Transcript Document

Back to Basics: Health Economics
Gavin Lewis, Head of Health Economics, Roche
BOPA, Brighton, 18th October, 2009
HCMR00008 / Date of Preparation October 2009
Learning Objectives
• Following this session you should be able to better
understand:
1. Principles of Health Economics
2. Meaning of a cost per QALY
3. Role of health economics in patient access to new
medicines
4. Key challenges facing application of Health Economics
to Oncology
HCMR00008 / Date of Preparation October 2009
Agenda
• What is Health Economics?
– Why do we need it?
– What is it?
– Cost Effectiveness analysis
• How is Health Economics applied in the NHS?
– What is a Cost per QALY?
– Calculating a cost per QALY
• Health Economics and Oncology
– Key challenges
– Recent Developments
HCMR00008 / Date of Preparation October 2009
HCMR00008 / Date of Preparation October 2009
Background
Common misunderstandings of Health Economics
1.
“The most cost-effective patient is a dead patient”
2.
“NICE are all about cost containment”
3.
“The cheaper drugs are the most cost-effective drugs”
4.
“Cost Effectiveness analysis doesn't consider the
patient’s quality of life”
HCMR00008 / Date of Preparation October 2009
Why do we need Health Economics?
HCMR00008 / Date of Preparation October 2009
Context: Provision of Health Care
• 3 distinct issues are raised when discussing the provision of health
care:
– Ageing population
– New technologies
– Patient expectation
• UK has a tax-funded healthcare system and therefore finite resources
• Key objectives of healthcare provider:
– Ensure equality of access to healthcare
– Generate the greatest health benefit from finite set of resource
Health Economics provides the tools and
analytical framework to help address these
objectives
HCMR00008 / Date of Preparation October 2009
A more recent addition to the evidence base
Safety
Efficacy
Cost Effectiveness
Tolerability
Reimbursement Criteria
“The Fourth Hurdle”
Regulatory
Criteria
• Mandatory evidence requirement to ensure funding for new medicines
HCMR00008 / Date of Preparation October 2009
What is Health Economics?
HCMR00008 / Date of Preparation October 2009
Some Definitions
• Economics
– Study of the allocation of scarce resources
• Health Economics
– Economic principles applied to healthcare
• Pharmacoeconomics
– Economic principles applied to drug therapy
• Economic Evaluation
– main decision making tool in economics
– Economic evaluation is about efficiency and is:
‘the comparative analysis of alternative courses of
action in terms of both their costs and consequences’
(Drummond, 1997)
– There are different types……
HCMR00008 / Date of Preparation October 2009
Types of economic evaluation
• Cost minimisation analysis
– Equal outcomes / clinical benefit assumed
– Which has lowest overall total costs?
• Cost Benefit analysis
– Both costs and outcomes expressed in monetary value
– Difficult to value all health benefits in monetary terms
• Cost Effectiveness analysis
– Outcomes expressed in natural units
– Cost per “% drop in blood pressure” / SRE avoided / cure
• Cost Utility analysis
–
–
–
–
Outcomes expressed in QALYs
Cross disease comparisons possible
What NICE use!
Considered current gold standard measure
HCMR00008 / Date of Preparation October 2009
Other types of Health Outcome analysis
• Epidemiological
– Prevalence / incidence of disease
• Patient reported outcomes
– Quality of life / Utility studies
• Descriptive Economic studies
– Burden of disease analysis – long term cost
consequences of disease
– Budget impact analysis – cost of treatment / drug
– Resource utilisation / time and motion studies
• However for decision making require full economic
evaluation
– E.g. Cost Utility analysis
HCMR00008 / Date of Preparation October 2009
Principles and methods
of Cost Effectiveness analysis
HCMR00008 / Date of Preparation October 2009
Understanding the principle of cost
effectiveness analysis
• Gold standard method:
– Cost Utility analysis which utilises the “cost per QALY”
or “incremental cost per QALY” (ICER)
• Methodology to formally evaluate the value for money of a
given healthcare technology
• Value for money = “Efficiency”
• A misunderstood phrase……
HCMR00008 / Date of Preparation October 2009
What is efficiency?
• “Government announces reduction in number of civil servants, saving
£50m as part of drive for greater efficiency”
• “Payment by Results may reduce total costs of delivering healthcare
thus improving the efficiency of the NHS”
• Statements ignore impact on outcomes
– E.g. PBR could reduce costs but increase mortality, is this
efficient?
• ”Cost-reducing” is not the same as efficiency!!
• Only if achieve same outcomes from reduced resources = improved
efficiency.
– Need to synthesise both costs and outcomes to evaluate value for
money
– Cost effectiveness analysis
HCMR00008 / Date of Preparation October 2009
Decision making principles
•
When judging value for money we
naturally evaluate things in
increments…
•
Purchasing a new home…is it a good
buy?
1. What else is available? (Identify options)
2. What is extra cost? (Purchase, stamp
duty, repair etc)
3. What is extra benefit? (Location, Size
etc)
•
Key principle:
– We can not judge value for money
in isolation - need to compare
•
Principles of Cost Effectiveness Analysis
no different!
HCMR00008 / Date of Preparation October 2009
Should the NHS adopt a new intervention?
Do not Adopt
Cost (+)
X
Areas of uncertainty
Decision rule
is required
Cost per QALY
less than
£30,000
?
(-)
Effectiveness - QALYs (+)

