dominance
0.000 0.010 0.020 0.030 0.040 0.050
Years of Life Gained
0
250
500
750
1000
Cos
ts ($
)
S5: COL, Q10 years
S3: SIG2, Q5 years
S4: U & SIG2, Q10 years
S2: SIG2, Q10 years
WeakDominance
S6
•
•
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Sig2,q5 and the Frontier
• Weakly dominated, but– Uncertainty (i.e., confidence region) might be such
that we may not be able to exclude it from the frontier– Weakly dominated therapies that lie close to the
frontier, "might be considered [a] reasonable alternative...if there were noneconomic reasons to prefer them, such as patient or physician acceptability, availability, or other factors." Mark D. JAMA. 287;202:2428-9.
Method 2. Choice Using a PredefinedMaximum Acceptable C-E Ratio
• Choose the therapy with a tangency between frontier and the lowest line with a slope defined by the maximum willingness to pay for the health outcome
0.000 0.010 0.020 0.030 0.040 0.050 0.060
Years of Life Gained
0
250
500
750
1000
Cos
ts ($
)
COL, Q10 years
$40,
000
per Y
OLS SIG2, Q5 years
U & SIG2, Q10 years
U & SIG2, Q5 years
SIG2, Q10 years
$7,850
$21,750
$44,800
Method 2 Recommendations
• Choose the therapy with a tangency between frontier and the lowest line with a slope defined by our maximum willingness to pay
S6S4S2S1
Therapy
21750 to 44,79944,800+
7850 to 21,749<7850Maximum WTP
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Introduction to Method 3: Net Benefits
• A composite measure (part cost-effectiveness, part cost benefit analysis), usually expressed in dollar terms, that is derived by rearranging the cost-effectiveness decision rule:
W > ΔC /ΔQ
where W = willingness to pay (e.g., 50 or 100K)
Net Benefits (II)
• Two forms of the net benefit expression exist depending on the rearrangement of this expression– Perhaps most naturally for economists, net monetary
benefits can be expressed on the cost scale (NMB)(W * ΔQ) - ΔC
– Alternatively, net health benefits (NHB) can be expressed on the health outcome scale:
ΔQ - (ΔC / W)• A potential disadvantage of the latter
transformation is that NHB is undefined when the CR equals 0
NMB Rationale
• Overcomes problems associated with parametric tests of the ratio– Study result is a difference in means, not a ratio of
means, and is always defined and continuous• Substitutes a “poor-person’s” willingness to pay measure
(the acceptability criterion) for the more theoretically correct individually-measured willingness to pay– Differs from cost-benefit analysis in that it does not
aggregate individuals' willingnesses to pay• All else equal, we should adopt programs with net
monetary (health) benefits that are greater than 0 (i.e., programs with incremental cost-effectiveness ratios that are less than WTP
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Net Benefits and the CE Plane (I)
• On the CE plane, NMB is represented by a family of lines all with a slope equal to W
-0.40 -0.30 -0.20 -0.10 0.00 0.10 0.20 0.30 0.40
Difference in QALYS
-27500
-17500
-7500
2500
12500
22500
32500
Diff
eren
ce in
Cos
ts
Acceptable upper limit, $50,000
Net monetary benefit, $0
Net monetary benefit, - $12,500
Net monetary benefit, - $25,000
Net monetary benefit, $12,500
Net Benefits and the CE Plane (II)
• Each line represents a single value of net benefits– For NMB, -intercept (because at the origin, W ΔQ = 0
and the formula reduces to -ΔC– For NHB, point where the line intersects the
horizontal axis• For the line passing through the origin, both NMB and
NHB = 0– Lines below and to the right of the net benefit=0 line
have positive net benefits (i.e., acceptable cost-effectiveness ratios)
– Lines above and to the left have negative net benefits*** Method 2, above, is equivalent to selecting the
therapy with the largest valued NMB ***
NMB and the Multitherapy Example
• Returning to the previous multitherapy example: suppose 6 therapies have the following discounted costs and life expectancies
• Which therapy should be adopted if the acceptability criterion is $40,000 / YOL Saved? $50,000?
