IHE HTIP Health Economics Educational Workshop€¦ · • Health economics has key role in...
Transcript of IHE HTIP Health Economics Educational Workshop€¦ · • Health economics has key role in...
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IHE Health Technology Innovation Platform
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Principles of Health Economics
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The Unique Healthcare Market and Basics
of Health Economics
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Special Features in Health Economics
• Health is not a product you can buy
• Doctors know more about illness and treatment than patients; patients know more about their health than insurers
• People who are ill have greatest incentive to buy insurance
• Once you have insurance you use more health care and may not stay as healthy
• Patients lack the ability to make properly informed choices about health care and rely on clinicians to act as agents for them
o Marketability
o Information asymmetry
o Adverse selection
o Moral hazard
o Consumer rationality
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Health Economics and Health Technology
• The lack of interaction between end user and producer and special features of health care mean prices cannot be set like other goods
• Health economics can provide a framework for assessing what price should be paid for health technology
• Based on the potential health that can be gained, the resources required, and the potential alternatives
• In publicly funded systems, government agencies make these interventions; in private insurance systems, insurers negotiate a price they were willing to pay
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Specifics of Health Economics
• Not about cutting spending or rationing health care
• Recognition that resources are not infinite and tries to work out how best to use them
• Recognizing that every dollar spent on one intervention for one person cannot be spent on another intervention for another person
o If that intervention is not improving health in an efficient way, there is a loss of opportunity to spend those resources on an intervention that would
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Specifics of Health Economics (cont’d)
• Public payers and society try to ensure maximum benefits for health spending
• Opportunities for industry – demonstrate value to increase odds of adoption
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Health Economics and Health Technology
• Identify how best to spend scarce resources on a growing range of health technologies
• Compare alternatives to determine what you have to pay for the benefits that the options offer
• Determine which alternative is preferable and allows health to be maximized
• Allow considerations of the price at which a health technology represents good value
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Importance of Health Economics
• Health economics has key role in achieving the triple aim
• Can provide a framework to reduce per capita cost of current and new health technology
• Plays a role in identifying how resources can be best used to maximize population health and the experience of care
Institute of Health Improvement. Triple Aim.
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Willingness to Pay for Innovative Health Technology
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Economic Evaluation for Health Technology
• Economic evaluation methods are used to answer questions about which alternative provides the best use of resources
• Assesses the benefits of a health technology compared to the costs associated
• Considers both the cost of the intervention and subsequent health costs that stem from the intervention
• Data for economic evaluation can be collected alongside efficacy studies
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Cost-Effectiveness
• Use a plausible alternative, which is usually existing best practice and new alternatives
• Allow us to examine what costs are needed to gain a certain amount of health benefit
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Cost-Effectiveness Planes
ΔC
ost
ΔOutcomes
NW quadrant NE quadrant
SW quadrant SE quadrant
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Cost-Effectiveness Planes (cont’d)
ΔC
ost
ΔOutcomes
NW quadrant
Less effective and costs more
NE quadrant
More effective and costs more
SW quadrant
Less effective and costs less
SE quadrant
More effective and cost less
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Cost-Effectiveness Planes (cont’d)
ΔC
ost
ΔOutcomes
NW quadrant
Less effective and costs more
REJECT
NE quadrant
More effective and costs more
TRADE OFF
SW quadrant
Less effective and costs less
TRADE OFF
SE quadrant
More effective and cost less
ACCEPT
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Decision-Making with Cost-Effectiveness
• Straightforward decisions
o Reject technology that is less effective and more costly
o Accept technology that is more effective and less costly
• Trickier decisions
o May fund technology that is slightly less effective but delivers large cost savings
o May fund technology that is more effective depending on how much you are able and willing to pay the additional cost
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Decision-Making with Cost-Effectiveness (cont’d)
ΔC
ost
ΔOutcomes
NW quadrant
Less effective and costs more
REJECT
NE quadrant
More effective and costs more
TRADE OFF
SW quadrant
Less effective and costs less
TRADE OFF
SE quadrant
More effective and cost less
ACCEPT
• Health technology
assessment provides a
framework for making
decisions in the NE
quadrant
• How much extra
providers are willing
to pay for additional
benefits
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Health Spending Needs to Maximize Health
ΔC
ost
ΔOutcomes
NW quadrant
Less of current patients and less of
other patients’ health
NE quadrant
More of current patients but less of
other patients’ health
SW quadrant
Less of current patients’ health but
more of other patients
SE quadrant
More of current patients’ health and
more of other patients
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Approaches to Reimbursement and Pricing Strategies
• Reimbursement decisions in health care
• Procurement for non-drug health technology
• Health technology assessment and value-based health care
• Differing approaches to decision-making in HTA
• Cost plus and value-based pricing
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Principles of Early Value Assessment
• Make assessments of potential value at the earliest
possible stage