?
Adopt
(-)
HCMR00008 / Date of Preparation October 2009
The cost-effectiveness plane
Incremental Costs
£40,000
Area of rejection
Willingness
to pay
threshold
£30,000
A
£20,000
Area of acceptance
£10,000
B
0.5
1
1.5
2
Incremental Drug Benefit
(QALYs)
HCMR00008 / Date of Preparation October 2009
Cost Effectiveness Threshold
• Currently defined as £20,000 - £30,000 by NICE
• No fixed threshold
• Poor evidence base behind threshold
• Subject to ongoing research
• Defines how much society is “willing to pay” to obtain a gain
in health outcome (1 additional QALY)
– Too high: displace more CE interventions with greater
health benefit for same money
– Too low: inhibit health improvements / innovation
HCMR00008 / Date of Preparation October 2009
What is a Cost per QALY?
HCMR00008 / Date of Preparation October 2009
What is a QALY? - concept
• “Quality adjusted life year”
• Drug b) Oral formulation, perfect
health
• Which drug would you prefer?
– Drug a) additional 12 years of life?
– Drug b) additional 10 years of life?
• Drug a) IV – large side-effects,
weekly hospital visits, toxic,
nausea.
• Therefore need to adjust survival
benefits for standard/quality of
life
• Achieved via a “utility score”
HCMR00008 / Date of Preparation October 2009
Utility Scores
By placing a tick in one box in each group below, please indicate which
statements best describe your own health state today.
• Way of capturing Quality of Life in
Cost Effectiveness Analysis
• Measured on a scale of 0 to 1
• 1 = Perfect Health
• 0 = Death
– Negative values possible
Mobility
I have no problems in walking about
I have some problems in walking about
I am confined to bed



Self-Care
I have no problems with self-care
I have some problems washing or dressing myself
I am unable to wash or dress myself



Usual Activities (e.g. work, study, housework, family or
leisure activities)
I have no problems with performing my usual activities
I have some problems with performing my usual activities
I am unable to perform my usual activities



• Captured through patient reported Pain/Discomfort
no pain or discomfort
generic quality of life instruments II have
have moderate pain or discomfort
I have extreme pain or discomfort
– EQ-5D, SF-36
• Can be applied across all disease
areas and variety of health states
Anxiety/Depression
I am not anxious or depressed
I am moderately anxious or depressed
I am extremely anxious or depressed






