The determinants of change in the cost-effectiveness threshold Mike Paulden, MSc 1 James O’Mahony, PhD 2 Christopher McCabe, PhD 1 1 Department of Emergency.

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Presentation transcript:

The determinants of change in the cost-effectiveness threshold Mike Paulden, MSc 1 James O’Mahony, PhD 2 Christopher McCabe, PhD 1 1 Department of Emergency Medicine, University of Alberta, Canada 2 Centre for Health Policy & Management, Trinity College Dublin, Ireland

Disclosure I have no actual or potential conflict of interest in relation to this topic or presentation

Overview 1.What is the threshold? 2.Why might the threshold change? 3.Why does this matter?

What is the threshold?

Two different ways to conceptualize the threshold: 1.The ‘value’ society places on marginal improvements in population health (‘demand-side’ threshold) Requires estimation of the ‘value’ that individuals place on improvements in health, then aggregation of these values 2.The ‘opportunity cost’ of funding the new technology within a budget-constrained health care system (‘supply-side’ threshold) Requires estimation of the ICERs of marginal technologies in the system that must be displaced to fund the new technology

Suppose you value apples at $1 each At the market are two identical stalls selling identical apples but at different prices Stall A 60¢ each Stall B 30¢ each Which stall would you purchase apples from? If the owner of stall A is willing to haggle, how much would you be willing to pay for an apple from Stall A? What relevance is your ‘value’ of $1 per apple?

Suppose society values health at $100,000 per QALY (‘demand-side’ threshold) New technology $60,000 per QALY Suppose society wants to improve population health and adopts the equity position that all QALYs have equal value Funding the new technology will displace one or more other technologies within the health system, resulting in health losses for other patients Displaced technology $30,000 per QALY (‘supply-side’ threshold) What ‘threshold’ ($ per QALY) should we use when assessing the new technology for reimbursement?

ICER for each technology Health care expenditure Budget

ICER for each technology Health care expenditure BudgetFundedNot Funded

Displaced technology ICER for each technology Health care expenditure BudgetFundedNot Funded Threshold N e w t e c h n o l o g y

Why might the threshold change? Theoretically, the threshold may change over time for a number of reasons: Changes in the budget for health care (↑)

ICER for each technology Health care expenditure BudgetFundedNot Funded Threshold

Why might the threshold change? Theoretically, the threshold may change over time for a number of reasons: Changes in the budget for health care (↑) Changes in the demand for health care services (↓)

ICER for each technology Health care expenditure BudgetFundedNot Funded Threshold

Why might the threshold change? Theoretically, the threshold may change over time for a number of reasons: Changes in the budget for health care (↑) Changes in the demand for health care services (↓) Changes in the technical efficiency of technologies (?) If funded technologies become less expensive then ↑

ICER for each technology Health care expenditure BudgetFundedNot Funded Threshold 1.Expenditure on tech falls 2.ICER of tech falls 3.Bookshelf reorganized 4.Additional tech funded 5.Threshold increases

Why might the threshold change? Theoretically, the threshold may change over time for a number of reasons: Changes in the budget for health care (↑) Changes in the demand for health care services (↓) Changes in the technical efficiency of technologies (?) If funded technologies become less expensive then ↑ If funded technologies become more effective then ↓

ICER for each technology Health care expenditure BudgetFundedNot Funded Threshold 1.Effectiveness of some techs fall, so ICERs fall 2.Expenditure unchanged - no change in book width 3.Threshold falls

Why might the threshold change? In theory, the threshold may change over time for a number of reasons: Changes in the budget for health care (↑) Changes in the demand for health care services (↓) Changes in the technical efficiency of technologies (?) If funded technologies become less expensive then ↑ If funded technologies become more effective then ↓ Where many changes apply, threshold may ↑ or ↓

Why might the threshold change? In theory, the threshold may change over time for a number of reasons: Changes in the budget for health care (↑) Changes in the demand for health care services (↓) Changes in the technical efficiency of technologies (?) If funded technologies become less expensive then ↑ If funded technologies become more effective then ↓ Where many changes apply, threshold may ↑ or ↓ In practice, we have little empirical evidence of the current threshold, let alone its rate of change

Why does this matter?

Period 1$50,000$18m40000$9m200 2$40,00000$18m400$9m200 Total-$18m400$18m400$18m400 ICER-$45,000 per QALY

Why does this matter?

Summary The threshold should reflect the opportunity cost of funding new technologies (‘supply-side’) The threshold depends upon a number of factors, including the budget, the demand for health care, and the technical efficiency of health technologies, each of which may change over time The threshold is therefore continuously changing This has implications for economic evaluations: Comparing ICERs to a threshold is problematic Using NHB or conventional NMB is problematic Research needed to develop new methods in this area