Making Economic Evaluation Fit for Purpose to Support Decisions Mark Sculpher, PhD Centre for Health Economics University of York, UK The Third Annual Global Health Economics Consortium Colloquium: Valuing Health, 12 th February 2016 The Third Annual Global Health Economics Consortium Colloquium: Valuing Health, 12 th February 2016

Learning the Lessons from the ‘NICE Experiment’ Mark Sculpher, PhD Centre for Health Economics University of York, UK The Third Annual Global Health Economics Consortium Colloquium: Valuing Health, 12 th February 2016 The Third Annual Global Health Economics Consortium Colloquium: Valuing Health, 12 th February 2016

Acknowledgements and disclosures Acknowledge key co-authors: Karl Claxton, Steve Palmer and Tony Culyer My Centre receives funding from NIHR to undertake technology assessments for NICE I have participated in various NICE decision making and advisory committees

Outline Reflections on the use of cost-effectiveness at NICE The role of cost-effectiveness in decisions –Cost-effectiveness threshold –Decisions with multiple criteria and perspectives Some thoughts for outside UK

What is NICE? National Institute for Health and Care Excellence Introduced in 1999 –Technology appraisals (priority drugs) –Clinical guidelines Take politically challenging decisions Best available evidence and analysis NHS pays – financial mandate for drugs International impact

NICE Guidance by Year Number of publications Year Source: David Haslam, Chair of NICE, June 2015

Prescription pharmaceutical appraisal at NICE

The NICE Reference Case Source: National Institute for Health and Care Excellence, Guide to the Methods of Technology Appraisal. 2013, London: NICE.

Areas of challenge to CEA at NICE Cost-effectiveness threshold Decisions with multiple criteria and perspectives Uncertainty Creating the right incentives

Areas of challenge to CEA at NICE Cost-effectiveness threshold Decisions with multiple criteria and perspectives Uncertainty Creating the right incentives

NICE’s supply-side concept of the threshold “Given the fixed budget of the NHS, the appropriate maximum acceptable ICER to be considered is that of the opportunity cost of programmes displaced by new, more costly technologies” “NICE does not have complete information about the costs and QALYs from all competing healthcare programmes in order to define a precise maximum acceptable ICER” “Consequently, the Institute considers technologies in relation to this range of maximum acceptable ICERs…” National Institute for Health and Care Excellence, Guide to the Methods of Technology Appraisal. 2013, London: NICE.

£20,000 per QALY £40,000 Price = P2 Cost-effectiveness Threshold £20,000 per QALY QALYs gained Cost £60,000 £30,000 per QALY Price = P3 3 The implication for decision making £20,000 2 £10,000 per QALY Price = P1 1 Net Health Benefit 1 QALY Net Health Benefit -1 QALY Claxton et al. British Medical Journal, 336,

Empirical basis for health opportunity costs

Estimating a supply-side CE threshold NHS expenditure data in 11 (of 23) clinical categories Variation in mortality in related ICDs Variation between 152 health authorities Effect of marginal change in expenditure on mortality Effect on life-years Quality of life in additional life-years Pure impact on quality of life ++ Effect of marginal change in expenditure on QALYs Central estimate: every £12,936 increase in expenditure results in 1 forgone QALY Claxton et al., Health Technol Assessment, (14): p

Expected health consequences of £10m costs? Change in spendAdditional deathsLY lostTotal QALY lostDue to premature deathQuality of life effects Totals 10 (£m) Cancer Circulatory Respiratory Gastro-intestinal Infectious diseases Endocrine Neurological Genito-urinary Trauma & injuries* Maternity & neonates* Disorders of Blood Mental Health Learning Disability Problems of Vision Problems of Hearing Dental problems Skin Musculo skeletal Poisoning and AE Healthy Individuals Social Care Needs Other (GMS)

How does this compare with NICE decisions?

Cost-effectiveness analysis at NICE – decisions Dakin et al. Health Economics 2014; DOI: /hec.3086

What have been the implications? Controversial No change in NICE threshold The term ‘threshold’ is unhelpful –Decisions –Opportunity cost NICE believes threshold also reflects other factors

Areas of challenge to CEA at NICE Cost-effectiveness threshold Decisions with multiple criteria and perspectives Uncertainty Creating the right incentives

Multiple criteria for decisions (NICE’s current position) “Above a most plausible ICER of £20,000 per QALY gained, judgements …take account of the following factors: The innovative nature of the technology, specifically if the innovation adds demonstrable and distinctive benefits of a substantial nature which may not have been adequately captured in the reference case QALY measure. The technology meets the criteria for special consideration as a 'life-extending treatment at the end of life' Aspects that relate to non-health objectives of the NHS” NICE, Guide to the Methods of Technology Appraisal. 2013, London: NICE.