17.4021810U+Sig, Q10 (S4)17.3962028C Q(10) (S5)
17.4072034U+Sig, Q5 (S6)
17.3871536Sig Q5 (S3)17.3781288Sig Q10 (S2)17.3481052No screening (S1)YOLSCostTreatment
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Numeric Net Monetary Benefit Methods
• Can follow a modified version of method 1 to calculate incremental NMB
• Modifications for calculation of Incremental NMB:– In step 3, calculate NMB rather than cost-
effectiveness ratios– In step 4, eliminate therapies that are less effective
(cost) but have a smaller NMB than the next highest ranked therapy (weakly dominated)
– In step 5, recalculate the NMBsSelect the therapy that has BOTH the greatesteffectiveness AND a positive incremental NMB
Comparing 6 Strategies' Monetary Benefits
• Alternatively, can calculate the monetary benefit (MB) for each therapy based on its own costs and effects rather than incremental costs and effects
• Step 1. Calculate each therapy’s MB by multiplying the therapy’s average (NOT incremental) effect times WTP and subtracting the therapy’s average cost
• Select the therapy with the greatest MB• Yields the same conclusions as the other 2 methods for
selecting a therapy
i i iMB = WQ - C
Method 3
868,316694,24617.4072034U+Sig,Q5 (S6)
867,772693,81217.3962028C,Q10 (S5)
868,290694,27017.4021810U+Sig, Q10 (S4)
867,814693,94417.3871536Sig, Q5 (S3)
867,612693,83217.3781288Sig, Q10 (S2)
866,348692,868 *17.3481052No Scr (S1)
NMB,$50K
NMB,$40KYOLSCost
* (40,000 * 17.348) = 693,920, subtracting 1052 = 692,868
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Exercise: Selecting a Therapy• Suppose you evaluated 5 therapies and observed the
following costs and effects• Using method 1, which strategy would you recommend if
WTP = 50,000? If WTP = 75,000?
683
644
655
635
678
Total Cost
35.66575
35.66534
35.66553
35.66502
35.66561
QALYsStrategy
Step 1• Step 1. ???
683
644
655
635
678
Total Cost
35.66575
35.66534
35.66553
35.66502
35.66561
QALYsStrategy
Rank Order• Step 1. Rank order the therapies by increasing cost or
effect
35.6657
35.6656
35.6655
35.6653
35.6650
QALYs
683
678
655
644
635
Total Cost
5
1
3
4
2
Strategy
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Step 2• Step 2. ???
35.6657
35.6656
35.6655
35.6653
35.6650
QALYs
683
678
655
644
635
Total Cost
5
1
3
4
2
Strategy
Dominated Therapies• Step 2. Eliminate any strongly dominated therapies
• There are no strongly dominated therapies
35.6657
35.6656
35.6655
35.6653
35.6650
QALYs
683
678
655
644
635
Total Cost
5
1
3
4
2
Strategy
Step 3• Step 3. ???
35.6657
35.6656
35.6655
35.6653
35.6650
QALYs
683
678
655
644
635
Total Cost
5
1
3
4
2
Strategy
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Calculate ICERS• Step 3. Calculate incremental cost-effectiveness ratios
35.6657
35.6656
35.6655
35.6653
35.6650
QALYs
50,000
230,000
55,000
30,000
--
ICER
683
678
655
644
635
Total Cost
5
1
3
4
2
Strategy
Step 4• Step 4. ???
35.6657
35.6656
35.6655
35.6653
35.6650
QALYs
50,000
230,000
55,000
30,000
--
ICER
683
678
655
644
635
Total Cost
5
1
3
4
2
Strategy
Weakly Dominated Therapies• Step 4. Eliminate any weakly dominated therapies
• Eliminate strategy 1 with an ICER of 230k because strategy 5 is more effective and has a lower ICER
35.6657
35.6656
35.6655
35.6653
35.6650
QALYs
50,000
230,000
55,000
30,000
--
ICER
683
678
655
644
635
Total Cost
5
1
3
4
2
Strategy
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Step 5• Step 5. ???
35.6657
35.6656
35.6655
35.6653
35.6650
QALYs
50,000
230,000
55,000
30,000
--
ICER
683
678
655
644
635
Total Cost
5
1
3
4
2
Strategy
Recalculate the ICERS• Step 5. Recalculate the ICERS
35.6657
35.6656
35.6655
35.6653
35.6650
QALYs
140,000
230,000
55,000
30,000
--
ICER
683
678
655
644
635
Total Cost
5
1
3
4
2
Strategy
Step 6• Step 6. ???
35.6657
35.6656
35.6655
35.6653
35.6650
QALYs
140,000
230,000
55,000
30,000
--
ICER
683
678
655
644
635
Total Cost
5
1
3
4
2
Strategy
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Therapy Selection• Step 6. Select the option with the largest ICER that is
lower than the maximum WTP
• #4 if WTP=50,000; #3 if WTP=75,000
35.6657
35.6656
35.6655
35.6653
35.6650
QALYs
140,000
230,000
55,000
30,000
--
ICER
683
678
655
644
635
Total Cost
5
1
3
4
2
Strategy
Recommendation?
