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

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

3. 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

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

5. 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)

6. 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

7. 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:
(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 Health Intervention and Technology Assessment Program (HITAP), Ministry of Public health, Nonthaburi, Thailand.

8. How to conduct health economic evaluation results?8

9. PE/HEE Study Designs Prospective: alongside clinical trial Model based9
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

10. 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

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

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

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

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

15. P.15

16. Identify the alternative interventions16

17. 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

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

19. Example of cost estimates19

20. Identify the outcomes

21. 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

22. 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

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

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

25. Interpretation and presentation of results25
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

26. 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

27. 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

28. Interpretation and presentation of results28
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

29. 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

30. 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

31. Conclusions

32. 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, 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, 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

33. Thank you, Any question? 43