EHC Workshop on Economics and HTA’s for EU Member Organisations Basic economic concepts Health economics, cost-effectiveness and QALYs EHC Workshop on Economics and HTA’s for EU Member Organisations September 20th, 2014 Keith Tolley Director Tolley Health Economics Ltd keith@tolleyhealtheconomics.com

The purpose of the presentation Provide an understanding of key concepts and language of health economics and cost-effectiveness Focus on Quality Adjusted Life Years (QALYs) Set up for session on payer perspective in the afternoon.

Climate change in haemophilia Previously little Funding restriction But growth in use and cost of factor VIII (prophylaxis) New expensive recombinant products Payers concern to control costs

Growth in Health Technology Assessment around the globe Organisations assessing clinical and cost- effectiveness of new medicines They use the tools of health economics To aid decisions about drug and health technology reimbursement and funding

HTA bodies in Europe Univ of Tartu VSMTA VASPVT MoH MoH AAZ FinOHTA NOKC TVL, SBU SMC Univ of Tartu VSMTA DACEHTA NCPE VASPVT AWMSG NICE CVZ/NVTAG AHTAPol DAHTA/ IQWiG KCE MoH HAS LBI of HTA SNHTA, MTU- SFOPH HunHTA MoH AAZ AET + AETSA, AVALIA, CAHTA, OSTEBA, UETS AIFA + regional HTA MoH ANHTA Lots of sun, but not so much HTA

Developing HTA in Europe Well established in countries such as Sweden, UK, Netherlands, Germany, Belgium Using cost-effectiveness criteria in all countries for pharmaceutical reimbursement decisions (including Italy and France recently) With some exceptions (Germany) the main outcome measure being used in assessments of cost-effectiveness is the QALY – “Quality Adjusted Life Years” HTA and the use of cost-effectiveness criteria has emerged in CEE countries in last 5-10 years (e.g. Poland, Estonia, Croatia, Romania, Bulgaria, Czech Republic)

Health Economics principles Scarcity of resources: resource allocation decisions in a population Value of resources used (costs/savings) and benefits of treatments (e.g. survival and quality of life) Efficiency: choosing treatments with the greatest net value for the population Equity: choosing treatments due to fairness criteria as well as efficiency

Health economic evaluation concepts Health economic evaluation is the tool of health economics concerned with assessing value, efficiency and equity in use of resources on health care interventions and technologies. Key principles/terms you will learn about today: Different types of health economic evaluation Perspective and types of cost QALYs and the concept of utility Incremental cost-effectiveness ratio (ICER) Utility (for QALY) measurement – time trade-off, standard gamble, EQ 5D

Comparing the Main Methods of Economic Evaluation Type of Analysis Result Measurement of Consequences Costs Cost Benefit Cost Minimisation Cost Utility Money Same outcomes for all interventions Quality Adjusted Life Years (QALYs) Cost per life year. Cost per QALY Cost Benefits valued in money. Net £ cost: benefit ratio. Single unit of outcome e.g. life years, blood pressure Cost Effectiveness

Identification of resources & costs Intervention Direct cost Indirect cost Wider cost implications to society e.g. lost production/wages Non-health services resource use. eg. patient transportation, informal caregiving Health services resource use. e.g. inpatient, outpatient, tests, drugs, overhead costs 93

Perspective The perspective determines the types of costs included A health care perspective would only include direct medical costs Currently preferred by UK HTA bodies, but likely to change (to some extent) to a broader perspective) A society perspective would also cover non-direct health-related and indirect costs Currently preferred basis in Sweden

Cost-effectiveness and cost utility analysis (CEA and CUA) The tool for assessing value, efficiency (vs equity) Health economic principle is to maximise the population health benefit with the resources available Expressed as cost per unit of benefit for a new treatment B over current treatment A e.g: Incremental cost per bleed avoided by primary prophylaxis over on-demand treatment (‘cost-effectiveness’ analysis) Incremental cost per QALY gained (‘cost-utility’ analysis) QALY = life years multiplied by quality of life (utility) score on 0-1 scale (the HTA favourite and sometimes enemy !)