S5S3S4S2
Therapy
55,000 to <140,000140,000+
30,000 to <55,000<30,000Maximum WTP
Simultaneous Comparison
• Description of the selection algorithm may suggest that we take a path through different options, which assumes we will adopt lower cost/effect pairs before we will adopt higher cost/effect pairs
• Instead, all 4 algorithms are simply step-by-step procedures that simultaneously compare all of the options– As done by identifying the tangency between the
NMB lines and the "health production" frontier, or– By comparing MBs
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Goal of Selection Process
• The goal of the selection process is to choose options with acceptable average and incremental cost-effectiveness ratios– Choose options whose ratios with all other options
are acceptable• Implication: We cannot ignore the economic value of U
and Sig2 every 10 years and U and Sig2 every 5 years when evaluating Sig2 every 5 years or colonoscopy every 10 years
What Is the Maximum Acceptable Ratio?
• Traditionally, cost-effectiveness ratios less than $40,000 to $50,000 per quality-adjusted life-year saved (or net monetary benefit cost lines defined using these ratios) have been considered acceptable
• Little analytic attention has been given to identifying an appropriate acceptability criterion
• There has been a growing debate about whether the acceptability criterion in the U.S. has increased (e.g., at a minimum to $100,000 per QALY)
• Not clear that acceptable levels derived for the point estimate of the cost-effectiveness ratio should be used to determine the acceptable levels for the upper limit of the confidence interval for the cost-effectiveness ratio
What Is the Maximum Acceptable Ratio?
• US Gov’t– EPA: 9.1 M / life (~222K / undiscounted YOLS)– FDA: 7.9 M / life (~176K / undiscounted YOLS)– DOT: 6 M / life (~133K / undiscounted YOLS)
• Australia: $AU 42K - 76K /YOLS• Italy: €60,000/QALY• Netherlands: €80 000/QALY• Sweden: SEK 500,000 (€54,000) / QALY• UK: £20 - 30K / QALY• WHO report: 3 times GDP per DALY
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Are All Ratios of Equal Value?
• Mortal, relatively incurable diseases vs. diseases that principally affect quality of life– Are acceptable ratios for the former higher than for
the latter?• NICE, appraisal committees can consider ‘giving
greater weight to QALYs achieved in the later stages of terminal diseases’” (Nature, 09/2009)
– As more treatments become available and the disease appears less incurable, does the acceptable incremental ratio for new therapies begin to approach the "standard" acceptable ratio?
• Small budgetary impact
Are All Ratios of Equal Value? (II)
• Identifiable individuals• Do individuals have a set of “social preferences” that
differ from their “individual preferences”– $1,000,000 to cure 100 blind invalids– $1,000,000 to cure 100 blind healthy individuals
• Compensation for risks imposed by society
Acceptability and the Lower Left Quadrant?
• Economists usually treat ratios in the upper right and lower left quadrants symmetrically– If we would not spend more than $50,000 per QALY
saved for a more costly and more effective new therapy in the northeast quadrant I, then we would not spend more than $50,000 per death averted for a more costly and more effective alternative therapy in the southwest quadrant
– i.e., we would adopt a less costly and less effective new therapy if its ratios of savings per QALY lost were greater than $50,000 compared with the alternative
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Acceptability and the Lower Left Quadrant? (II)
• Some have suggested that preferences for gains and losses of health are asymmetric– Common assumption is that people need to be paid
more to give up health than they are willing to pay to gain health (possibly an income effect)
• Such asymmetries can be incorporated into decision making for individual therapies, but complicates NMB calculation, construction of acceptability curves, and league-table decision making
Negative Cost-Effectiveness Ratios
• If the point estimates for the differences in costs and effects are of opposite signs (either increase costs and decrease effectiveness or decrease costs and increase effectiveness), the resulting cost- effectiveness ratio will be negative
• The magnitude of negative point estimates for ratios in the same quadrant does not provide information about the relative preferability of these different therapies
Negative Ratios (II)
• When reporting on the cost-effectiveness of a therapy (e.g., if you are comparing only two options), and the resulting cost-effectiveness ratio (or the CI of the ratio) is negative, do not report the negative value (because the magnitude conveys little if any information)– Instead simply report that the ratio represents that the
therapy is dominant/dominated• If the lower and upper limits of the confidence interval
(CI) for the CER are both negative, the relative magnitude of the two limits provides information about whether or not the CI includes the Y axis of the CE plane (return to this idea when we discuss sampling uncertainty for CERs)
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Take Home Messages (I)
• Decision making using cost-effectiveness ratios requires attention to average and incremental cost-effectiveness ratios
• To make decisions using these ratios, they must be compared to:– (Most common:) Other accepted and rejected
interventions (e.g., against league tables), or– (Growing in use:) A predefined standard (i.e., an
acceptability criterion) against which they can be compared (e.g., $50,000 per year of life saved might be considered the largest acceptable ratio), or
– (Rarely or never:) Utility curves trading off health and cost
Take Home Messages (II)
• Use of a predefined standard (e.g., $50,000 per year of life saved) equates decision making using cost-effectiveness ratios and decision making using net monetary benefits
• Do not report the magnitude of negative point estimates of cost-effectiveness ratios