Classen_HealthEcon_Class10 - Cost­Effectiveness Analysis...

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Unformatted text preview: Cost­Effectiveness Analysis Cost­Effectiveness Analysis and QALYs Class 10 Loyola University Chicago Prof. Tim Classen February 11, 2011 Class Outline Cost­Effectiveness Analysis Cost­Utility Analysis Incremental C­E Ratios QALYs Wrap up Chapter 4 today, start on health insurance on Monday Cost Effectiveness Analysis Cost Effectiveness Analysis Benefits measured in natural units Costs relative to benefits in clinical units Costs per unit of effectiveness Calculate Incremental Cost Effectiveness Ratios Reduction in length of hospital stay; increased longevity; change in blood pressure, etc. Outcome Measures for Cost­ Effectiveness Analysis Any measure relevant for question at hand (e.g. deaths, smoking quits, bp/lipid point reductions) However, cross­intervention comparisons may be limited by not having a common denominator. Many analyses attempt to incorporate outcome measures like life years or quality adjusted life years (QALYs) to facilitate such comparisons. QALY­type measures may be better suited (or at least more sensitive) to evaluating some interventions than others (e.g. common cold vs. chronic pain reduction). Use incremental cost­effectiveness ratios (ICERs) to evaluate interventions. Including $$$ (i.e. CBA as a special case of CEA). ICER ICER Ratio of incremental costs to incremental “effectiveness” is called Incremental Cost Effectiveness Ratio Treatment A Cost Life length $200,000 69 Treatment B $300,000 71 ICER = (∆ costs)/(∆ effectiveness) i.e. dollars per “unit” of incremental effectiveness $50,000/life year provided by B relative to A Limitations of CEA Limitations of CEA Unambiguous only when one alternative is at least as effective as others, but at lower cost (or more effective at same cost) Multiple outcomes Otherwise must think about ICER relative to cutoff Benefits (or harms) of procedures may have multiple dimensions Longevity is increased, but what about QoL? Which outcome is most relevant or representative after treatment? Use a combination of factors? Ignore conditions? Cost Utility Analysis Cost Utility Analysis CUA converts effectiveness measures into a common unit Based on the notion of utility, or satisfaction Utility here refers to health­related quality of life Incorporates changes in both quantity of life (mortality) and quality of life (morbidities) U(Q,T) where Q is health­related quality of life and T is time to live When to use? When to use? When health­related QoL is important Treatment affects both morbidity & mortality Outcomes have multiple dimensions Multiple interventions are considered Treatment of chronic conditions like arthritis, diabetes Neonatal intensive care, stroke patients, cancer patients Health­Related Quality of Life Health­Related Quality of Life Interventions may improve health by How to measure quality of life? Increasing length of life Improving quality of life Presence or absence of morbidities? Quality of Life vs. Clinical improvements 1/3 of adults are obese – useful? How to rank co­morbidities in relative sense? Treatment may improve clinical measures, but does patient have better QoL? Measure QoL using Quality Adjusted Life Years (QALYs) QALY Measures QALY Measures Provides scale of quality of health from 0 (~death) to 1 (full health) for given time period So, 6 months of full health may be equivalent to a year of health at 0.5 Based on individual’s preferences How to elicit? Useful in considering $/QALY improvements Offer patient “gamble” of treatment relative to current state How much time in best health vs. year in current health Ranking health status pre­ and post­treatment Example QALY Calculations Example QALY Calculations Two pieces of data are needed Path of health states along with duration of each Preference weights for each health state Duration 8 years 8 years Health State Home Dialysis Mastectomy QALY Weight 0.65 0.48 Example 1: Home Dialysis Example 1: Home Dialysis QALYs gained from 8­year life extension on home dialysis 0.65 x 8 = 5.2 QALYs (no discounting) With discounting, need to consider the effect of getting the benefit in the future in today’s terms = 4.4 QALYs 0.65 × 1 + 1 +1 + ... + 1 (1.05) (1.05) 2 (1.05)7 Example 2: Mastectomy Example 2: Mastectomy Symptoms → mastectomy: 6 years of life Screening → mastectomy: 9 years of life QALYs gained by screening (Gain 2 years of life vs. 1 year lived w/out diagnosis) 0.48 x 2 – (1 – 0.48) = 0.44 QALY (no discounting) 0.48 x (0.71 + 0.677) – 0.52 = 0.15 QALY (with discounting at 5% per year) 0 1 Symptom 7 Death w/o screening 9 Death w/ screening Screen From Cost-Effectiveness Analysis Registry at CUA studies growing popularity CUA studies growing popularity Concerns with CUA? Concerns with CUA? Theory is only valid at individual level Responses tend to depend on wording People find it hard to imagine certain events Responses tend to differ after an event has occurred (vs. asking prospectively) Assumes independence between utility from health and wealth Aggregation can be done under restrictive assumptions (mean utility of society) Other Issues in QALY use Other Issues in QALY use Special value for saving people near death? Should we consider people’s “potential health”? Is value of an effect for an individual proportional to length of effect? Is value of an effect for a population proportional to the number of individuals? Does the distribution of QALYs matter? Should we ask individuals about how they would value hypothetical effects on their own health or the effects on groups of individuals? Ethical concerns Ethical concerns Decision­making using CEA/CUA based on external valuation criterion CEA/CUA may avoid direct monetary valuation, but decision makers using these studies for resource allocation decisions (at least) implicitly place monetary value on outcomes Cost per QALY tables, published threshold values (often quite arbitrary or not very applicable to the case) ...
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This note was uploaded on 04/14/2011 for the course ECON 329 taught by Professor Classen during the Spring '11 term at Loyola Chicago.

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