Health Economic Course Series PRIORITY SETTING http://diankusuma.wordpress.com

Economics = study of unlimited needs combined with limited resources Government intervention required where market fails Given limited resources and unlimited needs, how does government prioritize its interventions?

Mechanism to decide on Best Use of Resources Free Markets = price mechanism Cooperative/community schemes = bottom up Centralized rational planning (e.g. communist/socialist countries) = top down Non of these is perfect Equity? Efficiency? Combinations Importance of clear criteria

Historical Allocation Most widely used method = “give the same last year” If needed adapted to budget changes, inflation etc This avoids difficult choices, BUT -what if needs change (e.g. epidemic)? -what if technology changes (e.g. cheaper provision)? -what if costs change (e.g. economies of scale)?

Criteria for Resource Allocation Technical Efficacy of intervention – researchers Operational Effectiveness of interventions – doctors Political desirability – politicians Feasibility – planners Fit within development agenda – donors Preferences – consumers Equity – all Burden of disease – epidemiologist Costs of interventions - economists

Priority setting framework WDR 93

Which interventions save most lives? Burden of disease (BoD) = Total quantity of life years lost due to mortality and morbidity, adjusted for the decreased quality of life experienced due to illness. Measured in: Disability Adjusted Life Year (DALY) = quantitative indicator of burden of disease that reflects the total amount of healthy life that would be lost, from premature mortality or from some degree of disability during a period of time, due to disease.

DALYs due to living with disability

DALYs due to early death (Black area measures DALYs; Black+White is a standard life)

DALYs due to disability and premature death combined

Choices behind DALYs Choice of standard life expectancy for men and women Severity weight for disabilities: 1 is severely disabled or death, 0 is healthy Weight for age which disease occurs: Children and old < adults Time preference: Long term effects “discounted”, i.e. future is valued less

Disability weights Severity weights Indicator conditions 1 .00 - .02 Vitiligo on face, wt for age>2 sds below normal 2 .02 - .12 Watery diarrhoea, severe sore throat, anaemia 3 .12 - .24 Radius fracture in cast, infertility, rheumatoid arth, angina 4 .24 - .36 Below knee amputation, deafness 5 .36 - .50 Rectovaginal fistula, mild mental retardation, Downs’ syndrome 6 .50 - .70 Unipolar major depression, blindness, paraplegia 7 .70 - 1.00 Active psychosis, dementia, severe migraine, quadriplegia

Example of DALY calculation Girl, 5 years old, treated successfully for deafness, who lives until she is 82,5 Life 82,5 – 5 = 77,5 Disabled life Deafness = 30% disability 1 year of life = (1-30%) = 0,7 year DALY if deaf 77,5 x 0,7 = 54 year DALY lost due to deafness or DALY gained due to treatment 77,5 – (77,5 x 0,7) = 0,3 x 77,5 =77,5 – 54 = 23,5

Priority setting framework WDR 93

Different types of economics evaluation 1. Cost effectiveness Used to compare interventions on the basis of a specific health outcome (e.g. DALY saved) 2. Cost utility Used to compare interventions on the basis of a utility-weighted health outcome (e.g. QALY saved) 3. Cost benefit Used to compare interventions on the basis of a monetary value of the health outcome (e.g. $ cost -- $ benefits)

Cost effectiveness of interventions Cost-effectiveness ratio = Cost of intervention DALYs gained Costs: = Direct service costs (fixed and variable) that could be attributed to particular interventions. Excluded: indirect and private costs (government perspective), intangible costs (pain & suffering)

Cost-effectiveness of interventions Relative concept: More/less cost-effective interventions Overall budget Measurement of costs limited Measurement of effectiveness limited Other criteria to prioritize

Priority setting framework WDR 93

Priority Setting Priority interventions are those that: Address conditions that are a high burden of disease (high DALY loss) Can be delivered with low cost per DALY gained (cost effective) “League tables” of interventions: Low to high cost effectiveness ratio ($/DALY gained) More or less cost effective

Yearly infection averted Example: HIV/AIDS Intervention Yearly costs Yearly infection averted Average CE ratio Yearly DALYs averted $ millions Millions $/infection averted millions $/DALY averted Mass media 16 0,27 58 4,5 3 Peer education sex workers 70 1,04 68 14,3 4 Peer education and STI treatment sex workers 74 1,26 59 20,2 School based education 77 0,01 6704 0,2 376 VCT 406 0,31 1315 5 82 PMTCT 151 0,19 847 4,7 34 ART First line 1507 0,04 34825 2,5 569 First and second line 6945 185396 3,5 1977

EDR 1993 Package of priority interventions Public Health Immunization School-base health services IEC on nutrition and FP Reduction tobacco and alcohol Improvements of household environment AIDS prevention Clinical Services Maternal health Family planning TB STDs Child and infant health $12 per capita

Macroeconomics and Health 2001 Essential health services package, scaled up to reach 80-90% of the population by 2015. = $14 per capita for the least developed countries. Revision: New interventions added (ART) New evidence on effectiveness Updated BoD since 1993 Country-specific costs Costs of scaling-up included