Health Economics II –2010 Health Economic Evaluations Part III
Lecture 2
Cost-effectiveness analysisQALYs and cost-utility analysis
Nils-Olov Stålhammar
Type of analysis - the outcome measurement
Type of analysis Costs Effect
Cost-minimization Money Not measured
Cost-effectiveness Money Natural units; Life years gained, relapses
Cost-consequence Money Several disease specific measures
Cost-utility Money Combining length and quality of life, QALYs
Cost-benefit Money Money
Cost-effectiveness analysis
• CEA is of most use when operating with a given budget and there is a limited range of options within a given field
However, the measure of effectiveness must be appropriate with respect to the objective
• But can also guide broader resource allocation, but with a ‘narrow’ measure of effectiveness (compared to CUA more is left to the decision maker’s judgment )
Incremental cost-effectiveness ratio
• ICER=
Decision rules of CEA/CUA
Average cost-effectiveness ratio• CERa=Ca/Ea
• CERb=Cb/Eb
ba
ba
EECC
C
E
a
b
0
Decision rules of CEA/CUA
Effect EA
Possible outcomes in CEA(CUA)Comparison of two alternatives, A and BAlternative B may fall in area I, II, III or IV
Cost
CA
IVHigher costPoorer effect
IHigher costBetter effect
IILower costBetter effect
IIILower costPoorer effect
A
Decision rules of CEA/CUAExample from Karlsson and Johannesson, 1996*
Assumptions• Three patient groups of equal size, 1000 homogeneous pts per
group• Mutually exclusive treatments are available, i.e. a patient can
only receive one of the treatments• Constant returns to scale, i.e. C and E per patient are
independent of the number of patients treated• C and E in one group are not dependent on choice of treatment
in another group• Fixed budget, i.e. a given amount of resources is available
*) Karlsson, Johannesson. The decision rules of cost-effectiveness analysis. Pharmacoeconomics, 1996;9:113-20
Decision rules of CEA/CUAExample from Karlsson and Johannesson, 1996
Patient group I Patient group II Patient group IIIC E C/E C E C/E C E C/E
A 100 10 10 F 200 12 17 K 100 5 20
B 200 14 14 G 400 16 25 L 200 8 25
C 300 16 19 H 550 18 31 M 300 12 25
D 400 19 21
E 500 20 25
Average cost-effectiveness ratios do not provide relevant informationIncremental cost-effectiveness ratios have to be calculated!
Decision rules of CEA/CUAExample from Karlsson and Johannesson, 1996
Patient group I Patient group II Patient group III
ΔC ΔE ΔC/ΔE ΔC ΔE ΔC/ΔE ΔC ΔE ΔC/ΔE
A 100 10 10 F 200 12 17 K 100 5 20
B 100 4 25 G 200 4 50 L 100 3 33
C 100 2 50 H 150 2 75 M 100 4 25
D 100 3 33
E 100 1 100
ICER is estimated between treatment alternatives within the same patient group, i.e. a comparison with the next most effective mutually exclusive alternative
Decision rules of CEA/CUAExample from Karlsson and Johannesson, 1996
• Dominance– A treatment is dominated if it is more costly and less effective than another
treatment; d is dominated by a• Extended dominance
– A treatment can also be dominated when its ICER is higher than that of the next more effective treatment; b should be ruled out because of extended dominanceC
bc
0E
a
d
A combination of a and c, i.e. some patients get a and some patients get c, will give more effectiveness at the same cost or same effectiveness at a lower cost, than b alone
Decision rules of CEA/CUAExample from Karlsson and Johannesson, 1996
Patient group I Patient group II Patient group III
ΔC ΔE ΔC/ΔE ΔC ΔE ΔC/ΔE ΔC ΔE ΔC/ΔE
A 100 10 10 F 200 12 17 K 100 5 20
B 100 4 25 G 200 4 50 L 100 3 33
C 100 2 50 H 150 2 75 M 100 4 25
D 100 3 33
E 100 1 100
ICER is estimated between treatment alternatives within the same patient group, i.e. a comparison with the next most effective mutually exclusive alternative
