Week 3

Question 1

What is economics

Answer 1

Economics and the economy are topics for debate and research
-economists have particular expertise, enabling them to facilitate understanding of and discussion on the topic to conduct research and top advise decision makers
Economics is also a discipline:
-a way of approaching problems
-a characteristic mode of thinking

Question 2

What is economics about

Answer 2

Concept or problem of scarcity
Resources are limited:
-finite resources
But potential uses of those resources are unbounded
-infinite wants
As individuals and society we face difficult decisions in terms of how we use limited resources
Economics is the study of how decisions are made in the context of scarcity

Question 3

Economic agents

Answer 3

A central concern in economics is the behaviour of economic agents
Economists make assumptions about what will motivate economic agents and how they’re expected to make decisions
But the central theme running through economics is that decisions will be made in the context of scarcity

Question 4

economic goods

Answer 4

Any good or service that is scarce relative to our wants for it
-healthcare is an economic good
-not available in endless supply resources are finite but wants for healthcare are unbounded

Question 5

Opportunity cost

Answer 5

Opportunity cost is the value of the consequences forgone by choosing to deploy resources in one way rather than in their best alternative use
- given a fixed budget for health care increasing production in one speciality will require diverting resources away from another - micro/system level

Question 6

Positive economics

Answer 6

Is predictive or descriptive
Eg how much does the uk spend on healthcare in comparison to other European countries

Question 7

Normative economics

Answer 7

Values, judgement and evaluation
Eg the uk government should increase spending on healthcare

Question 8

Macroeconomics vs microeconomics

Answer 8

Macroeconomics: the economic agent is typically the government or another agent acting on behalf of the government, the objective is typically assumed to be achieving stable economic growth

Microeconomics: the economic agents here are typically consumers and firms
Typically assumed that consumers will seek to maximise their utility subject to time and budget constraints. Various definitions of utility: happiness, satisfaction, desire fulfilment
Typically assumed that firms will seek to maximise profit subject to constraints relating to the inputs of production (land, labour and capital)

Question 9

Health care funding: how do we collect (and redistribute) the money used to pay for healthcare

Answer 9

Taxation
Private health insurance
Social health insurance
Out of pocket (direct) payments
Mix of all above

Question 10

Health care budget England

Answer 10

HM treasury: designing the tax system and allocating budgets to other govt. depts
Department of health and social care: policy and oversight of multiple arms length organisation
The opportunity cost of increasing spending on health at this (macro) level is either;
-lower taxes
-increased spending by other government departments

Question 11

Health care and the free market

Answer 11

Microeconomics tends to assume that there are transactions in a free market:
-consumers buy goods in order to make themselves happy (maximise utility)
-firms seek to make profit selling goods
This can be the case in healthcare Uk
But there are characteristics or both health and healthcare that mean that health care is often considered to be a special case necessitating some form of government intervention (regulation) to correct/prevent market failure
Health care can still be provided by private profit seeking firms even where there is government intervention/regulation and sometimes even when its funded through taxation
Furthermore goods and services that cannot be classified as health care may have an impact on health and the demand for health care

Question 12

Production in the short run

Answer 12

But in microeconomics the short run is a period of time in which at least one factor of production is fixed
Relating this to health care:
Capital: hospital infrastructure, GP surgeries, MRI scanners, ED beds, ambulances, operating theatres. Not much scope to increase capital in short term
Labour: variable to some extent in the short run:
-may be possible to recruit more support staff
-can bring in health and allied health care professionals from other countries or from private sector
-but long lead time to train health and allied health professionals so labour only fully variable in the longer term

Question 13

Marginal analysis

Answer 13

Marginal private cost: the change in total cost for the firm/individual associated with producing/consuming one additional unit of a good
Marginal social cost: the change in total cost to society associated with the production/consumption of one additional unit
Marginal private benefit: the change in total benefit (for firm/individual) associated with the production/consumption of one additional unit of a good
Marginal social benefit: the change in total benefit (to society) associated with the production/consumption of one additional unit of a good

Question 14

Intuition

Answer 14

We wouldn’t expect an individual to continue purchasing more of a good if the cost of an additional unit (marginal cost) exceeds the benefit they’ll get from consuming an additional unit (marginal benefit)
If there’s fixed costs or if there’s economies of scale then marginal cost will fall at first but then begin to increase