• Series of methods that have varying resource
requirements and deliver varying certainty
• Add confidence to decisions made in the interests of the
SME
• Add confidence to investment decisions from partners
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Early Value Assessment Cascade
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Development Stages of Early Value Assessment
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Development Stages of Early Value Assessment
• Number of stages that early value assessment can target
• Iterative use of early value assessment can be built into development process
• Create “gates” where appropriate decisions about development can be made
• Fail early and adapt
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Development Stages of Early Value Assessment (cont’d)
Ijzerman and Steuten (2011), Appl Health Econ Health Policy 9, 331-47
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Economic Evaluation
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Important Steps in Economic Evaluation
• Define the decision problem
o patient groups
o comparators
o perspective
• Select type of economic evaluation
o trial- or model-based
o both
• Design trials and evidence synthesis
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CADTH Guidelines
• CADTH provides guidelines on economic evaluation
• Recommendations on selecting population groups and comparators
• Suggests a societal perspective
• Use of quality and length of life
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Trial-Based Economic Evaluation
• Information collected alongside trials
• Covers the time period of the trial
• Short-term estimate of effects and costs
• Suitable if cost and health gains occur over a short time period
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Model-Based Economic Evaluation
• Used to extrapolate beyond the follow up of trials
• Project costs and effects over longer term
• Bring together information from a trial and synthesize with other available evidence
• Assumptions are used to create a long-term model and uncertainty needs to be tested
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Vehicles for Model-Based Economic Evaluations
• Decisions trees
• Markov models
• Computational approaches
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Different Strategies for Cost-Effectiveness
• Increased health gain
o immediate
o longer term
• Reduce procedure costs
• Reduced follow-up costs for health service
• Reduced follow-up costs for patients and carers
• Reduced costs in other areas of public spending
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Designing Trials for Economic Evaluation
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Designing Trials for Economic Evaluation
• Additional cost of conducting economic evaluation is not prohibitive
• Consult health economics experts in the design phase
• Include health economics information in existing systems for collecting data and analysis
• May be some extensions of trials that are more resource intensive (i.e., extended follow up and access to medical records)
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Using Existing Evidence in Economic Evaluation
• Not all information needs to be collected afresh
• Health economics experts will be able to provide information on existing sources of information
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Inputs
Three main types of inputs needed:
• Effectiveness
• Quality of life
• Resource use and cost
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Inputs: Effectiveness
• Primary outcomes from clinical trials
o Efficacy
o Safety
• Important secondary outcomes
• Long-term health outcomes
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Inputs: Quality of Life
• Growing databases and prior evidence of people’s quality of life in different health states
• Beneficial to collect data in your own population
• Reflects that quality of life is important to patients and life years lived alone does not provide enough information
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Preference-based HRQL
(used to calculate QALYs)
Examples:
EQ-5D HUI3 15-D
Scoring function provides a
weighting score of health
status between 0-1.
0 represents death and 1
represents perfect health.
✓
✓
✓
✓
✓
Index Score = 1
If stayed in this health state
over 15 years = 15 QALY
Note that both quality of
life and time is incorporated
in a QALY
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Inputs: Alternative Outcomes
• Non-HRQL/Monetary Natural Health Units
o reduced mortality
o life years saved
o additional correct diagnoses
o blood pressure
• Monetized Health Units
o health outcomes converted to $ through
willingness to pay methodology
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Types of Economic Evaluation
Outcomes
Direct health
care costs
Indirect non-
health costs
Lost
productivity
Cost
Inputs
One-dimensional naturally occurring units = CEA
e.g., lives saved, blood pressure, life years gained
Costs of Services /
Programs / Technologies
Costs are treated the same in
principal.
What is included depends on
perspective!!!
Types differ in how output is
defined and used
Multidimensional health outcomes expressed in
health utilities = CUA
e.g., QALY, DALY, HYE
Health outcomes are expressed in dollars = CBA
e.g., value of one extra year of life is worth $50,000 to society
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Measuring Service Use
“The researcher should identify all activities and resources that are likely to occur within the context of the decision problem (e.g., accounting for the target population, perspective, and time horizon). The conceptualization of the clinical or care pathway for the health condition will provide the basis for identifying relevant resources.”
• Drug/technology
• Staff time
• Hospital beds, surgical theatres,
emergency department visits,
ambulance trips, outpatients
• Primary care
• Home care
• Additional medications used
• Disposables associated with
treatments
• Patient costs: lost salary, travel
costs, childcare costs
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Measuring Service Use (cont’d)
“Resource use should be measured and quantified in as disaggregated a form as necessary for the economic evaluation. The required level of precision for quantifying resource use will guide the resource inputs for the economic evaluation. Where greater precision is required, individual-level costing may be appropriate; however, where resource use is unlikely to vary based on individual characteristics, resource quantities measured by event or case may be sufficient.”