Decision rules of CEA/CUAExample from Karlsson and Johannesson, 1996
Patient group I Patient group II Patient group III
ΔC ΔE ΔC/ΔE ΔC ΔE ΔC/ΔE ΔC ΔE ΔC/ΔE
A 100 10 10 F 200 12 17 K 100 5 20
B 100 4 25 G 200 4 50 M 200 7 29
D 200 5 40 H 150 2 75
E 100 1 100
Dominated alternatives are excluded and ICERs are recalculated
0
100000
200000
300000
400000
500000
600000
0 5000 10000 15000 20000 25000
E
C
Patient group I Patient group II Patient group III
Decision rules of CEA/CUAExample from Karlsson and Johannesson, 1996
A
B
C
D
E
F
G
H
K
L
M
Decision rules of CEA/CUAExample from Karlsson and Johannesson, 1996
Treatment alternatives to be implemented can be determined by• The size of the budget available
– The maximum price we are willing to pay for a unit of effectiveness will then be determined implicitly
or• The maximum price we are willing to pay for a unit of
effectiveness– The size of the budget will then be determined implicitly
Decision rules of CEA/CUAExample from Karlsson and Johannesson, 1996
The budget as the decision rule
Budget Treatment MC Effectiveness
Group I Group II Group III
0-99 900 Some: 0Some: A
0 0 10 0-9 990
100 000 A 0 0 17 10 000
100 200-299 800
A Some: 0Some: F
0 17 10 012-21 988
300 000 A F 0 20 22 000
300 100-399 900
A F Some: 0Some: K
20 22 005-26 995
Decision rules of CEA/CUAExample from Karlsson and Johannesson, 1996
0
20
40
60
80
100
120
0 5000 10000 15000 20000 25000
Effectiveness
MC
Patient group IPatient group IIPatient group III
Decision rules of CEA/CUAExample from Karlsson and Johannesson, 1996
0
20
40
60
80
100
120
0 5000 10000 15000 20000 25000
Effectiveness
MC
Patient group IPatient group IIPatient group III
All in I get A
In I some get A some get B
All in I get B
Decision rules of CEA/CUAExample from Karlsson and Johannesson, 1996
Marginal cost of producing effectiveness
0
20
40
60
80
100
120
0 10000 20000 30000 40000 50000 60000Aggregate effectiveness
Mar
gina
l cos
t (IC
ER)
A F K BM
DG
H
E
Area under MC curve = total costA specific price (threshold) implies a specific budget
Type of analysis - the outcome measurement
Type of analysis Costs Effect
Cost-minimization Money Not measured
Cost-effectiveness Money Natural units; Life years gained, relapses
Cost-consequence Money Several disease specific measures
Cost-utility Money Combining length and quality of life, QALYs
Cost-benefit Money Money
Quality Adjusted Life YearsHealth index orUtility or QALY weight
0
0.80.91
Life expectency, years4 5
Without treatment
With treatment
QALYs without treatment = 4 x 0.9 = 3.6QALYs with treatment = 5 x 0.8 = 4.0
How to estimate QALY-weights
• Rating Scale, Category Scaling, Visual Analogue Scale– Note; respondents are not faced with a ’choice’
• SG – Standard Gamble– A choice between a certain intermediate health state
and a treatment with two possible outcomes, dead and healthy
• TTO – Time Trade Off – A choice between living for a given time in a poor
health state and living for a shorter time in full health
P ( 0<P<1) is used as the index of QoL
STATE i
HEALTHY
DEADAlte
rnative 1
Probability p
Probability 1-p
Alternative 2
Standard Gamble
Time
QoL
Alternative 2
Alternative 1
HEALTHY 1.0
STATE i hj
DEAD 0
0 t T
The value of t for which the respondent is indifferent is used to construct an indexof QoL for the state i: h = t
T
Time Trade Off
Some quality weights (utilities) for health states
Full health (reference state) 1.00Life with menopausal symptoms (RS) 0.99Side effects of hypertension treatment (RS) 0.95-0.99Mild angina (RS) 0.90Kidney transplant (TTO, patients) 0.84Moderate angina (RS) 0.70Hospital dialysis (TTO, Hamilton, patients) 0.59Hospital dialysis (TTO, St John´s, patients) 0.57Hospital dialysis (TTO, general public) 0.56Severe angina (RS) 0.50Anxious/depressed much of the time (TTO) 0.45Being blind or deaf or dumb (TTO) 0.39Dead (reference state) 0.00
