CANNeCTIN 2013.Nov.08 Chris Cameron Revised1

A Primer on Health Economics & Integrating

Findings from Clinical Trials into Health Technology

Assessments and Decision Making

Presenter: Chris Cameron

CANNeCTIN

November 8, 2013

Acknowledgements

• Vanier Canada Graduate Scholarships (Vanier CGS)

• Canadian Institutes of Health Research (CIHR)

• CANNeCTIN

• University of Ottawa

• Dr. George Wells, Dr. Doug Coyle, and Dr. Tammy Clifford

• Drug Safety and Effectiveness Network (DSEN)

• University of Ottawa Heart Institute

Health Economics General Concepts

• Economics is the study of unlimited needs/wants constrained by a limited number of resources (scarcity)

• Choices need to be made

• For each choice that is made there is an opportunity cost associated with it

• Similar principles apply when considering health

technologies

• Since we are not able to pay for all health technologies,

we need to make choices

• In doing so, we need to know whether a health

technology is worth the cost

Opportunity Cost in Health Care

Health Economic Evaluation

• Provide a measure of “value for money”

• Comprised of two concepts:

1. Cost

2. Clinical / health effects

• Systematic way to compare health technologies

Comparing Health Technologies

Improved clinical benefits (+)

Incre

ase in

tota

l costs

(+

)

O

Consider cost effectiveness

Consider cost effectiveness

Health Technology A

Better than status quo

?

?

Status quo better than Health Technology A

O =what health technology is compared to (e.g., status quo)

Reduced clinical benefit (-)

Decre

ase in

tota

l costs

(-)

0

0

Health Economic Evaluations

• Typically reported as a ratio (cost effectiveness):

Incremental Cost Effectiveness of Health Technology Aversus Health Technology B

=Total Cost A – Total Cost B

Effect A – Effect B

Cost-Effectiveness Analysis

Incremental Cost Effectiveness of Health Technology A versus Health Technology B

=Total Cost A– Total Cost B

Effect A - Effect B

-In terms of clinically meaningful outcomes e.g., survival, fracture, infection avoided.

Cost-Utility Analysis

Incremental Cost Effectiveness of Drug A versus Drug B

=

Total Cost A – Total Cost B

QALY A - QALY B

Drug impacts patients quality of life ormeaningful outcomes that in turn affect quality of life

What is a Quality Adjusted Life Year (QALY)?

• Outcome measure that incorporates both quantity of life (mortality) and health-related quality of life (morbidity)

• Quantity – how long person lives

• Quality – factor that represents a preference for a health state

• one year of perfect health = one QALY • one year less than perfect health < one QALY • death = zero

Cost-Utility Analysis

Incremental Cost Effectiveness of Drug A versus Drug B

=

$50,000– $37,500

0.9 QALYs-0.8 QALYs= $125,000

per QALY

gained

What Constitutes Good Value for Money?

• Cost-effectiveness threshold:

–maximum that a decision maker is willing to pay for one quality-

adjusted life

• Cost-effectiveness threshold is not empirically estimated in Canada

– range of $20,000-$100,000 per QALY (Canada)

– range of £20,000 to £30,000 per QALY (United Kingdom)

• Not a cost-effectiveness threshold per se but rather a range of threshold

values that may be considered acceptable depending on the context

Incremental Cost

QALYs gained0.1

$12,500

$5,000

$2,500

Cost-effectiveness threshold

of $50,000 per QALY gained

Value for Money?ICUR= $125,000 per QALY

ICUR= $25,000 per QALY

0.25

Net Health Benefit

-0.15 QALYs

0.05

Net Health Benefit

0.05 QALYs

Other Issues to Consider when interpreting Cost per QALY

• Disease severity (e.g., terminally ill)

• Benefits in compliance with treatment (difficult to capture)

• Unmet need – Treatment for which limited options are currently available

• Benefits beyond those to the health care payer (lost productivity, caregiver time)

‘A QALY Is a QALY Is a QALY – Or is it?’

Health Technology Assessment

‘Technology assessment in health care is a multidisciplinary field of policy analysis. It studies the medical, social, ethical, and

economic implications of development, diffusion, and use of health technology’ (International Network of Agencies for Health

Technology Assessment)

Terminology - HTA, EBM, & CER

HTA Products in Canada

Single HTA Multi-HTA

Time & Effort

Health Economic Components

• Review of Published Economic Studies

• Critical Appraisal of Manufacturer’s PharmacoeconomicSubmission

• Primary Health Economic Evaluation

• Budget Impact Analysis

Review of Published Economic Studies

Review of Submitted PharmacoeconomicEvaluation

Model & Pharmacoeconomic Report

Decision Modeling & Primary Economic Evaluation

Introduction

• Self-monitoring of blood glucose (SMBG) has unclear benefits in patients with type 2 diabetes who do not use insulin

• Significant expenditure on blood glucose test strips

• Blood glucose test strips are among the top five classes in terms of total expenditure, with costs exceeding those for all oral antidiabetes drugs combined

• Over 50% is expended on patients who are not using insulin

• Decisions regarding the prescribing and reimbursement of blood glucose test strips require consideration of both clinical and cost-effectiveness information

Methods

• Incremental cost-utility analysis using United Kingdom Prospective Diabetes Study (UKPDS) Outcome Model

• Clinical inputs were obtained from a systematic review and meta-analysis of RCTs comparing SMBG with no self-monitoring

• Costs and utilities were obtained from published sources

• The perspective of this analysis was that of a Canadian publicly-funded Ministry of Health.