Incremental CE ratio (ICER)* [Cost (B) - Cost (A)] i.e. Difference in Cost [Effect (B) - Effect (A)] Difference in Effect It reveals the additional cost per unit of benefit of switching from one treatment option (current practice) to another or new treatment option, i.e. from A to B *Sometimes known as the incremental cost-utility ratio (ICUR)

Cost-effective footballers? 2012-13: €330k (£275k) weekly salary Annual salary of €17,160,000 60 goals in 50 games €286k per goal 2012-13: €288k (£240k) weekly salary Annual salary of €14,976,000 55 goals in 55 games €272k per goal Incremental annual cost per extra goal by Messi = €437k Goal per game adjusted: = €218k

Quality Adjusted Life Years

Calculating pre and post treatment cost per QALY figures Without treatment (A) Estimated survival = 20 years Estimated utility = 0.5 QALY = (20 x 0.5) = 10 Cost = €4,000 With treatment (B) Estimated survival = 20 years Estimated utility = 0.6 QALYs = (20 x 0.6) = 12 Cost = €36,000 ICER = €36,000- €4,000/12-10 QALYs = €32,000/2 QALYs = €16,000/QALY gained

QALYs Whereas clinical outcomes only allow comparisons within diseases e.g. Cost per bleed avoided for different haemophilia treatments QALYs allow comparisons across disease areas e.g. cost per QALY for haemophilia treatments vs cost per QALY for cancer treatments v cost per QALY for migraine treatments

Cost/QALY league tables Treatment Cost/QALY Stop smoking advice € 270 Hip replacement € 1,180 CABG € 2,090 Kidney transplant € 4,710 Haemophlia prophylaxis €41,000 Bevacizumab (col. cancer) €62,857

UK Benchmark for decisions: incremental cost per QALY gained A = <£20,000 per QALY gained: Considered an efficient use of resources B = >£30,000 per QALY gained Would need special circumstances to accept Probability of rejection on grounds of cost ineffectiveness Increasing cost/QALY (log scale) Source: Rawlins and Culyer, BMJ 2005;329:224-227

How does disease affect patients’ health related quality of life? General Health Perceptions Psychological Distress/Well being Disease Physical Functioning Social/Role Functioning Essentially, when we talk about HRQoL we are appreciating that there is more to disease than clinical signs and symptoms. If you ask a patient about asthma, they do not talk about inflammation in the lungs and bronchoconstriction, they talk about not being able to run for a bus, being bothered by pollen which means they stay indoors to avoid Personal Functioning Adapted from Ware, 1984

QALYs... The ‘Quality adjusted Life Year’ (QALY) Survival (e.g. 10 years) Health related QoL (Utility 0-1) QALY = survival weighted by utility (10 life years x 0.5 = 5 QALYs) To derive a utility need a health state and a valuation of that health state

Utility The utility weight (typically on a 0-1 scale ) reflects the preference (or value) people have for different health states HRQoL or Utility = preference or value The more preferable a health state the more utility associated with it (i.e. health state with a value = 0.995 is preferred to a health state with a value = 0.125).

Example of health states on the 0-1 utility scale PERFECT HEALTH 0.9 Normal health 0.8 Headache once a week 0.7 Migraine once a week 0.6 3 migraines per week 0.5 Daily migraines 0.4 Regular severe migraines 0.3 Regular severe migraines and other pain 0.2 Regular pain (including severe migraines) 0.1 Constant migraines and pain DEATH Using migraine/pain as an example Utility scales are typically bounded by 0 (death) and 1 (perfect health)

How is a ‘utility measured’? Time Trade-off Standard gamble Visual analogue scale Generic questionnaire – e.g. EQ 5D, SF 6D

Time trade-off (TTO) - valuation Ask respondent: How much time in perfect health would you give up to avoid a longer time with the health state - haemophilia patient with 5 bleeds per 3 months For example, accepting 6 years in perfect health followed by death instead of 10 years with the health state gives the utility of 0.6 (6 divided by 10)

Direct measurement using Time Trade-off Applying TTO Step 1: Full health state description typically required Step 2: Completing the TTO exercise Direct measurement using Time Trade-off How many years in perfect health followed by death would you accept? 0 5 10 Years Years Versus 10 years in Health State A Response: = 6 years

Standard Gamble (SG) - valuation Ask respondent would you: Accept a gamble which gives perfect health (e.g. 10 yrs) or death Or Choose a health state for 10 yrs – general health state with mobility etc problems, or haemophilia with 5 bleeds per 3 months If accept gamble at odds of 60% chance of perfect health, the utility of the health state is 0.6

Visual analogue scale (VAS)-valuation Ask respondent to: Place a cross on a scale marked 0-100 (0 being death and 100 perfect health) for the state - haemophilia patient with 5 bleeds per 3 months If the cross is placed at 60, (then rescaled 0-1) the utility is 0.6.

