Health economics Flashcards
what are the 4 principles of health economics?
- Scarcity- a finite limit to resources
- Economic efficiency- achieved when resources are allowed in a way to max. benefit
- Economic evaluation- the assessment of efficiency, cost vs benefits of heath care interventions
- Equity- fairness or justice in the distribution of costs and benefits
how to measure health benefit?
change in something measured in ‘natural units’ i.e. BP, pain score, walking distance, cholesterol level
what is a QALY?
Quality Adjusted Life Year
combines length of life (years) with quality of life (measured in utility: 0-1)
what is 1 QALY?
1 year of perfect health or 2 years in half perfect health
allows comparison across diseases
what is monetary value?
willingness to pay for health benefit
4 types of economic evaluation?
- Cost-effectiveness analysis
- Cost- utility analysis
- Cost-benefit analysis
- Cost-minimalization analysis
which type of economic evaluation is used by NICE and why?
cost-utility analysis
outcomes are in QALY and cost in monetary value
what is cost-effectiveness analysis?
outcomes measured in natural units
costs measured in monetary value
what is cost-benefit analysis?
both costs and outcomes measured in monetary units e.g. how much money does screening save for on breast cancer treatment
what is cost minimalization analysis?
outcomes known to be equal
different costs
what is the cost-effectiveness plane from a cost-utility analysis?
a 4 way grid, used to compare 2 interventions/treatments
x axis= QALY
y axis= incremental cost
dominant treatment means most effective for the least cost
how to work out incremental cost effectiveness ratio (ICER)?
differences in costs/ differences in benefits
e.g. (cost intervention A- cost intervention B)/ (benefit A- benefit B)
if an existing drug costs £10,000 with 5 QALYs
and a new drug costs £25,000 with 6 QALYs
what is the ICER?
(25000-10000)/ (6-5) = 5000
Means £5000 per QALY gained
what do NICE value 1 QALY at?
£20000
anything over isn’t funded unless case-by-case basis
ICER can be increased as people get older as they are seen to be worth more
a current treatment costs £2000 over the remaining life time of a typical patient which is 10 years
how many QALYs?
a new tx costs £22000, extends life to 11 years and increases utility to 0.75
how many QALYs?
should the new treatment be funded?
Old QALYs= 0.7 x 10= 7
New QALYs= 0.75 x 11= 8.25
the difference means the new treatment costs £20000 for a increase in 1.25 QALY
ISER= 22000-2000/ 8.25-7
= 16000
= £16000 for 1 QALY
therefore it is likely to be funded by NICE as it costs less than £20000 for 1 QALY