• Sensitivity analyses were performed to examine robustness of cost-effectiveness results.

Clinical Trial Data

Clinical Trial Data

Base Case Results

Cumulative incidence(%) in

no self-monitoring of blood glucose

arm

Cumulative incidence(%) in

self-monitoring of blood glucose arm

ARR (%)

NNT

Myocardial infarction 36.58% 36.21% 0.38% 266

Ischemic heart disease 13.12% 13.04% 0.09% 1,136

Heart Failure 17.64% 17.20% 0.44% 228

Stroke 16.34% 16.14% 0.20% 500

Amputation 3.55% 3.34% 0.21% 467

Blindness 8.69% 8.49% 0.19% 518

End-stage renal disease 2.29% 2.21% 0.08% 1,299

Base Case Results (continued)

No SMBG

SMBG Difference Between

SMBG and No SMBG

Quality-adjusted life-years gained* 7.298 7.322 0.02385

Total direct costs [C$]* $27,997 $30,708 $2,711

Incremental cost per QALY gained (ICUR)* $113,643‡

∆ = difference; ICER = incremental cost-effectiveness ratio; ICUR = incremental cost-utility ratio; QALY = quality-adjusted life-year; SMBG = self-monitoring of blood glucose.*Discounted at 5% per year.† Cost in $C per incremental life-year gained.‡ Cost in $C per incremental quality-adjusted life-year gained.

Sensitivity Analysis

ICUR (C$/QALY)

Reference Case $113,643/QALY

Lower limit of 95% CI for WMD in A1c from 7 RCTs (∆A1c=-0.39%) $77,706/QALY

Upper limit of 95% CI for WMD in A1c from 7 RCTs (∆A1c=-0.15%) $189,376/QALY

Price per test strip reduced by 25% (C$0.55/strip) $86,129/QALY

Price per test strip reduced by 50% (C$0.36/strip) $58,615/QALY

Price per test strip reduced by 75% (C$0.18/strip) $31,101/QALY

History of diabetes-related complications reflective of patients in DICE study and Canadian diabetes atlases

$89,656/QALY

SMBG <1/day, (∆A1C=-0.20%; frequency= 0.77 SMBG/day) $81,654/QALY

SMBG 1-2/day, (∆A1C=-0.26%; frequency= 1.46 SMBG/day) $122,416/QALY

SMBG >2/day, (∆A1C=-0.47%; frequency= 3.5 SMBG/day) $169,120/QALY

Baseline A1c< 8.0% (WMD in A1C%=0.16%, Baseline A1C=7.5%) $213,503/QALY

Baseline A1c, 8.0 to 10.5% (WMD in A1C%=0.30%, Baseline A1C=8.7%) $94,443/QALY

Patients using OAD(s) $91,724/QALY

Patients using diet only therapy $292,144/QALY

Primary Economic Evaluation – Blood Glucose Test Strips

• Over $330 million expended annually – 50% is for patients not using insulin

• Top five class in terms of total expenditure in drug plans

• ~ $1/day in patients not using insulin

• Modest clinical benefits in patients not using insulin in non-industry sponsored RCTs

• Frequent use (>1 per day) not cost-effective in patients not using insulin - incremental cost per QALY of $113,643 per QALY

• Reduced price of strips or frequency (e.g., 1 or 2 per week) would improve cost-effectiveness

Cost effectiveness vs Budget Impact Analysis

• Cost effectiveness helps us assess whether a health technology is worth the cost – provides good value for money

• Cost effectiveness does not provide information on affordability, i.e., can we afford it

• A health technology might be cost effective but the financial impact to a drug plan may be such that it cannot list the health technology

• Affordability decisions are made by the participating decision makers based on their budgets and priorities

Cost effectiveness vs Budget Impact Analysis

BIA CEA

Question Is it affordable? Is it good “value for money”?

GoalPlan financial impact (cost containment)

Economic efficiency (max. health with resources)

Unit IndividualEntire Population

Scope of Costs Narrow perspective(decision-maker costs)

Usually broader (health system costs)

Health Outcomes

ExcludedIncluded

Measure Total expenditure ($) Incr. cost per unit of outcome

Market dynamics Usually included Usually not modeled

Time Horizon Usually short (1 – 5 years) Usually longer (lifetime?)

