2.1 Economic evaluation, decision-modelling in health care, solidarity and distributional cost effectiveness Flashcards
why use economic evaluation in healthcare
resources are scarce in relation to healthcare needs
decision-making is a tool to prioritise between competing uses of resources, to obtain maximum benefit for any budget
full economic evaluations examine:
both costs and consequences
comparing alternative courses of action
partial economic evaluations examine:
costs and consequences
full economic evaluation - which analysis
cost-effectiveness analysis (CEA)
cost-utility analysis (CUA)
cost-benefit analysis (CBA)
partial economic evaluation - which analysis
cost-consequence analysis (CCA)
cost-minimization analysis (CMA)
opportunity costs
if we choose option A, that means that we cannot dedicate the resources to option B.
The benefits that option B would have yielded are the opportunity costs of choosing option A.
cost-consequence analysis
costs and consequences are presented, the reader decides how to value both.
the ‘simplest’ way of presenting the costs and consequences of two (or more) interventions. The objective of this analysis is to neutrally present all the information on costs and consequences of the alternatives.
cost and consequences are neutrally presented
advantage cost-consequence analysis
all costs and consequences are communicated transparently, without normative judgement on the importance of various effects
disadvantage cost-consequence analysis
it relies on the expertise of the reader to make a judgement about the costs and consequences
cost-minimalization analysis
requires that the health outcomes of the alternatives are identical and only looks at which option has the lowest costs.
the type of costs that are taken into account depend on the perspective, but this usually only includes ‘direct’ costs of the treatment. Objective of this analysis is the minimization of costs
advantage cost-minimalization analysis
easy to interpret
disadvantage cost-minimalization analysis
only appropriate when there is equivalence in clinical outcome ( is hardly ever the case)
costs-effectiveness analysis
compares the costs and consequences of two different options, using a ratio of cost per unit of health outcome. Can be used if outcomes vary, but can be expressed in common natural units (such as reduction in blood pressure, cases prevented, etc.)
- calculate the costs / effects of both interventions
- calculate the difference in costs / effects
- calculate the incremental cost-effectiveness ratio
advantage cost-effectiveness ratio
allows for comparing interventions across diseases and relatively easy to interpret
disadvantage cost-effectiveness ratio
one-dimensional outcome
cost-utility analysis
uses the quality-adjusted life year (QALY) as the measurement unit for the effect of the health intervention. Costs are usually measured in monetary terms, utility in terms of QALY’s. Cost-utility analysis can be considered a subset of cost-effectiveness analysis
disadvantage cost-utility analysis
comparisons to interventions in other social domains (education, safety, etc.) can be challenging, as the reader still has to determine the monetary value of a QALY
advantage cost-utility analysis
comparability of results to other studies
cost-benefit analysis
compares the monetary costs and benefits of health care interventions.
Requires monetarizing health care outcomes using people’s willingness-to-pay.
Essentially, it seeks to answer the question: ‘how does total social welfare change?’, which makes it a welfarist approach.
advantage cost-benefit analysis
provides a ‘straightforward’ answer to the question if a health intervention is worth financing. Allows for comparisons across other social domains.
disadvantage cost-benefit analysis
monetarizing health outcomes is difficult, both practically and conceptually. Placing a monetary value on health is often considered immoral.
how does a cost-benefit analysis uses standard welfare economics?
sum of individual utility = social welfare
determine social costs and benefits = willingness to pay
Kaldor-Hicks criterion
- As long as winner can potentially compensate the losses of losers, there is an increase in welfare
what is not a part of the calculation in a standard cost-benefit analysis?
distributional effects (do we perceive the outcome as fair?)
productive and allocative efficiency
cost-benefit analysis allows for answering questions of allocative efficiency
cost-effectiveness analysis focusses rather on productive efficiency.
allocative efficiency
the distribution of goods and services over various sectors maximizes social welfare, so production is aligned with consumer preferences.
This allows for comparing the welfare gains of unrelated policy domains, such as investing in breast cancer screening versus bike path infrastructure.
Allows for answering the question if an expansion of the budget (rather reallocation of the existing budget) is worthwhile.
productive efficiency
a good (health outcome) is produced at the lowest possible cost.
So: the maximisation of health outcome for a given cost, or the minimisation of cost for a given outcome.
This allows for determining which intervention offers health against the lowest costs.
values of QALY (Quality-Adjusted Life Year)
The quality of life takes a value between 0 and 1.
A value of 0 means death and a value of 1 means perfect health. Values below 0 are not possible.
how is quality of life assesment made?
First, a health state is defined.
Second, individuals assess different health states and place a value on each of them.
direct methods QALY measuring
visual analogue scale (rating scale)
time trade-off
standard gamble
indirect methods QALY measuring
EQ-5D
SF-6D
time-trade off
asks respondents to choose between two alternative scenarios: living in an impaired health state or living in full health for a shorter period of time.