Applying the VAS Step 2: Completing the VAS Step 1: Full health state description typically required Step 2: Completing the VAS Visual Analogue Scale 100 Perfect Health 75 50 25 0 Death Response = 30 on VAS – equates to a utility of 0.3 Health State A

Example health state in haemophilia Few published examples - Naraine et al. 2002 (Canada) Health Related quality of life for severe haemophilia: used standard gamble technique. Conducted in 30 healthy adults, 30 parents of children with haemophilia, and 28 adults with haemophilia. Seven scenarios/health states for on-demand or prophylaxis, low, medium or high dose, level of bleeding frequency and infection risk were valued.

An illustration of a health state description Scenario 1: Baseline on demand-therapy: low to moderate joint bleeding frequency (<3 in 3 months) Your son was diagnosed with severe haemophilia shortly after birth. He bleeds frequently and easily into muscles and joints, especially after a bang or fall and requires one or two infusions of FVIII. Infusion means a needle is inserted into his vein. The needle is connected to a syringe containing the FVIII. You have to wait until all the FVIII is in the vein (15–20 min). He may need to go to the hospital for an infusion, if you’re not on homecare treatment. With minor bleeding events, he has moderate pain that prevents a few activities. Generally, he is able to walk around without difficulty or walking equipment. He avoids activities and bodily contact sports that may result in a bleed. A few times a year, he has a serious bleed into a joint and he experiences severe pain that prevents most activities for a few days. He misses a week or more of school After the joint has healed, he is able to walk around without difficulty

Utility valuation survey - Respondents Can be patients, patient carers, members of public If public complete the exercise, said to represent community based or society values for the health states

Generic utility questionnaires Broad description of quality of life Use direct measurement techniques (TTO/SG) to value general health states Questionnaire then applied to find which health state a patient is in Most popular questionnaires are: EQ-5D (EuroQoL) SF-36 (SF6D) Health Utilities Index (HUI)

EQ 5D utility questionnaire 100 = best assessment Mobility Self-care Usual activities 100 mm Visual analogue scale Pain/ discomfort Anxiety/ depression 0 = worst assessment

Applying the EQ 5D Step 1: Patient complete the EQ 5D questionnaire to reflect their health state EQ-5D Questionnaire Mobility I have no problems in walking about 1 I have some problems in walking about 2 I am confined to bed 3 Self-Care I have no problems with self-care 1 I have some problems washing or dressing myself 2 I am unable to wash or dress myself 3 Usual Activities (e.g. work, study, housework, family or leisure activities) I have no problems with performing my usual activities 1 I have some problems with performing my usual activities 2 I am unable to perform my usual activities 3 Pain/Discomfort I have no pain or discomfort 1 I have moderate pain or discomfort 2 I have extreme pain or discomfort 3 Anxiety/ Depression I am not anxious or depressed 1 I am moderately anxious or depressed 2 I am extremely anxious or depressed 3 Step 2: Apply valuation system (tariff): Valued by members of the general public (in Europe, but available for other countries) using time trade-off (TTO) techniques n=3,235 respondents (cross section of the public).

