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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
What is a network meta-analysis?