Question 15

Priority setting/ rationing

Answer 15

Most rationing is by price
Where health care is free at the point of use there needs to be some other form of rationing or priority setting
Theres a common assumption in the UK that the purpose of health care system is to maximise population health
So we should prioritise treatments which are most cost effective (gives greatest amount of benefit/outcome for our investment)
No health care system in the world has ever achieved levels of spending sufficient to meet all of the wants of all its clients

Question 16

Efficiency vs equity

Answer 16

Efficiency: important in both positive and normative economics. The allocation of scarce resources that maximise the achievement of aims -morris
Equity: harder to define, relates more to normative economics, synonymous with fairness and social justice
Potential for conflict: the fairest/most equitable outcome may not be most efficient

Question 17

Efficiency

Answer 17

Technical efficiency:
-producing output in the best way possible without wasting scarce resources meeting a given objective at least cost

Allocative efficiency:
-producing the pattern of output that best satisfies the pattern of consumers wants/needs

Question 18

Health economics in the UK

Answer 18

Much of the focus of health economics activity in the UK relates to economic evaluation
Assumes a fixed budget
And some societal objective (typically maximising health but not always)
Comparative in nature (weighs up costs and outcomes)
Seeks to find the most efficient use of resources given the stated objective

Question 19

Economic evaluation: perspective

Answer 19

In economic evaluation we need to identify relevant costs and outcomes
Depends on the perspective of our analysis:
-health service
-public sector
-patient
-society
Depends on the type of economic evaluation:
-cost effectiveness analysis, cost utility analysis

Question 20

Clinical outcomes

Answer 20

Advantages:
-often measured as part of clinical study
-easily understood/transparent to clinicians/ decision makers

Limitations:
-lack of comparability across different disease areas
-what does £ per unit reduction in mmhg mean
-what if we have more one outcome

Question 21

Valuing health: quality adjusted life-years QALYs

Answer 21

Combines length and quality of life ‘utility’ into single unit
Quality of life: value health states with maximum value of 1 (perfect health) and value 0 equivalent to death
Used to weight life years
QALY= sum of(length of life) * (QoL)

Where do we get info from:
-life years: life tables and literature (long term) deaths recorded in study (short term)
-quality of life:
-value judgement
-questionnaires
-direct measurement from health state description
-published values in literature

Question 22

Euro-QoL EQ-5D

Answer 22

Five dimensions:
-mobility
-self care
-usual activities
-pain/discomfort
-anxiety/depression

Each with 3 levels most recent versions has 5

Question 23

QALY calculation

Answer 23

QALYs gained: QALYs with treatment- QALYs without treatment
= treatment (QoL * LE)- non treatment (QoL *LE)
Advantages of using QALYs:
-takes into account impact on quality and quantity of life
-common unit of measure that can be used across disease areas
-convenient tools for measurement

Question 24

Measuring utility

Answer 24

QALYs used in a cost utility analysis
Economic definition of utility: level of satisfaction from goods or services
Utility in cost utility analysis- purely about maximisation of health

Question 25

Broader outcomes

Answer 25

Patient benefits not captured by QALYs: -control/empowerment -reassurance -knowledge -satisfaction with care -capability Family/carer QoL

Question 26

Types of cost

Answer 26

Direct cost: Health and social services resource use. Eg inpatient, outpatient, tests, drugs. UK focus Non health services resource use eg patient transportation, informal care Indirect costs: -wider cost implications to society eg lost production

Question 27

Health and social services cost

Answer 27

Intervention and usual care costs, related medications Primary care costs: -GP and practice nurse visits other health care professionals Secondary care costs: -A&E attendance, outpatients, inpatients stays, surgery, tests and investigations Social services: nursing home care, home help, home adaptations

Question 28

Patient and carer incurred costs

Answer 28

Cost of time and transport for health care visits Over the counter medicines and appliances Private health care Paid carers Informal carer time

Question 29

Indirect costs

Answer 29

Costs due to lost production; -unable to work due to death or disability -time off work due to illness -reduced productivity Not required for UK analyses Part of “ reference case” for other countries

