HEA PTP: M212 Economic Evaluation 1 Session 7: Defining & Assessing Benefits for Economic Evaluation 1.Why, what and how of benefits. 2.Benefit assessment

HEA PTP: M212 Economic Evaluation 1

Session 7: Defining & Assessing Benefits for Economic Evaluation

1. Why, what and how of benefits.

2. Benefit assessment for CEA.

3. Benefit assessment for CUA.

4. Practical exercise in estimating benefits for CUA.


Why Measure Benefits?

Efficiency

Maximise benefits for given resources


Key Features of Economic Evaluation

Economic evaluation is

“The comparative analysis of alternativecourses of action in terms of both their

costs and consequences in orderto assist policy decisions”.

1. Costs and consequences - efficiency!

2. Comparative - relative efficiency


Benefit Categories

InterventionIntervention

Direct BenefitsDirect Benefits Indirect BenefitsIndirect Benefits

Savings in productivity.Savings in

productivity.

Improved patient health status / utility.

Improved patient health status / utility.

Reduced health services

resource use eg. LoS.

Reduced health services

resource use eg. LoS.

Family and friends quality

of life.

Family and friends quality

of life.


Should Changes in Productivity be Included?

May depend upon viewpoint (govt., societal, NHS)

Main issues are level of ‘true’ loss and comparability• Measurement of value of loss (gross wage, friction cost)• Double-counting, especially with CUA/CBA• Comparability with ‘health’ focus (viewpoint again)• Comparability with other studies (applies to other variables also)

Solution?• Provide a good reason why they should be measured/included• Report separately from other results• Differentiate measurement and valuation


Should Benefits be Discounted?

Why not discount?

• Health, unlike resources, cannot be traded over time• Inter-generational equity (cf environmental economics)• If are discounted, may be different rate to cost

Why discount?• Inconsistent treatment costs and benefits• Inconsistent policy, especially in comparison with other sectors• Counter-intuitive conclusions for investment. eg always postpone!• Individuals do trade health over time ((dis)invest in health)


Negative And Positive Benefits (and Costs!)

C/E ratio = net cost/net benefits

Net cost = positive cost + negative cost

Net benefit = positive benefit + negative benefit

Negative cost = cost saving, eg reduced LoS

Negative benefit = reduced health, eg adverse event


Types of Economic Evaluation

Type of Analysis ResultResultConsequencesCosts

Cost Minimisation

Cost BenefitCost Benefit

Cost Utility

Cost Effectiveness

Dollars

Single or multiple effects not necessarily common.

Valued as “utility” eg. QALY

Different magnitude of a common measure

eg., LY’s gained, blood pressure reduction.

Least cost alternative.Least cost

alternative.Identical in all

respects.

DollarsDollars

Dollars

DollarsCost per unit of

consequence eg. cost per LY gained.

Cost per unit of consequence eg.

cost per LY gained.

Cost per unit of consequence eg. cost per QALY.

Cost per unit of consequence eg. cost per QALY.

As for CUA but valued in money. eg

willingness-to-pay

As for CUA but valued in money. eg

willingness-to-pay

Net $ cost: benefit ratio.

Net $ cost: benefit ratio.


How Can Health Be Measured?

Length of life• Mortality (numbers, rates, SMRs)

• Life expectancy

• Life years lost

Quality of life• Numerous QoL measures (generic and specific)

• SF-36, Nottingham Health Profile, Guttman Scale, Rotterdam Symptom Checklist, Hospital Anxiety and Depression scale etc….


Process of Benefit Assessment

1. Identification:

2. Measurement:

3. Valuation:

Mortality.Quality of life.

Measure in natural physical units (eg. number of deaths averted).

Value benefits if appropriate ie. if performing CUA or CBA.


Issues in Assessing Benefits for CEA

1. Efficacy vs effectiveness vs efficiency.

2. Intermediate versus final outcome.

3. Sources of data for CEA.


Efficacy Vs Effectiveness Vs Efficiency

Efficacy = measure of effect under ideal conditions.

Effectiveness = effect under ‘real life’ conditions.

Efficacy does not imply effectiveness

Efficiency = relationship between costs & benefits.

