Cost Effectiveness Analysis

Wipo willingnesstopay Is Cost Effectiveness Analysis (CEA) classicwayto on'tcomparedingsw different familiar Define CEA outcomes result yoof CEA Advantages and disadvantages Presentation of CEA results Costeffective CEA grid and plane ICERSup tICER vs. INB effective leer was NOIcost Efficacy vs. effectivenessareReal world get common yo I control enynnat Rascati (Chapter 5) 1 Cost-effectiveness analysis (CEA) • Costs are measured in dollars • Outcomes or consequences are measured in natural health units ―Number of cures (acute infection) ―Number of life-years saved due to an intervention ―Blood pressure reductions (hypertension) ―A1C reductions (diabetes) ―Symptoms free days (asthma) • CEA is the most common type of PE analysis in the literature 3 Advantages of CEA 1. Health units are familiar to clinicians and are routinely measured in clinical practice ―Blood pressure reductions (hypertension) ―A1C reductions (diabetes) ―Symptoms free days (asthma) 2. Outcomes do not require conversion to monetary values as required in cost-benefit analysis (CBA) 4 Disadvantages of CEA 1. Alternatives that are being compared must be measured in the same clinical units ―Outcomes of an antihypertensive drug (outcome=mmHg) cannot be compared to that of an asthma drug (outcome=forced expiratory volume) 2. It is difficult to combine/collapse several possible outcomes (effectiveness, side-effects, complications) into one unit of measurement ―This disadvantage is overcome using cost-utility analysis (CUA) which can combine several outcomes into one unit called the quality adjusted life years (QALYs) →Some consider CUA as a subset of CEA 5 Common use of the term ‘cost-effective’ • Some use it to mean cost-saving • Some use it to mean more effective • Some use it to mean cost-saving with equal or better outcomes • Some use it to mean the added cost is worth the added benefit 6 What the term ‘cost-effective’ specifically mean in the field of PE 1. Lower cost and at least as effective ―Lower cost and same effectiveness Classic no ―Lower cost and higher effectiveness (dominant) 2. Higher cost and higher effectiveness ―However, the higher effectiveness is judged to be worth the higher cost Classiccosteffectiveness or loweryst morefestive 7 Methods to present costs and effectiveness • Three methods that can be used to present costs and effectiveness (outcome) include: contacted NIratioare 1. Cost-consequence analysis lost 2. Average cost-effectiveness ratio (ACER)no outcome aisle 3. Incremental cost-effectiveness ratio (ICER) 9 Method 1: Cost-consequence analysis • For each alternatives (Drugs A, B, or C), the costs and various outcomes are listed but no ratios are conducted 10 Method 2: Average cost-effectiveness ratio (ACER) ACER = cost/outcome 11 Eon Method 3: Incremental cost-effectiveness ratio (ICER) • This is the most common (and recommended) way to present CEA results • How does Treatment A compare to Treatment B in terms of costs and effectiveness (outcomes or benefits) ―Is Treatment A cheaper and more effective? Treatment A is dominant (Treatment A is chosen, ICER calculation is not needed) ―Is Treatment A more expensive but more effective? There is a tradeoff (ICER is useful and conducted, Treatment A is chosen if ICER is <= the willingness to pay, WTP amount) ―Is Treatment A more expensive and less effective? Treatment A is dominated (Treatment A is not chosen, ICER calculation is not needed) 12 A ICER ICER = ∆ ∆ = • where 𝐶 𝑎𝑛𝑑 𝑂𝑢𝑡𝑐𝑜𝑚𝑒 are the costs and outcomes for the group or treatment of interest, whereas 𝐶 𝑎𝑛𝑑 𝑂𝑢𝑡𝑐𝑜𝑚𝑒 are the costs and outcomes for the referent group or treatment. • ICER calculations are usually positive ―This means that the treatment of interest is both more costly and more effective • What if ICER is negative ―This occurs when the treatment of interest is dominant or is dominated →It is less costly and more effective (it is dominant) (-ve/+ve = -ve) or →It is more costly and less effective (it is dominated) (+ve/-ve = -ve) • In both cases, ICER should not have been conducted in the first place 13 Situation where ICER can be negative