Question 30

Costs: estimation

Answer 30

Measurement of quantities of resource use Eg from review of case notes, from routine data systems, patient questionnaires Assignment of unit costs or prices to those quantities - market prices available for most resource items

Question 31

Economic evaluation in health care

Answer 31

Definition: “ the comparative analysis of alternative courses of action in terms of both their costs and their consequences” (Drummond et al 2005) It involves: - a comparison of 2 or more alternatives -examination of both costs and consequences -takes an incremental approach

Question 32

Equity in healthcare background

Answer 32

Scarcity and resource allocation is a universal challenge Health systems/ HTA’s objectives include: -improving total population health (maximisation) (for a budget/WTP threshold) -CEA as an ethical principle not the only principle - reduction of unfair differences in health (inequalities/inequities) -alternative equity concerns/principles Economic evaluation is comparative in nature Key aim: incremental costs (resources) and outcomes Decision rule of national institute for health and care recommend if treatment/intervention is £20,000-30000 per QALY. Generally explicit but aims for efficiency Standard CEA methods dont capture health equity impacts (inequalities) of interventions evaluated. Often don’t explicitly consider distributional impacts of interventions evaluated Don’t capture the size/nature of trades offs between improving population health and reducing unfair health inequality

Question 33

Equity

Answer 33

Relates to ‘fairness’ and ‘distributive justice’ in resource allocation decisions NHS: delivering equal access to healthcare for all Others system aims: reducing disadvantage, access/use to services and or affordability

Question 34

health equity

Answer 34

Health equity addresses differences in population health that can be traced to unequal economic and social conditions that are systemic, avoidable and inherently unjust/unfair

Question 35

Health disparities/health inequities

Answer 35

Preventable health differences between groups of people. These differences can affect how frequently a disease affects a group, how many people get sick or how often a disease causes death

Question 36

Further understanding of equity

Answer 36

Equity evaluation necessitates assessing equity types across levels and avoidable areas of inequality Horizontal equity: the equal treatment (use of healthcare resources) of people who are equal in a relevant respect (equal need). - individuals with the same need for health care have the same use for healthcare (variations investigated for age, gender, status, ethnicity) Vertical equity: the unequal treatment (use of healthcare resources) of people are unequal in a relevant aspect (unequal cases) -individuals with different levels of ill health have different levels of use

Question 37

When is CEA not enough

Answer 37

Adding equity to economic evaluation imposes a cost Impact of policy decisions in distribution of costs and benefits on equity relevant variables such as socio-economic status, ethnicity, area of residence, gender, age, severity of illness, geographical location Special cases where a trade off might be required eg rare diseases (orphan drugs), dreaded disease (eg cancer, end of life) Population wide- screening, public health interventions not adequately accounted for in CEA

Question 38

CEA equity trade offs

Answer 38

CEA- absolute size of population health gains Equity- how these health gains are distributed in the population Eg HIV treatment interventions: -CEA- universal screen and early treatment - equity- prioritise severely ill, financial protection

Question 39

The health equity impact plane

Answer 39

Cost effectiveness (net total health impact) Net health equity impact Win-lose: cost effective- harms equity Win-win: cost effective, improves equity Lose-lose: cost ineffective, harms equity Lose-win: cost ineffective, improves equity

Question 40

Equity considerations and EE

Answer 40

Equity weighting- (eg health outcomes) relative weight of principles -extent to which society scarifies health gains Subgroup analysis of groups/patients -different valuation of outcomes to assess impact of inequality or group

Question 41

Equity weighting analysis

Answer 41

How much concern for equity is required to choose a fairer but less cost-effective option Reflect extent to which society is prepared to sacrifice overall health benefits for equity (trade offs with efficiency) Equity weighting Numbers expressing relative weight of equity principles NICE reference case is no weighting (exceptions- ‘life extending treatment at the end of life) Sources of equity weights: -views of the population (surveys/experiments) - views of decision makers( surveys/past decisions)

Question 42

Subgroup analysis

Answer 42

EE of interventions could be reported by different subgroups/patient types Apply a different valuation (eg equity weighting) of outcomes for each socioeconomic position to assess impact on health inequality or patient group Tabulation of updated results