Effectiveness does not imply efficiency


Intermediate Vs Final Outcome Measures

Final = change in health (status) resulting from the programme.

Intermediate = change in clinical indicator resulting from the programme.

Need to establish causal link betweenintermediate and final outcome measure.


Examples of Intermediate Vs Final Outcomes Indicators (PBAC (PBS) Oz)

Condition being Final outcome Surrogate Outcome Indicatorstreated indicator

Coronary thrombosis Quality-adjusted Number surviving Number with specified Number achieving coronary(thrombolysis survival level of left ventricular re-perfusion

function

Stable angina Quality-adjusted Number with Number who can walk Number with adequate(various interventions) survival acceptable a specified distance relief of pain

quality of life

Asthma Quality-adjusted Number surviving Number with adequate Number achieving a target(various drugs) survival control of bronchial level of airways functions

hyperreactivity

Depression Quality-adjusted Number avoiding Quality of life (may be Number achieving a target(various drugs) survival suicide improved by drugs) Hamilton or Montgomery-

Asberg Depression RatingScale

Hypertension Quality-adjusted Number avoiding Quality of life (may be Number achieving a target(various drugs) survival a stroke worsened by drugs) blood pressure


Sources of Effectiveness Data

1. Clinical trials, eg RCT’s.

2. Epidemiological studies, eg cohort studies.

3. Synthesis methods, eg meta-analyses.

4. Use of modelling.


Randomised Controlled Trials

‘Gold standard’ - minimal bias and confounding.

Disadvantages:

1. Often establishes efficacy, not effectiveness.2. Selective subjects used.3. Limited opportunity to conduct.4. Limited time horizon.5. Costly to conduct.6. Often unethical and/or unfeasible.


Epidemiological Studies

Real life setting - establish effectiveness

Disadvantages:

1. Potential for significant bias and confounding.2. Causal link can be weak.


Decision Rules: CEA

CEA result = CEI (c/e). eg cost per LY gained

Decision rule = adopt lowest CEI

Application = technical efficiency

Qst addressed = “Should we undertake program “X” or

program “Y” to treat condition “A”?


Limitations of Measurements/Need for Valuation

Ambiguity in assessing overall improvement or detriment in health

Allocative efficiency - value of benefits > (opportunity) cost


Valuation Versus Measurement

Value is determined by benefits sacrificed elsewhere (weighted preference)

Valuation requires a trade-off between benefits - measurement does not


Methods of Valuing Health

‘Utility’ or ‘preference’ assessment• Quality-Adjusted Life Years (QALYs)• Variants on QALY - Years of Health Life (YHL), Health-Adjusted

Person Years (HAPY), Health-Adjusted Life expectancy (HALE)• Healthy-Year Equivalents (HYEs) (based on ‘sequence’ of SG)• Saved-young-life equivalent (SAVE) (based on PTO)

Monetary terms eg WTP• Willingness-to-pay (WTP)• Human Capital


Quality Adjusted Life Years(QALYs)

Adjusts data on quantity of life years saved to reflect a valuation of the quality of those years

If healthy: QALY = 1

If unhealthy: QALY < 1


Qol Profile

0 5 10 15

No Life Years = 15

No QALYs = 11

QL Weighting


QALY Procedure

Identify possible health states - cover all important and relevant dimensions of QoL

Derive ‘weights’ for each state

Multiply life years (spent in each state) by ‘weight’ for that state


“Utility” Weight

Utility = satisfaction/well-being - reflects a consumers (weighted) preferences

Utility weights are necessarily subjective - they elicit an individual’s preferences for, or value of, one or more health states.