EQ 5D utility score and QALY calculation Response to questionnaire = 2 1 3 1 2 Utility TTO tariff 21311 = 0.49 21312 = 0.42 21313 = 0.25 Step 3 QALY: Calculation Life years = 10 10 x 0.42 Utility = 0.42 QALYs = 4.2 Step 4

How are utilities for generic instrument health states derived? Valuation system Time trade-off (TTO) Standard gamble (SG) Rating scale/visual analogue scale (VAS) Questionnaire EQ 5D SF 6D Health Utilities Index EQ 5D VAS

EQ 5D utilities EQ-5D - utility values 0,0 0.8 0.6 0.4 0.2 1) Kobelt G et al. HEPAC 2001, 2: 60-68 2) Meads et al. Value in Health 2004; Poster Presenation at ISPOR 2004 3) Groen et al. Am J Transplantation 2004; 4:1155-1162 4) Lloyd A et al. Primary Care Respiratory J 2007, 22-27 5) Miners, Haemophilia, 2009 0.2 0.6 0.8 0.4 0,0 0.50 – patients before lung transplantation (3) EQ-5D - utility values 1.00 – best health status 0.87 – severe haemophilia receiving prophylaxis (5) 0.76 – patients with mild multiple sclerosis (EDSS ≤ 3.0) (1) 0.66 – severe haemophilia receiving on-demand treatment (5) 0.58 – patients with pulmonary arterial hypertension NYHA III (2) 0.43 – patients with pulmonary arterial hypertension NYHA IV (2) 0.33 – patients hospitalized for exacerbation with asthma (4) ) 0.23 – patients with severe multiple sclerosis (EDSS ≥ 6.5) (1) 0.00 - death

Comparing the generic instruments EQ 5D SF 6D HUI 5 health domains (mobility, self care, usual activities, pain/discomfort, anxiety depression) Utilities based on TTO methods Valued by general population (in several countries) Only adult version currently validated Has a greater range of scores than SF 6D May lack sensitivity due to fewer domains especially in less severe health problems Quick questionnaire to complete Ceiling effects found (large percentage of respondents report no problem) 6 health domains (physical functioning, role limitation, social functioning, pain, mental health, vitality) Derived from the validated generic quality of life questionnaireSF36 Based on SG methods Valued by general population (in UK) Only adult version currently validated Floor effects found (large proportion of respondents report low scores) 7-8 health domains (HUI3) (speech, vision, ambulation, dexterity, emotion, cognition, pain) Based on SG and VAS methods Valued by general population (in Canada) Includes a version available for use in children (HUI2) Has stronger emphasis on sensory elements than other instruments

Some observations HTA general preference is for societal valuation (general public) and/or using a generic questionnaire The different techniques can easily produce different utility scores What is important is difference between health state scores as that measures the QoL benefits of treatment: If on-demand treatment utility is 0.6 If prophylaxis utility is 0.8 Means there is a 0.2 gain in utility score/quality of life

Whose QALY are we interested in? The Patient certainly The family caregivers?

QALY is a QALY is a QALY “An assumption that underlies most of NICE's technology appraisals has been that “a QALY is a QALY is a QALY.” By this NICE means that a QALY gained or lost in respect of one disease is equivalent to a QALY gained or lost in respect of another. It also means that the weight given to the gain of a QALY is the same, regardless of how many QALYs have already been enjoyed, how many are in prospect, the age or sex of the beneficiaries, their deservedness, and the extent to which the recipients are deprived in other respects than health.” Rawlins & Culyer. BMJ 2004;329:224

QALY is a QALY is a QALY not not ^ ^ “I am uneasy about the mantra of ‘a QALY is a QALY is a QALY.’ It means that an increase in utility from 0.3 to 0.5 is valued the same as an increase from 0.7 to 0.9. I am not sure this is fair.” Rawlins. Value in Health 2012;15:568-9

Challenges for improving health economic evaluation in haemophilia Improving but still limited clinical and outcomes data available Lack of standard approach to utility measurement Importance of adopting a societal perspective Ensuring equity considerations incorporated Reminding HTA bodies that haemophilia is an Orphan (rare) disease

Conclusions HTA and health economics is increasingly being used to assess value by national and regional health authorities and payers Patient organisations and health professionals working in haemophilia can contribute to the debate on what constitutes value in haemophilia by understanding the key concepts and tools of HTA and health economics QALYs are here to stay for time being, so need to understand and work with them. Although other outcomes options are being considered even in UK

Any questions? Does Santa Exist? How many shopping days to Christmas?

Further Reading Tolley K - What are Health Utilities? What is...? Series April 2009 (revised in 2014 and available soon) O’Mahoney B - An Introduction to Key Concepts in Health Economics for Hemophilia Organizations, World Federation of Hemophilia, 2010