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PHRM 100 – PPHC > PPHC 10: Health (Health Economics II) – How do we decide what is good value? > Flashcards

PPHC 10: Health (Health Economics II) – How do we decide what is good value? Flashcards

1
Q

If markets work well, what do competition and consumer choice solve?

A
  • problems of allocative efficiency – who gets a product or service
  • problems of technical efficiency – the most efficient way to convert inputs (raw materials) into outputs (products, services), lowering the price
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2
Q

What is health technology assessment?

A

process to evaluate health technologies (ie. drugs, devices, diagnostics, etc.) to decide what to provide/fund

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3
Q

Why do we do health technology assessment?

A

to understand what is best to provide for a population to maximize health

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4
Q

What are the 5 components of a health technology assessment?

A
  • clinical effectiveness – does the technology improve health outcomes relative to other alternatives
  • economic evaluation – does the technology provide good value for money (ie. comparing costs and outcomes) relative to other alternatives
  • social and ethical impact – how does the technology affect different populations
  • organizational impact – how would adopting the technology impact the healthcare delivery, infrastructure, planning
  • budget impact analysis – estimating the short-term financial burden on healthcare system
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5
Q

What is economic evaluation?

A

systematic, comparative analysis of two (or more) courses of action in terms of their costs and consequences

  • systematic: a unified framework – what are the relevant components of an analysis, how do they relate to one another, how should the analysis be conducted
  • comparative: efficiency – two (or more) alternatives, costs, and consequences – how do we get most output from a govern set of inputs
  • courses of action: a particular way of using resources, delivery of healthcare services, programs, policies, etc., assessment required before approval
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6
Q

What are the 3 building blocks of economic evaluation?

A
  • objective
  • choice
  • costs and consequences
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7
Q

What are the 3 building blocks of economic evaluation in healthcare?

A
  • objective: maximize health for a population
  • choice: which policy/program/intervention will most efficiently achieve the objective
  • costs and consequences: alternative A or alternative B – what resources are needed (cost), what effects does it generate (benefits or consequences)
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8
Q

What does economic evaluation tell us?

A

the price tag of an extra unit of effectiveness (however you decide to measure effectiveness)

  • ie. $/liter of gas, $/kg of cornflakes
  • healthcare benefit isn’t as divisible as gas or cornflakes
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9
Q

What does economic evaluation NOT tell us?

A
  • how much you should be willing to pay – ie. only decision-maker knows that (or we make it up – ie. $50,000 per QALY)
  • the budget impact – ie. how many litres of gas you have to buy
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10
Q

What is the objective of economic evaluation?

A

focuses on value and long-term efficiency – compares the costs and health outcomes of different interventions to determine which provides the best value over the long term

  • which intervention is most efficient in terms of health benefits gained per dollar spent
  • ie. Canada’s Drug Agency suggests cost-utility analysis, to understand the price tag of getting an extra QALY
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11
Q

What is the objective of budget impact analysis (BIA)?

A

focuses on immediate financial feasibility – assess the short-term affordability of introducing a new intervention, looking at the financial impact on a specific budget (usually over 1-5 years) without directly assessing long-term health outcomes

  • ie. can I afford it
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12
Q

What are the 4 types of economic evaluation?

A
  • cost-minimization analysis
  • cost-benefit analysis
  • cost-effectiveness analysis
  • cost-utility analysis
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13
Q

Cost-Minimization Analysis

  • costs
  • benefits/effectiveness
A
  • $
  • 0 (equivalent)
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14
Q

Cost-Benefit Analysis

  • costs
  • benefits/effectiveness
A
  • $
  • many outcomes (in $)
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15
Q

Cost-Effectiveness Analysis

  • costs
  • benefits/effectiveness
A
  • $
  • 1 outcome (natural units)
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16
Q

Cost-Utility Analysis

  • costs
  • benefits/effectiveness
A
  • $
  • 2 outcomes (quality and length of life)
17
Q

Cost-Minimization Analysis

What is this analysis?