HCMR00008 / Date of Preparation October 2009
What is a QALY? - calculation
Patient Survival
Patient QALYs
Drug B
Drug B
Drug A
Drug A
0
2
4
6
Years
8
10
12
0
2
4
6
8
10
12
QALYs
• Patients on Drug A live longer than patients on Drug B
• Utility Scores:
• Drug A = 0.40
• Drug B = 0.65
• QALYs for Drug B (6.5) greater than Drug B (4.8)
HCMR00008 / Date of Preparation October 2009
Cost per QALY
• Standardised measure to assess the value for money of
a health intervention
• “How much additional NHS money is required to
produce an additional QALY using the intervention
under question?”
• Cost per QALY is therefore a COMPARATIVE measure
– Additional costs and benefits relative to chosen
comparator
HCMR00008 / Date of Preparation October 2009
What is a Cost per QALY?
New Intervention
Current Practice
Interested in
difference /
Marginal
differences
Total NHS Costs
QALYs
HCMR00008 / Date of Preparation October 2009
How do you calculate a cost per
QALY?
HCMR00008 / Date of Preparation October 2009
Calculating aa Cost
Cost per
per QALY:
QALY:
Calculating
(Total
(Total Costs
Costs Drug
Drug A)
A) –– (Total
(Total Costs
Costs Drug
Drug B)
B)
(Total
(Total QALYs
QALYs Drug
Drug A)
A) –– (Total
(Total QALYs
QALYs Drug
Drug B)
B)
• Total Cost = Drug cost + NHS Resource costs
• Total QALY = (Survival)*(Utility score)
• Period of survival is often stratified into discrete “health states”
– Response versus Progression
– Cure versus Active disease
HCMR00008 / Date of Preparation October 2009
The Cost per QALY, an example.
Total NHS
Current
New Drug Difference
£10,000
£18,000
£8,000
6.90
0.70
per patient
Total
6.20
per patient
Cost Per
£11,429
• “How much additional cost is required to generate an additional quality
adjusted life year compared to current practice?”
HCMR00008 / Date of Preparation October 2009
What influences Cost per QALY?
• Drug Price
• Patient Survival
• Patient Quality of Life
• Related NHS resources
– Drug Administration
– Nurse / Pharmacy time
– Side Effect management
– Medical Supplies
We can not judge the merits of treatments in isolation
from current alternatives
HCMR00008 / Date of Preparation October 2009
Cost per QALY Summary
• When given the Total costs and QALYs for each intervention cost per
QALY a simple calculation
• Controversy surrounds estimation of QALYs:
– Multiple health states and utility scores
– Longer term outcomes and overall survival unknown
• Clinical outcomes rarely available for the necessary lifetime time
horizon of the analysis
• ICER can be very sensitive to small changes in model assumptions
• Uncertainty around parameter estimates the most consistent source of
debate within economic evaluation and NICE decisions
HCMR00008 / Date of Preparation October 2009
NICE’s preferred methodology – the Reference Case
Source: National
Institute for Clinical
Excellence (NICE).
Guide to the
Methods of
Technology
Appraisal. London:
NICE, 2004.
HCMR00008 / Date of Preparation October 2009
Background
Common misunderstandings- revisited
1.
“The most cost-effective patient is a dead patient”
• Cost Effectiveness ratios include survival, reduce
survival increases cost per QALY
2.
“NICE are all about cost containment”
• NICE guidance can dramatically increase costs
within a disease area. “Efficiency” not same as “costcutting”
HCMR00008 / Date of Preparation October 2009
Background
Health Economic Myths - Revisited
3.
“Cheaper drugs are the more cost effective drugs”
• Cost Effectiveness takes into account the benefits
generated by a given drug
4.
“Cost Effectiveness analysis doesn't consider the
patient’s quality of life”
• The “QALY” is the outcome measure of CE analysis
HCMR00008 / Date of Preparation October 2009
Health Economics and Oncology
HCMR00008 / Date of Preparation October 2009
Key Challenges
1. Methodology Limitations and Oncology
– EQ-5D sensitivity
– Dynamic CE ratio
– Variation in threshold by patient characteristics
2. Oncology Clinical Trial Design
– Comparator
– PFS and OS relationship (Cross-over)
– Quality of Life outcomes
– Sub Groups / Personalised Medicine
– Means and Medians
– Resource Use
HCMR00008 / Date of Preparation October 2009
Recent Developments
1. HTA Policy developments:
– NICE End of Life Criteria
– Kennedy Review
– Pharmaceutical Oncology Initiative (POI)
– PPRS innovation package
– Patient Access Schemes
2. Regionalised HTA
– Pre-NICE Health Economics requirements
HCMR00008 / Date of Preparation October 2009
Thank you
HCMR00008 / Date of Preparation October 2009
Back Up
HCMR00008 / Date of Preparation October 2009
End of Life Criteria
• Patients with less than 24 months life expectancy
• Additional 3 months survival from new treatment
• “Small patient numbers” (approx 7,000?)
• No alternative with comparable benefits
• Single indication
HCMR00008 / Date of Preparation October 2009