Drug A (drug of interest) Drug B (reference) Cost $750 $1,000 Effectiveness (% cured) 95% (95 people out of 100 were 90% (90 people out of cured) 100 were cured) ICER = ∆ = ∆ = . . = . = −$5,000 𝑝𝑒𝑟 𝑐𝑢𝑟𝑒 ICER is negative and difficult to interpret. However, it means Drug A is dominant (costs less and more effective) while Drug B is dominated (costs more and less effective) ICER should not have been conducted. Drug A is the clear, preferred choice 14 Presentation of Costs and Effectiveness Example: Cost-effectiveness of three asthma medications 15 Method 1. Cost-consequence analysis – statement of costs and outcomes (consequence) Asthma Medications (Alternatives) Medication costs per year Symptom-free days (SFD) per year (a measure of effectiveness) A $450 120 B $150 200 C $400 240 16 Method 2: Average cost-effectiveness ratio (ACER) Medications (Alternatives) Dollars per symptom-free days (SFD) =ACER $450 = $3.75/𝑆𝐹𝐷 120 $150 B = $0.75/𝑆𝐹𝐷 200 teastfetigness A C $400 = $1.67/𝑆𝐹𝐷 240 Interpretation Most expensive Least expensive (option will be chosen) 2nd most expensive 17 Method 3: Incremental cost-effectiveness ratio (ICER) Medications (Alternatives) Step 1: Eliminate the dominated alternative A Step 2: Calculate ICER for the remaining two alternatives C and B Incremental dollar per symptom-free days (SFD) Cost = $450 SFD= 120 ICER= = = $6.25 𝑓𝑜𝑟 𝑒𝑎𝑐ℎ 𝑎𝑑𝑑𝑖𝑡𝑖𝑜𝑛𝑎𝑙 𝑆𝐹𝐷 Interpretation Not cost-effective (A is dominated and eliminated: the most expensive and least effective) It becomes a matter of judgment whether each additional SFD is worth $6.25 (decision depends on the WTP) If the WTP value ≥ $6.25, then the alternative with the higher cost and higher effectiveness (Drug C) is chosen 18 Graphical Ways to Present CEA Results 1. Cost-effectiveness grid 2. Cost-effectiveness plane 19 Cost-effectiveness grid Lower cost Same cost Higher cost Lower effectiveness A Conduct ICER B Dominated C Dominated Same effectiveness D Dominant E Arbitrary F Dominated Higher effectiveness G Dominant H Dominant I Conduct ICER Classic GoHighEllows 20 Cost-effectiveness grid • Used to illustrate the concept of cost-effectiveness • A newer Drug A is more ‘cost-effective’ and dominates older Drug B if it: 1. Is more effective and less costly (cell G) 2. Is more effective at the same cost (cell H) 3. Has the same effectiveness at a lower cost (cell D) 21 Cost-effectiveness grid • Conversely, a newer Drug A is considered NOT ‘cost-effective’ and is dominated by an older Drug B if it is: 1. Less effective and more costly (cell C) 2. Has the same effectiveness at a higher cost (cell F) 3. Has lower effectiveness at the same cost (cell B) 22 When is ICER estimation most useful and recommended? - Trade-offs 1. When newer drug (i.e., treatment of interest) is more costly and more effective (cell I) ―This is the most common findings of CEA results in the literature ―Does not mean the newer drug is ‘cost-saving’ →It means the value/benefit newer drug is providing is worth the higher cost 2. When treatment of interest is less costly and less effective (cell A) 23 Asthma example Medications (Alternatives) Medication costs per year Symptom-free days (SFD) per year (a measure of effectiveness) A $450 120 B $150 200 C $400 240 24 Cost-effectiveness grid (for asthma example) Lower cost Same cost Higher cost Lower effectiveness A Conduct ICER (Drug B) B C Dominated (Drug A) Same effectiveness D E F Higher effectiveness G H I Conduct ICER (Drug C) 25 Graphical Ways to Present CEA Results 2. Cost-effectiveness plane 26 Cost-effectiveness plane Higher cost (+) Lower effectiveness (-) Quadrant IV Dominated: more expensive and less effective ICER not needed: eliminate Quadrant I Trade-off: more expensive and more effective ICER needed Quadrant III Trade-off: less expensive and less effective ICER needed Quadrant II Dominant: less expensive and more effective ICER not needed: choose Higher effectiveness (+) Lower cost (-) 27 Asthma example Medications (Alternatives) Medication costs per year Symptom-free days (SFD) per year (a measure of effectiveness) A $450 120 B $150 200 C $400 240 28 Cost-effectiveness