Question 43

Equity considerations in NICE framework

Answer 43

NICE methodology offers framework for incorporating social and ethical values for funding interventions above the threshold NICE recognises that society and patients have valid claims to resources over and above cost effectiveness evidence Special considerations have been made

Question 44

NICE- CEA of health technology assessments

Answer 44

CEA criteria in conventional health technology assessments HTAs treatments recommend routine use if ICER <£20000-£30000 Exceptions/alterations have included: -end of life care -ultra orphan drugs (HST) -cancer drug fund (CDF)

Question 45

End of life care

Answer 45

Criteria introduced in 2009 for costly end of life technologies Aim to provide special consideration for life extending treatments at the end of life with very short life expectancy Ethical and social importance of being compassionate towards of dying By weighting QALYs (2.5 from £20000)- £50000, with <24 months and life extending to 3 months 61 single technology appraisals were found to meet the EoL criteria

Question 46

cancer drugs fund CDF

Answer 46

Provide short term solutions to reduce delays and improve patient access to novel treatments Designed to increase public access to cancer treatments with clinical uncertainty/promising Ideally between £20-£30000 but with uncertainty Some have questioned fairness of the NHS in choosing cancer compared to all other patients Other: -empirical analyses outside CEAs often assess inequalities between groups -case study: based on access to healthcare -access to healthcare for men and women with disabilities in the UK: secondary analysis of cross -sectional data 2017

Question 47

CDF aim etc

Answer 47

Aim: to investigate differences in access to healthcare Hypothesis: 1) people with disabilities likely to have unmet care needs. 2) women more likely to report unmet needs Setting/data: secondary data from European health interview survey Key results: 1) severe disability associated with higher odds of unmet needs (mental healthcare and prescribed medication) 2) more likely with women than men

Question 48

Policy implications

Answer 48

Study revealed inequalities in access to healthcare services (disabled/women) Barriers were in terms of transportation, prescriptions costs and long waiting lists Similar funding observed in UK and other settings- particularly with cancer services

Question 49

‘Rationing’, ‘priority setting’ and ‘managing scarcity’ terms

Answer 49

Used “to refer to the ways in which healthcare interventions are restricted in order to control spending or increase efficiency” (Williams, Robinson and Dickinson 2011, p6)

Question 50

Why ration pressures

Answer 50

Shifts in: -demography: people live longer -pattern of disease -medical technology : increase faster than household income - staffing, service organisation: sub specialisation, minimum staffing rules, system reorganisation -expectations and culture: population ageing, professional expectations, new knowledge and technology, patient expectations

Question 51

Implicit rationing

Answer 51

Not acknowledged Examples: - delay (waiting lists) - deterrence -dilution (spending less time on patients) -denial (deny treatment based on eligibility)

Question 52

Explicit rationing

Answer 52

A) political methods: -discussion and consensus building (eg conferences, surveys, voting) -clinicians or the public? B) technical methods: -cost effectiveness -other methods

Question 53

How the NHS in England rationed (prior to integrated care systems in 2022)

Answer 53

1) three year cash limited budget determined in parliament 2) DH allocates (most of) the budget to NHS England 3) NHS England allocates 75% to CCGs 4) NHSE and CCGs allocate the budget to GPs and trusts 5) trusts and GPs allocate the budget to specialities, treatments and patients 6) doctors tailor treatments to patients

Question 54

What is NICE

Answer 54

The national institute for Health and care excellence is the independent organisation responsible for providing national guidance on the promotion of good health and the prevention and treatment of ill health

Question 55

Rationale for NICE

Answer 55

“Underachievement of the health service” -unacceptable variations -poor uptake of effective practice -excess use of inappropriate treatments -continued use of ineffective treatments

Question 56

The NICE guidelines

Answer 56

Guidelines: clinical guidelines, public health guidelines, social care guidelines Health technology evaluation: technology appraisals incl HST, interventional procedures, devices and diagnostics Quality: quality standards, quality indicators

Question 57

The committee’s dilemma (at every appraisal)

Answer 57

1) what is the value of the (new) technology to patients?- clinical effectiveness 2) what is the consequences of adoption of the technology for all patients?- cost effectiveness 3) is our consequent decision fair and reasonable

