Assessing cost-effectiveness – what is an ICER?- Incremental analysis Usa Chaikledkaew, Ph.D.

Outline How to conduct health economic evaluation results? What is an Incremental cost-effectiveness ratio (ICER)?

What is health economic evaluation? Refers to a study that considers both the comparative costs associated with two or more health care interventions, and the comparative clinical effects, measured either in clinical units, health preferences, or monetary benefit Outcomes Costs $ LYGs QALYs$ Source: Drummond et al, 2005

What Counts As An Economic Evaluation? Source: Drummond et al, 2005

Economic Evaluation Methods Cost Outcome Results Cost-Minimization Analysis (CMA) ฿ Usually clinical values (Assume to be equivalent in comparable groups) Cost per case Cost-Benefit Analysis (CBA) Net benefit Benefit-to-cost ratio Return on investment (ROI) Cost-Effectiveness Analysis (CEA) Clinical values Life year gained (LYG) ICER (cost per LYG) Cost-Utility Analysis (CUA) Quality-adjusted life years (QALYs) ICER (cost per QALY)

Incremental cost-effectiveness ratio (ICER) The cost that on average needs to be sustained to obtain “an additional success” (cost of treatment A) – (cost of treatment B) (clinical success treatment A) – (clinical success treatment B) Or (cost of treatment A) – (cost of treatment B) (LYG A – LYG B) Or (cost of treatment A) – (cost of treatment B) (QALY A – QALY B) 6

Cost-effectiveness threshold or WTP UK: < £30,000 per QALY gained USA: < $50,000 per QALY gained Countries in the World: < 3 x GDP per DALY averted Thailand: < 1.2 GNI per capita per QALY gained (160,000 THB) Source: (1) Devlin, N. and Parkin, D. Health Economics, 2004; 13: 437-452. (2) Towse, A., Devlin, N., Pritchard, C (eds) (2002) Cost effectiveness thresholds: economic and ethical issues. London: Office for Health Economics/King's Fund. (3) Thavorncharoensap et al. Assessing a societal value for a ceiling threshold in Thailand. 2013. Health Intervention and Technology Assessment Program (HITAP), Ministry of Public health, Nonthaburi, Thailand.

How to conduct health economic evaluation results? 8

PE/HEE Study Designs Prospective: alongside clinical trial Model based 9 Prospective: alongside clinical trial Model based Combining different sources e.g. a model, based on input from clinical trials, retrospective data, expert opinion. 1.1 Decision trees 1.2 Markov models 11

How to conduct HEE results? Define the problem Identify the alternative interventions Identify and measure cost and outcomes Value costs and effectiveness Interpret and present results

Example Source: Thavorn et al. Tobacco Control 2008;17:177–182. doi:10.1136/tc.2007.022368

Define the problem Perception of the problem Specific intervention Specific strategy Specific drug Specific surgical procedure

Define the problem Selection of objectives A decision must be made about how cost-effectiveness will be evaluated.

Define the problem Perspective Patient Provider Third Party Payer Healthy System Public/Government Societal

P.15

Identify the alternative interventions 16

Choice of comparator(s) An intervention should be compared to the comparator (s) which is most likely to be replaced by the intervention in real practice Current practice may be : The most effective clinical practice The most used practice May not always reflect the appropriate care that is recommended according to evidence-based medicine Minimum clinical practice A practice which has the lowest cost and is more effective than a placebo. “doing nothing” or no treatment 17

Identify the costs Sources of cost data Hospital (charges, unit cost) Ministry of Public Health website DRG Reimbursement list Standard costing menu 18

Example of cost estimates 19

Identify the outcomes

Quality Adjusted Life Years (QALYs) Integrate mortality, morbidity, and preferences into a comprehensive index number Related to outcomes Life duration Quality of life Allows comparisons of the cost-effectiveness results with other medical interventions 21

Quality-Adjusted Life Years (QALYs) QALYs = number of years lived x utility* Patient 1: Utility = 0.9 Number of years = 10 QALYs = 0.9 x 10 = 9 QALY Patient 2: Utility = 0.5 QALYs = 0.5 x 10 = 5 QALYs * Utility can be ranged from 0 (worst health state) to 1 (best health state/healthy) Quality weight that represents HRQOL Quantity or life 22