Source: Torrance (1987)
Health state Quality weight
Preferences, values and utilities
Response method Question framing
Certainty (values) Uncertainty (utilities)
Scaling Rating scaleCategory scalingVAS
Choice TTOPerson trade-off *)
SG
*) Person Trade Off measurement; How many pts in a certain state of health should have their lives extended by one year in order to be equivalent to extending the lives of 100 healthy individuals with 1 year?
To estimate QALY-weights – some remarks
• VAS less ’attractive’ from a theoretical point of view• SG can be expected to result in higher weights than TTO
due to:– People are risk averse– People have a positive rate of time preference
• SG may be preferable compared to TTO since it involves uncertainty
• However, the ability to map utilities can be questioned for both methods
• Who is to give the weights?– Patients know what it is like, but cope– General public bear the costs and are potential patients
Multi-attribute health status classification • Health states are described with respect to a number of
attributes (e.g. mobility, pain..), each with a number of levels
• Utility scores are derived with VAS, SG or TTO, but necessary to interpolate some of the utilities– Composite approach
• Respondents value a subset of states• Econometric modelling is used to give values to all states
– Decomposed approach• Involves asking respondents to value each level within a
dimension/attribute assuming that all other dimensions are constant
• Composite health states are generated with a multi-attribute function
• Stringent conditions for the multi-attribute function
Multi-attribute health status classification
• EuroQoL; EQ-5D– Five dimensions; mobility, self-care, usual activities,
pain/discomfort, anxiety/depression– Three levels for each dimension– Also a VAS– 243 health states plus ‘unconscious’ and ‘dead’– Values derived for different countries, different
population groups and with different techniques (VAS and TTO)
http://www.euroqol.org/home.html
EQ-5DMobilityI have no problems in walking aboutI have some problems in walking aboutI am confined to bed
Self-CareI have no problems with self-careI have some problems washing or dressing myselfI am unable to wash and dress myself
Usual Activities (e.g. work, study, housework, family or leisure activities)I have no problems with performing my usual activitiesI have some problems with performing my usual activitiesI am unable to perform my usual activities
Cont…
EQ-5D…ContPain/DiscomfortI have no pain or discomfortI have moderate pain or discomfortI have extreme pain or discomfort
Anxiety/DepressionI am not anxious or depressedI am moderately anxious or depressedI am extreme anxious or depressed
Multi-attribute health status classification
• The McMaster Health Utility Index– HUI3 has eight attributes; vision, hearing, speech,
ambulation, dexterity, emotion, cognition, and pain– 5-6 levels per attribute– Defines 972 000 unique health states– Utility scores derived with VAS and SG among 504
adults, Hamilton, Ontario (replicated in French population with similar results)
http://www.healthutilities.com/
Guidelines’ views
• The Dental and Pharmaceutical Benefits Agency, (Tandvårds och läkemedelsförmånsverket, TLV):
– “QALY weightings based on appraisals of persons in the health condition in question are preferred before weightings calculated from an average of a population estimating a condition depicted for it.”