Question 58

Explicit criteria for decision making

Answer 58

ICER= incremental cost effectiveness ratio - ICER <20K/QALY: usually accept, unless poor evidence -ICER £20-30k/ QALY: judgement is made taking into account: — the degree of certainty around the ICER — whether health required quality of life was adequately measured — the innovative nature of the technology — non health objectives - ICER>30k/QALY: usually reject, unless strong arguments with respect to above criteria

Question 59

Some ICERS

Answer 59

Cost per QALY less than £3000: -neurosurgery- benign brain tumours -laser treatment for DM retinopathy -folic acid fortification of cereal grain products (D) Cost per QALY £3000 to £30000: -CABG (coronary artery bypass surgery) for left main vessel disease -neonatal ITU for very low birth weight -haemodialysis Cost per QALY >£30000: -inpatient detoxification for drug abuse -pre-op HIV screening -many new anti-cancer drugs eg Sunitinib RCC More harm than good: - PSA screening - Antiarrhythmics after MI

Question 60

Special considerations ICERS

Answer 60

1) end of life timespan (eg temozolomide) 2) children (eg CSII) 3) significant innovation (eg imatinib) 4) disadvantaged populations (eg pemetrexed) 5) search for sub groups (eg omalizumab) 6) avoiding exclusions/small numbers (eg HGH) 7) severity/cancer 8) primary prevention (eg statins)

Question 61

What is economic evaluation

Answer 61

A comparative analysis of alternative courses of action in terms of both costs and consequences -often an intervention (something new) -and a comparator (usual care)

Question 62

Types of economic evaluation

Answer 62

Most types of economic evaluation quantify costs in monetary units -the possible exception being cost consequence analysis But differ in terms of how outcomes (benefits) are included/quantified/ summarised

Question 63

Cost-minimisation analysis (CMA)

Answer 63

Don’t use CMA: not a full from of economic evaluation -requires an assumption that there are equivalent outcomes from the different treatments (intervention and comparator) -unless you actually measure outcomes, you wont know they’re equivalent -if you assume outcomes are equivalent then CMA simply involves identifying the cheapest option

Question 64

Cost consequence analysis CCA

Answer 64

Costs and outcomes are listed without an attempt to fully aggregate either costs or outcomes Could be listed in a largely qualitative way It’s then left to the decision maker to “weigh up” the list of costs and the list of outcomes and decide whether to fund the new intervention or not

Question 65

Cost benefit analysis CBA

Answer 65

Costs quantified in monetary units Outcomes (benefit) also expressed in monetary units Eg. The cost of providing intervention A= £500 The benefit to society is valued at £1000 So we should fund intervention A as it produces a net benefit (it does more good than harm)

Question 66

Cost effectiveness analysis CEA

Answer 66

Costs expressed in monetary units Outcomes expressed in single, natural units (only relevant to a particular context) - eg number of asthma attacks prevented - eg weight loss -eg reduction in the number of PTs with high blood pressure Report cost per additional unit of benefit Can inform technical efficiency not allocative efficiency

Question 67

Cost utility analysis CUA

Answer 67

Costs expressed in monetary units Outcomes expressed as quality adjusted life years (QALYs) eg, from EQ-5D. So can be applied to multiple scenarios. Aggregated summary of health benefit compares QOL and length of life Report cost per additional QALY gained Can inform allocative efficiency Most common form in healthcare context

Question 68

Incremental cost effectiveness ratio ICER

Answer 68

ICER= difference in costs/ differences in outcomes Cost of B (intervention)- cost of A (comparator) QALY gain associated with B- QALY gain associated with A £1000- £500= £500 (this is the difference in costs) 0.75-0.55= 0.20 (this is the difference in outcomes) ICER= 500/0.20 =£2500 (the cost per additional QALY gained)

Question 69

Decision rule (CUA)

Answer 69

National institute for health and care excellence (NICE) Consider a new therapy to be cost effective if the cost per QALY is less than £20000 per QALY £20000 to £30000 is an area that will be considered taking other factors about uncertainty into account

Question 70

Concerns about QALYS

Answer 70

Whose values? Insensitivity of questionnaires End of life treatments Discrimination Broader patient benefits Family/carer benefits