Sources of data:
• Administrative data
• Patient self-report
• Trial CRFs
• Literature
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Estimating Costs
• Published sources
o government (reference costs)
o physician billing (but be careful to distinguish between
costs and charges)
o previous research
o provider accounts
o drug formularies
• Direct valuation (e.g., patient out-of-pocket expenses – travel,
time, child care)
o questionnaires
o diaries
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Determining Cost-Effectiveness
• Incremental cost-effectiveness ratios (ICERs)
o Change in cost required for a unit change in health
o Incremental cost per quality-adjusted life year
• Net benefit
o (incremental benefit x CE threshold) – incremental cost = ???
o Need to know threshold value
CostICER
Outcome
=
Assess against CE threshold
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Interpreting Results
• Projected gains in health
o events
o QALYs
• Projected cost of intervention and subsequent services
• Incremental cost-effectiveness ratios
o cost required for health gains
o cost per quality-adjusted life year (cost / QALY)
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If expected value falls here, B
DOMINATES A because it is more
effective and less costly.
If expected value falls here, B is
DOMINATED by A because it is
less effective and more costly.
If expected value falls here,
THERE IS NO DOMINATION. Must
apply a decision rule for cost
additions.
If expected value falls here,
THERE IS NO DOMINATION. Must
apply a decision rule for cost
savings.
Compared to status quo A, intervention B’s costs and
outcomes can fall in 1 of 4 quadrants
B B
B B
A (status quo)
NW quadrant NE quadrant
SW quadrant SE quadrant
ΔC
OST
SΔOutcomes
Interpreting Results (cont’d)
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Straight line from origin
represents ICER
Most often, new health technologies produce greater
benefit but at greater costs
A (status quo)
B
Represents Societal WTP for
an additional outcome
But how do you know if
outcomes worth the cost?
ΔC
OST
SΔOutcomes
Costs this much more
To get this much more
benefit
CostICER
Outcome
=
Interpreting Results (cont’d)
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A (status quo)
B
ICER < Societal WTP
Thus, compared to status
quo, should adopt B
ICER > Societal WTP
Thus, compared to status
quo, should not adopt B
Decision Rule for CEA
and CUA
Adopt if ICER < Societal WTP
ΔC
OST
SΔOutcomes
$50K per additional outcome
$30K per additional outcome
$20K per additional outcome
Interpreting Results (cont’d)
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Straight line from origin
represents ICER
A (status quo)
B
In CEA and CUA, ICERs need to be
compared with an external threshold to
determine allocative efficiency (i.e.
whether intervention is cost effective)
Compare ICER with
Societal WTP
To summarize
ICER only tells you how much it costs
to produce additional effectiveness
ΔC
OST
SΔOutcomes
Interpreting Results (cont’d)
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0 Health care
expenditures
Health benefit per $1,000
Current treatments
covered by health care
systemBudget
Treatments not covered by
the health care system
Worse
Than
Current
Better
value
Worse value
Opportunity cost
ICERs in Resource Allocation
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0 Health care
expenditures Budget
Opportunity cost
New opp. cost
Health benefit per $1,000
ICERs in Resource Allocation (cont’d)
IHE HTIP Health Economics Educational Workshop
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0 Health care
expenditures
Health benefit per $1,000
Budget
Opportunity cost
New opp. cost
Net Health Effect
of changing how
the health care $
is spent
ICERs in Resource Allocation (cont’d)
IHE HTIP Health Economics Educational Workshop
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Assessing Uncertainty
Parameter uncertainty:
• Value of individual inputs to analysis not known with certainty
• In early evaluation, sample sizes likely to be small and uncertainty high
• Relevant to trials and model-based evaluations
• Dealt with through computational means: probabilistic analysis
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Assessing Uncertainty (cont’d)
Acknowledgement: Edlin et al., Cost Effectiveness Modelling for Health Technology Assessment (2015). Adis.
Structural uncertainty:
• Model structure is a simplification of reality
• But do simplifications exclude important characteristics care processes?
• Risk that an excluded clinical pathway is associated with differences in costs and outcomes and could change the decision
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Assessing Uncertainty (cont’d)
Methodological uncertainty:
• Uncertainty in process of producing evidence included in model and in choice of modelling methods
o How should the effectiveness data from the trial be analysed?
o How should survival curves be extrapolated beyond the trial period?
o How should utility values be estimated for each health state included in the model?
o What model form should be used to predict future resource use?
IHE HTIP Health Economics Educational Workshop
Acknowledgement: Edlin et al., Cost Effectiveness Modelling for Health Technology Assessment (2015). Adis.
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Implications for Market Access
• Collected evidence on efficacy and quality of life can be used across jurisdictions
• Health economics partners can adapt analyses to account for different costs in different settings
• Investing in high-quality health economic input early on makes process smoother later
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[email protected] 1.780.448.4881 www.ihe.ca