Valuing costs and outcomes Model based Decision tree model Markov model Discounting to present value if its been more than one year Uncertainty analysis

What is an Incremental cost-effectiveness ratio (ICER)? 24

Interpretation and presentation of results 25 Incremental cost-effectiveness ratio (ICER) The cost that on average needs to be sustained to obtain “an additional success” (cost of treatment A) – (cost of treatment B) (clinical success treatment A) – (clinical success treatment B) Or (cost of treatment A) – (cost of treatment B) (LYG A – LYG B) Or (cost of treatment A) – (cost of treatment B) (QALY A – QALY B) 25

The need for incremental thinking Marginal analysis: requires assessment of relative costs and benefits of each marginal addition or reduction in production or consumption 26

Second table is incremental cost: 71.4424- 65.9469 = 5.4956 Between comparing 5 test and 6 tests it jumps to 47 mill. It becomes totally not CE Source: 1975 article from Neuhauser and Levicky: “what do we gain from the sixth stool-guaic” (N Engl J Med) on stool tests do detect colonic cancer 27

Interpretation and presentation of results 28 Incremental cost-effectiveness ratio (ICER) The cost that on average needs to be sustained to obtain “one Life Year gained” (cost of CPSC) – (cost of treatment of Usual Care) (Life Years of CPSC) – (Life Years of Usual Care) 28

ICER of CPSC compared to Usual Care by Age and Sex Gender/Age Incremental cost Life years gained ICERs of CPSC compared to Usual Care (year) (THB) (Years) (THB per LY gained†) Male, 40 -17,504 0.181 -96,705 (Dominant) Male, 50 -16,356 0.152 -107,603 (Dominant) Male, 60 -12,387 0.121 -102,373 (Dominant) Female, 40 -21,500 0.244 -88,114 (Dominant) Female, 50 -20,074 0.205 -97,922 (Dominant) Female, 60 -14,889 0.161 -92,479 (Dominant) Better to not use negative sign bcs it misleads policy makers. So we use the dominant. Dom shows CPSC is more than usual care. If its positive, we use thresholds. THB 6000 is the threshold. *Negative ICER due to higher effectiveness and lower costs of CPSC compared with Usual Care 29

Cost-effectiveness plane more costly A D C B Intervention is more effective and more costly Intervention is less effective and more costly decrease in health effects increase in health effects Intervention is more effective and less costly Intervention is less effective and less costly less costly 30

Conclusions

Cost-effectiveness league table of selected interventions in Thailand Health Interventions Baht/QALY (2008) Coverage Antiretroviral treatment vs. palliative care 26,000 Yes Prevention of vertical HIV transmission (AZT + NVP) vs. null 25,000 Statin (generic) in men >30% CVD risk vs. null 82,000 Cytomegalovirus retinitis: Gancyclovir vs. palliative 185,000 Antidiabetic: Pioglitazone vs. Rosiglitazone 211,000 No HPV vaccine at age 15 vs. Pap smear, 35-60 years old, q 5 years 247,000 Osteoporosis: Alendronate vs. calcium + vitamin D 296,000 Osteoporosis: Residronate vs. calcium + vitamin D 328,000 Peritoneal dialysis vs. palliative care included anyway cs ethic issues/ surviability 435,000 Hemodialysis vs. palliative care included anyway cs ethic issues/ surviability 449,000 Osteoporosis: Raloxifene vs. calcium + vitamin D 634,000 Osteoporosis: Calcitonin vs. calcium + vitamin D 1,024,000 HPV vaccine at age > 25 vs. Pap smear, 35-60 years old, q 5 years 2,500,000 Anemia in cancer patients: Erythropoitin vs. blood transfusion 2,700,000 Transtuzumab in breast cancer 5,051,000 อธิบาย GDP per QALY (why 200,000 baht per QALY) 3x GDP per capita might be too high. 32

Thank you, Any question? usa.c@hitap.net 43