Time in full health is varied until the respondent is indifferent.
This ‘point of indifference’ is the utility value. Utility = (years in health condition) / (years in perfect health)
utility in time trade-off
Utility = (years in health condition) / (years in perfect health)
standard gamble
asks people to choose between gamble (full health, but with risk of death) and certainty (living in an impaired health status for sure).
Again, the utility is the point at which the respondent is indifferent between both options.
EQ-5D
Individual describes health condition using EQ-5D questionnaire.
This gives the EQ-5D health state. Other individuals express preference for this health condition, which gives ‘value sets’ for health states.
what is a subset of cost-effectiveness analysis
cost-utility analysis
ICER
incremental cost-effectiveness ratio
an intervention is compared to the next-best alternative (‘opportunity costs’).
That is: you should compare to the next most effective (in terms of QALY gains), non-dominated alternative.
ACER
average / absolute cost-effectiveness ratio
an intervention is not compared to the next-best alternative, but to a baseline or ‘do-nothing’-option
calculating ICER
- calculate the costs and effects for both interventions
- calculate the difference in costs and in effects = ‘incremental’ costs and effects
- calculate the incremental cost-effectiveness ratio
what is inherent to measuring cost-effectiveness
that you compare one intervention to another. When measuring cost-effectiveness, we are interested in the difference in costs and effect
what can using ACER lead to?
using average cost-effectiveness ratios can lead to misleading results: an intervention might seem attractive, but in fact leads to small QALY-gains for high costs.
dominance
an intervention is both more costly and less effective than an alternative
an intervention is both cheaper and more effective than the existing therapy.
extended dominance
an option has an ICER (cost-effectiveness) that is greater than that of the more effective option.
Logic: if the budget does not allow for choosing option Z, then a combination of X and Z is more cost-effective (i.e. results in more health gains) than going for option Y.
steps to ensure that you are calculating the ICERs in relation to the next-best alternative
- sort the alternatives from least effective to most effective.
- rule out strongly dominated alternatives (= option that is more (or equally) expensive, but less effective)
- calculate ICERs based on the comparisons of moving to increasingly costly and increasingly effective alternatives.
- if the ICER associated with moving to more costly alternative falls, then the lower-cost alternative used to calculate the ICER is extendedly dominated and should be ruled out.
- recalculate ICERs based on comparisons of moving to increasingly costly but increasingly effective alternatives that are neither strongly nor extendedly dominated.
what do we need to distinguish to apply cost-effectiveness analysis in practice?
- mutually exclusive goods
- independent interventions
mutually exclusive
is when you can only implement one intervention at a time ‘per disease’
independent interventions
is when you can implement more interventions, like health policy in general.
four approaches for deciding on the ‘maximum acceptable ICER’
- rule-based approach (‘Rule of thumb’)
- league table approach
- revealed preference
- stated preference
maximum ICER: rule based approach / rule of thumb
pick threshold values for ICERs, often (more or less loosely) based on empirics and/or the existing cost-effectiveness literature.
WHO has advised a threshold per QALY of 1 up to 3 times the GDP per capita for low- to middle-income countries.
maximum ICER: league-table approach
- rank all available interventions by cost-effectiveness (ICER from lowest to highest) (‘league table’)
- calculate the cumulative cost of adopting a treatment. Start with adopting the most cost-effective treatment and work down the list.
- continue until the budget constraint is reached. Note the ICER of the last treatment that can be financed: this is the maximum acceptable ICER.
- if a future intervention has an ICER lower then this threshold, it should be adopted to produce health gains. Step 1 to 3 should be repeated to calculate the new maximum acceptable ICER.
maximum ICER: revealed preference
approach to establish the maximum acceptable ICER: asses what decision-makers have been willing to pay for health gains in the past (‘revealed preference’).
Decision-makers can both be national decision-makers or doctors
willing to pay for health gains in the past (‘revealed preference’)
shortcomings league-table approach by calculating maximum ICER’s
requires ‘full information’ (ICERs of all intervention) and requires identical methodological approach in calculating ICERs.
shortcomings revealed preference approach by calculating maximum ICER’s
decision maker society. Assumes that past behaviour was ‘right’, without solid theoretical underpinning.
maximum ICER: stated preference
approach uses individuals’ statements to estimate how much value they attach to a good/service or health effect (rather than their actions, as in revealed preference).
Stated preferences-approaches usually measure the preference for different treatments and/or health states. They are less common for estimating the maximum acceptable ICER.
two broad categories in stated preference
- choice modelling
- contingent valuation method
choice modelling
making people choose between two or more option, to reveal their preferences (often for specific characteristics or attributes)
contingent valuation method
survey-based technique to determine monetary value of the effects of health technologies (‘willingness-to-pay’ for health gains)