• NICE:– “Information on changes in HRQL as a result of treatment should be
reported directly by patients (and directly by carers when the impact of treatment on the carer’s health is also important). The valuation of changes in HRQL reported by patients should be based on public preferences elicited using a choice-based method in a representative sample of the UK population.”
Alternatives to QALYs• HYE - Healthy Years Equivalent
– The number of years in perfect health that are equivalent to a particular profile of health states over remaining life time
• SAVE- Saved Young Life Equivalents – Based on Person Trade Off measurement; extending
lives of 100 healthy individuals with 1 year = extending lives of X patients in designed health state with 1 year
• DALY – Disability Adjusted Life Years– Measures time lost due to premature death (compared
to the greatest reported national average life expectancy) and due to disability (scores on a discrete scale with 7 categories, assigned by health care workers as PTO-scores)
From Neuman PJ, et al. Value in Health 2005;8(1):3-9
Growth in CUA- literature
From Neuman PJ, et al. Value in Health 2005;8(1):3-9
Quality of CUA- literature
’Old’ exam question. Part III a) Give two reasons why QALY is an often
recommended measure of outcome in a health economic evaluation.
b) Describe in detail VAS, SG and TTO as methods for eliciting preference weights (QALY weights). (Use illustrations.)
c) Why can SG be expected to result in higher QALY weights than TTO?
’Old’ exam question. Part III Assume the following:- There are three patient groups with 1000 homogeneous patients per group- A number of mutually exclusive treatments are available for each patient
group (see table below), i.e. a patient can only receive one of the treatments
- There are constant returns to scale, i.e. cost (C) and effect (E) per patient are independent of the number of patients treated
- C and E in one group are independent on choice of treatment in another group
- In addition to the 11 alternatives listed in the table, there also exist ‘do nothing’ alternatives which are assumed to have zero cost and zero effectiveness
- The fixed budget that can be used for treatment in these three patient groups is 700 000.Cont.
’Old’ exam question. Part III
Cont.
Patient group I Patient group II Patient group III
Alternative C E Alternative C E Alternative
C E
A 100 10 F 200 12 K 100 5B 200 14 G 400 16 L 200 8C 300 16 H 550 18 M 300 12D 400 19
E 500 20
Cont.
’Old’ exam question. Part III Cont. • a) Which treatments should be chosen, given that the
objective is to maximise the effectiveness of the resources spent on treatment for these 3 patient groups? (You must describe and illustrate the necessary steps in the calculations needed to arrive at your answer.)
• b) What is the total effectiveness and the marginal cost of producing effectiveness when the budget is being optimally used, i.e. when the budget is allocated in accordance with your answer to question a).
’Old’ exam question. Part III While discounting of costs occurring in the future is generally accepted, discounting of future health effects is sometimes questioned. Describe two often given reasons for not discounting future health effects and give two arguments in favour of discounting future health effects.
’Old’ exam question. Part III Explain the difference between ‘utilities’ and ‘values’. Give a plausible explanation to the common empiric finding that the utility for a specific health state is higher than the corresponding value.
’Old’ exam question. Part III Regarding the estimation of QALYs a) Describe in detail Visual Analogue Scale, Standard Gamble and Time Trade Off as methods for eliciting preference weights (QALY weights). Support your description by using illustrations. b) An alternative way of measuring the effect of, for instance, a treatment on health outcomes is to use a pre-scored multi-attribute health status classification system. Give a brief description of what this means.
’Old’ exam question. Part III According to an assessment of two treatment alternatives, alternative A results in a cost per patient of 1 MSEK and a life expectancy of 10 years. The corresponding numbers for alternative 2 are 1,5 MSEK and 12 years. a) Calculate average and incremental cost-effectiveness ratios. b) Is it possible to decide which alternative that is most cost-effective? Explain. c) Suggest cost and effectiveness for a hypothetical third alternative that would be dominated by extended dominance. Explain the concept of extended dominance.
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