A

comparison of cost impact of two different technologies – lower cost is better

cost of new treatment - cost of current treatment

  • we effectively ignore the benefit
  • does not include qualitative effects – things that might not affect outcomes, but might affect experience
18
Q

Cost-Minimization Analysis

When is this analysis appropriate?

A

only when effectiveness between comparators is equivalent

  • assumes that there is no difference between interventions – want to be really confident this is the case
19
Q

Cost-Benefit Analysis

What is this analysis?

A

net benefit – costs and benefits in monetary terms

net benefit = (benefitA - benefitB) - (costA - costB)

  • if net benefit is positive (benefit > cost) – you do it
  • if net benefit is negative (benefit < cost) – you don’t do it
20
Q

Cost-Benefit Analysis

What is the cost-benefit principle?

A

take an action only if the extra benefits exceed the extra cost

21
Q

Cost-Benefit Analysis

Why is this analysis rarely used in practice?

A

it has the most simple decision rules – does the monetary value of the benefit exceed the monetary cost

  • how do we measure health benefits in monetary terms
  • how much is a year of life worth
  • what is health improvement valued at
22
Q

Cost-Effectiveness Analysis

How is effectiveness measured?

A

in natural units

  • one outcome – ie. cancer screening (number of cases detected), hypertension tablets (average reduction in blood pressure), heart attack treatment (life-years gained)
  • costs in dollars ($)
23
Q

Cost-Effectiveness Analysis

What does this analysis measure?

A

efficiency – cost per unit of effect achieved

  • compare incremental effects gained by one alternative over another against the incremental resources used by one alternative over the other
  • reveal at the margin (for the next dollar spent) the extra effects we gain
24
Q

Cost-Effectiveness Analysis

How is cost-effectiveness calculated?

A
  • incremental cost (ΔC) = CostY – CostX
  • incremental effect (ΔE) = EffectY – EffectX
  • incremental cost-effectiveness ratio = (CostY – CostX) / (EffectY – EffectX) = ΔC / ΔE
25
Q

Cost-Effectiveness Analysis

What is the incremental cost-effectiveness ratio (ICER)?

A

the cost per additional unit of effect

  • are the extra units of effectiveness (if any) worth the extra cost
26
Q

Cost-Effectiveness Analysis

What is the disadvantage of this analysis?

A

can only tell you about one measure of effect – and that measure of effect might be quite specific

27
Q

Cost-Utility Analysis

What is the structure of this analysis?

A

same structure as cost-effectiveness analysis

  • some people just call it cost-effectiveness analysis
  • subset – uses an outcome measure which incorporates subjective valuation of health
28
Q

Cost-Utility Analysis

What is the outcome measure?

A

quality-adjusted life years (QALY)

  • length of life (years) x quality of life adjustment (0 = death, 1 = full health)
  • subjective valuation (utility) on a 0-1 scale
29
Q

Cost-Utility Analysis

How is cost-utility calculated?

A
  • incremental cost (ΔC) = CostY – CostX
  • incremental effect (ΔE) = Effect_QALYsY – Effect_QALYsX
  • incremental cost-effectiveness ratio = (CostY – CostX) / (Effect_QALYsY – Effect_QALYsX) = ΔC / ΔE
30
Q

Cost-Utility Analysis

What is Canada’s Drug Agency threshold value per QALY?

A

$50,000 per QALY

ie. if ICER < $50,000 per QALY we should do it

31
Q

What is budget impact analysis?

A

analysis of the impact to a single budget from the addition of a new treatment to a centre, government, or individual

  • how much more is this going to cost – bottom line impact/financial impact to the decision-maker, relates to cost/incidence/prevalence
  • the least explanatory type of economic evaluation – does not take into account benefits or qualitative impact, the least informative but most widely used
  • very useful complement to other types of economic evaluation

PHRM 100 – PPHC (18 decks)

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