Budget Impact Analysis: Can we afford not to?

Rising Costs of Test Strips

Budget Impact of Test Strips

Could the money be better spent?

The >$150 million spent annually on blood glucose test strips among patients with type 2 diabetes who are not using insulin could be used to pay for……………

2,200 nurses

2,800 dieticians/nutritionists

Universal coverage of insulin for all patientswith type 1 diabetes in Canada.. and then some….

OR

OR

All oralDiabetes medication

OR

Primary Economic Evaluation & Budget Impact Example

Opportunities for enhancing the role of Health Economic Evaluation and HTA in Canada

• Proximity to Decision

• Application of payer-specific data

• Opportunity to integrate HTAs

• Larger role for sub-group analysis

• Measure impact of HTAs

Proximity to Decision

HTA Report

HTA Report & Recommendation

HTA Report & Decision

Evidence Generation & Synthesis Decision Making

“globalize the evidence,

localize the decision”

Payer-specific Data

• Payer specific prices

• Incorporate local clinical/epidemiological data into HTA

• More accurate estimates of budget impact

• Contextual issues

Integrating Health Technology Assessment(s) vs. “One-off” HTA(s)

Assessment of

one technology

in one disease

area

Assessment of

multiple

technologies in

one disease area

Assessment of

one technology

in multiple

disease areas

Assessment of

multiple

technologies in

multiple disease

areas

# of health technologies considered simultaneously

# o

f d

ise

as

e a

rea

s c

on

sid

ere

d s

imu

lta

ne

ou

sly

More seamless integration of evidence along the continuum

• Seamless integration of network meta-analysis with economic analysis

• Value-based pricing

• Managed entry agreements

• Research Prioritization

Enhanced role of sub-group analysis

Studies typically report

mean or average effect

estimates. However, there

are individuals on both

sides on the mean – those

who benefit more and those

who benefit less (in some

cases those who don’t

benefit at all).

Conveying Opportunity Costs of Decisions

The >$150 million spent annually on blood glucose test strips among patients with type 2 diabetes who are not using insulin could be used to pay for……………

2,200 nurses

2,800 dieticians/nutritionists

Universal coverage of insulin for all patientswith type 1 diabetes in Canada.. and then some….

OR

OR

All oralDiabetes medication

OR

Current Challenges with applying Health Economic Evaluation and HTA in Canada

• Health economics capacity in Canada

• Issues not captured in a QALY

• Prioritization of HTA Topics & Level of effort of Health Economic Evaluation

• Perspective of HTA

• Coordination of HTA & Health Economic Evaluations in Canada

Decision Modeling & Health Economics Capacity in Canada

Government & Quasi-

Government

Pharmaceutical & Biotech

Sector

Insurance Industry

Healthcare Consulting

Universities

• Expertise in Decision Modeling & Health economics limited in Canada

• Recruitment and retention is a challenge in Canada

• Capacity within HTA units often requires a blend of internal health economist(s) expertise and external contractors

Prioritization of HTA’s and level of effort devoted to Health Economic component

Prioritization Criteria

Procedures

Devices

Drugs

Tim

e &

Eff

ort

Primary Economic

Evaluation & Budget

Impact Analysis

“Small Ticket”

Health Technologies

“Big Ticket”

Health

Technologies

Review of Published

Economic Studies

and/or rapid budget

impact analysis

Critical Appraisal of

Pharmacoeconomic

Submission (if

applicable)

Incorporating items not captured in a QALY

• Disease severity (e.g., terminally ill)

• Benefits in compliance with treatment (difficult to capture)

• Unmet need – Treatment for which limited options are currently available

• Benefits beyond those to the health care payer (lost productivity, caregiver time)

‘A QALY Is a QALY Is a QALY – Or is it?’

Incorporating elements not captured in QALYs

Emerging Approaches for formally incorporating these elements

Breaking the silos- Enhanced Pan-Canadian Coordination

- Budget

impact/Affordability

- Price Negotiation

- Managed Entry

Agreements

- Efficacy versus Tx

- Cost-effectiveness

versus Tx

- Efficacy versus placebo

- Safety

Other

Health

Technologies?

Purchasing & Price Negotiation Power

Perspective of Evaluation

- 2,000 new taxi cabs

licences

In New York City

- Generate one time

$ 1 Billion US

Payer

Considerations

Health System or Societal Considerations

- Catch taxi quicker but

in taxi longer

- $500 million a year in

lost time

• Clinical trial and epidemiological data form the

foundation for health economic evaluations

• Health economics is an essential component of HTA

• There are several health economic methodologies

that are applicable for decision making

• There are opportunities for improving the application

of health economic evaluation and HTA in Canada

• There are also challenges but these challenges are

not insurmountable

Summary & Conclusions

Questions?

cgcamero@gmail.com

What is a network meta-analysis?