MCDA’s increasing profile

Value-based pricing (2010) Multiple criteria and perspectives No longer focus on standard QALYs QALYs adjusted for burden Wider social benefits included Net productivity Carer costs

NICE and value-based pricing No implementation of VBP Proposals for value-based assessment Major concerns about equity Absolute burden proxy for wider social benefits Proportionate shortfall measure of burden of illness NICE ‘flexibilities’ as multiple of up to 2.5 on threshold NICE, Value Based Assessment. Item 4, NICE Board Meeting 17 September. 2014, London: NICE.

Burden of disease (QALY loss)Wider Social Benefits (net production) C22Liver cancer10.70M05Rheumatoid arthritis£30,034 C25Pancreatic cancer9.97E11Diabetes£27,421 C34Lung cancer9.68M45Ankylosing spondylitis£26,190 F20Schizophrenia7.62F30Depression£23,489 G35Multiple sclerosis6.18F20Schizophrenia£22,697 C92Myeloid leukaemia6.15J45Asthma£20,100 G20Parkinson's disease4.60M81Osteoporosis£17,910 C90Myeloma4.45G35Multiple sclerosis£15,482 J43Emphysema and COPD3.80J43Emphysema and COPD£14,525 C64Kidney cancer3.75G40Epilepsy£14,245 F30Depression3.63L40Psoriasis£11,890 M05Rheumatoid arthritis2.83 DisplacedAverage of displaced QALYs£11,611 E11Diabetes2.68E66Obesity£8,138 DisplacedAverage of displaced QALYs2.07 C53Cervical cancer£6,912 J45Asthma1.86K50Irritable Bowel Syndrome£6,284 G30Alzheimer's disease1.68J30Allergic rhinitis£5,234 F03Dementia1.68G20Parkinson's disease£3,102 G40Epilepsy1.32C50Breast cancer£2,888 C18Colon cancer1.28G30Alzheimer's disease£351 I26Embolisms, fibrillation, thrombosis1.16A40Streptococcal septicaemia-£513 C61Prostate cancer1.06F03Dementia-£2,430 I21Acute myocardial infarction1.00I64Stroke-£6,949 I64Stroke0.83C18Colon cancer-£8,061 C53Cervical cancer0.60C61Prostate cancer-£10,602 C50Breast cancer0.55C64Kidney cancer-£13,211 A40Streptococcal septicaemia0.38I21Acute myocardial infarction-£14,395 J30Allergic rhinitis0.30I26Embolisms, fibrillation, thrombosis-£16,752 M81Osteoporosis0.28J10Influenza-£21,568 K50Irritable Bowel Syndrome0.26C90Myeloma-£23,382 J10Influenza0.19C92Myeloid leukaemia-£24,813 L40Psoriasis0.19C22Liver cancer-£32,709 E66Obesity0.18C34Lung cancer-£36,067 M45Ankylosing spondylitis0.11C25Pancreatic cancer-£53,860 Reflecting multiple criteria and perspectives: opportunity costs Claxton K, et al., Health Economics, 2015, DOI: /hec.3130.

Using multiple criteria and perspectives – an example Appraisal of ranibizumab (Lucentis) for diabetic macular oedema 2011 –Retinal thickness ≥ 400 subgroup before PAS –Additional costs = £3,506 per patient –Incremental cost-effectiveness = £25,000 per QALY –23,000 eligible patients each year AttributesInvestmentForgoneNet effects Lucentis for diabetic macular oedema (£80m pa) Expected effects of £80m pa Deaths0-411 Life years0- 1,864 QALYs3,225- 6,184-2,959 Burden of disease QALY loss Wider social benefits Consumption QALY equivalent (£60,000 per QALY) £85.2m 1,420 - £49.8m £35.4m 590

Multiple perspectives: how should we decide? PerspectiveValue Health and health care Net health benefits = 3,225 – 6,184 = - 2,959 QALYs Net societal cost: ignore opportunity costs Net costs = £80m - £85.2m = - £5.2m Societal perspective: account for health opportunity costs Net health loss = -2,959 QALYs Wider social benefits = £85.2m Worthwhile if consumption value of health < £28,800 per QALY Societal perspective: account for health and wider social benefits opportunity costs Net health loss = -2,959 QALYs Net wider social benefits = £85.2m – £49.8m = £35.4m Worthwhile if consumption value of health < £11,900 per QALY

Where are we now? Still ambition to widen criteria Wider perspective contentious Key distinction: –Threshold as decision rule –Threshold as measure of opportunity cost Other major challenges

Thoughts outside the UK: updated Panel What does a ‘societal perspective mean? How are (opportunity) costs falling on multiple budgets/sectors appropriately reflected? How are multiple aspects of benefit reflected In health Outside health

Thoughts outside the UK: Gates funded research