Must: 1. Have interval properties

2. Be ‘anchored’ at death and ‘good health’


Techniques For Measuring “Utility”

Variety of techniques available, including:

Time Trade off

Person Trade Off

Standard Gamble

Rating Scale


Obtaining “Utility” Weights

Two means of obtaining “utility” weights:

1. Evaluation specific/’holistic’ measures - develop evaluation specific (‘holistic’) description of health state and then derive weight for that specific state directly by population survey

2. Use ‘generic’ or ‘multi-attribute’ instruments - use predetermined weights, based on combination of

dimensions of health yielding a finite number of health states/values


Evaluation Specific/‘holistic’ Measure

Advantages: 1. Sensitive

2. Account for wider QoL(eg process, duration, prognosis)

Disadvantages 1. Cost and time intensive

2. Lack of comparability


Generic (MAU) Instruments

Advantages: 1. Supply weights “off the shelf”2. Comparability

Disadvantages: 1. Insensitive to small changes in health

2. Dimensions may not be

sufficiently comprehensive

3. Weights may not be

transferable across groups


Some Other Issues

Choosing respondents for utility estimation - whose values count?

What constitutes a ‘correct’ health state description?

What is the appropriate ‘measurement’ technique?

Aggregation of values?

Biases - ageist, life enhancing versus life-saving etc.


Decision Rules: CUA

CUA result = CEI (c/e). eg cost per QALY gained

Decision rule = adopt lowest CEI

Application = 1. technical efficiency

2. possibly allocative efficiency within

health care sector

Qst addressed = 1. Should we undertake program “X”

or “Y” to treat condition “Z”?

2. Should we treat condition “A” or “B”?


Decision Rules: Issues

1. Perspective - Health Care Sector

- Purchaser/Provider

- Societal

2. Comparator

3. Budget constraint/indivisibility

4. NPV vs BCI

5. Limited nature of economic evaluation


CUA and Rationing

Market system - price mechanism establishes equilibrium (efficient allocation)

Non-market system - absence of price as allocative tool leads to other, non-price, techniques

Issue is one of: (i) philosophical basis for rationing; and (ii) applied technique for rationing


Methods of Explicit Rationing

L ayp a rticip a tion

M e d ica lp a te rn a lism

P o lit ica lp ro cesses

E q u ity E ff ic ie n cy

T e ch n ica lm e th o ds

E xp lic itra tion ing

(Coast et al, Priority setting: the health care debate, John Wiley, 1996)


Explicit Rationing: Technical Methods

Single principle

Little distinction between setting priorities at different levels

Examples

• maximising health gain• need-based rationing• lotteries• age-based rationing


Technical Method: ‘QALY League Tables’

Economic evaluation produces information on cost-effectiveness

If using comparable outcomes (eg QALY) can ‘rank’ according to c/e

Can use resultant ‘league table’ to allocate resource to most c/e first


League Tables: Handle With Care!

Studies show differences in methodology

• choice of discount rate• method of estimating utility values• range of costs included• choice of comparator

Requires consistent methodology, ‘admission criteria’ for inclusion, applicability in local decision context


The Oregon Plan

1987 - decision to stop funding for organ transplantation

1989 - Oregon Health Services Commission begins work

1990 - List 1

1991 - List 2

1994 - plan begins


Oregon List Version 1

Efficiency principle

1600 condition/treatment pairs

Cost/QALY gained

• social values• outcome• cost



“... looked at the first two pages of that list and threw it in the trash can”

“... the presence of numerous flaws, aberrations and errors”

(Harvey Klevit, member, Oregon Health Services Commission)



Equal treatment for equal need

709 condition/treatment pairs

Method:

• Development & ranking of categories• Ranking C/T pairs within categories

– Public preferences– Outcome

• Professional judgement



Top Five C/T pairs

1 Pneumonia - medical

2 Tuberculosis - medical

3 Peritonitis - medical/surgical

4 Foreign body - removal

5 Appendicitis - surgical

Bottom Five C/T pairs

705 Aplastic anaemia - medical

706 Prolapsed urethral mucosa - surgical

707 Central retinal artery occlusion - paracentesis of aqueous

708 Extremely low birth weight, < 23 weeks - life support

709 Anencephaly - life support


Summary

1. Benefits must be assessed to establish efficiency.

2. Breadth and depth of benefits measured (& valued) varies across type of economic evaluation.

3. Difference between valuation and measurement.

4. Debate on role of CUA (& CEA) in allocative efficiency

5. Beware ‘league tables’!

Documents

HEA PTP: M212 Economic Evaluation 1 Session 7: Defining & Assessing Benefits for Economic Evaluation 1.Why, what and how of benefits. 2.Benefit assessment