plane (for asthma example) Higher cost (+) Lower effectiveness (-) Quadrant IV Dominated: Drug A (highest cost and lowest effectiveness of all 3 drugs) Eliminated Quadrant I Trade-off: Drug C (more expensive and more effective than Drug B) ICER needed Quadrant III Trade-off: Drug B (less expensive and less effective than Drug C) ICER needed Quadrant II Dominant: None of Drugs B or C is dominant Higher effectiveness (+) Lower cost (-) 29 Is there an alternative method to ICER calculation? Incremental net benefit (INB) -INMBt Monotony -INHB toHealth9191 30 Incremental net benefit (INB) • A newer technique suggested to overcome some of the limitations of ICER ―Positive ICERs which suggests that an intervention is both more costly and more effective does not answer the question of whether the intervention is more ‘cost-effective’ →Needs further evaluation if the WTP is known ―However, a positive INB indicates that the alternative of interest is cost-effective →INB incorporates WTP into its calculation →A negative INB means the alternative of interest is NOT cost-effective Source: Health Care Cost, Quality, and Outcomes: ISPOR Book of Terms, 2003 31 Incremental net benefit (INB) INB can be expressed in two ways: 1. Incremental Net Monetary Benefit (INMB) ―when equation (or answer) is expressed in dollar unit INMB = ∆ 𝑂𝑢𝑡𝑐𝑜𝑚𝑒𝑠 × λ − Δ 𝐶𝑜𝑠𝑡 where λ=willingness to pay (WTP) 2. Incremental Net Health Benefit (INHB) ―when answer is expressed in the unit of the outcome (effectiveness or QALY) ∆ INHB = ∆ 𝑂𝑢𝑡𝑐𝑜𝑚𝑒 − ( ) Source: Health Care Cost, Quality, and Outcomes: ISPOR Book of Terms, 2003 32 INB-for the asthma example Assuming the willingness to pay (WTP) was determined to be $7.00 per SFD: 1. Calculate the incremental net monetary benefit (INMB) of Drug C compared to Drug B 2. Calculate the incremental net health benefit (INHB) of Drug C compared to Drug B. Remember: Drug A is dominated (and therefore eliminated) because it is both more expensive and less effective than Drugs B and C 33 Asthma example Medications (Alternatives) Medication costs per year Symptom-free days (SFD) per year (a measure of effectiveness) A $450 120 eliminate expensive B $150 200 C $400 240 more less 34 winigressto Incremental net monetary benefit (INMB) 7 ooppay 1. INMB = ∆ 𝑂𝑢𝑡𝑐𝑜𝑚𝑒𝑠 × λ − Δ 𝐶𝑜𝑠𝑡 DoutomXX 065 where λ=WTP = $7.00 158 240200171 900 = [(240 − 200) × $7.00] − $400 − $150 = 40 × $7.00 − $250 30 = $280 − $250 = $30 • Interpretation: Since the INMB is positive, Drug C is considered costeffective compared to Drug B at a WTP of $7.00 ―Drug C has an incremental net monetary benefit of $30 over Drug B • Note: INMB is positive (i.e. > 0) for all values of WTP that are > ICER ―Remember that the calculated ICER between Drugs C and B was $6.25 35 Incremental net health benefit (INHB) 2. INHB = ∆ 𝑂𝑢𝑡𝑐𝑜𝑚𝑒 where λ=WTP = $7.00 −( ∆ ) $400 − $150 $250 = 240 − 200 − ( ) = 40 − $7.00 $7.00 GAY Asoutane DE 4402001 tf 4.299dg = 40 − 35.71 = 4.29 SFD • Interpretation: Since the INHB is positive, Drug C is considered cost-effective compared to Drug B at a WTP of $7.00 ―In order words, the incremental effectiveness or benefit of Drug C compared to B was providing additional 4.29 SFD • Note: INHB is positive for all values of WTP that are > ICER ―calculated ICER between Drugs C and B was $6.25 36 What if WTP < ICER? • Assuming a WTP of $5.00, what is the calculated value of INMB? INMB = ∆ 𝑂𝑢𝑡𝑐𝑜𝑚𝑒𝑠 × λ − Δ 𝐶𝑜𝑠𝑡 where λ=WTP = $5.00 = (240 − 200) × $5.00 − $400 − $150 = 40 × $5.00 − $250 = $200 − $250 = −$50 • Interpretation: Since the INMB is negative, Drug C is considered NOT cost-effective compared to Drug B at a WTP of $5.00 ―This is a form of sensitivity analysis (changing the values of the WTP and checking if same overall conclusion is reached about the cost-effectiveness of Drug C compared to Drug B) 37 Differences and similarities between ICER and INB 38 ICER vs. INB • Although the incremental net benefit approach is gaining adherents in health economics, the ICER is still the dominant approach to assessing cost-effectiveness in the literature • The simplicity of the net benefit approach is more attractive ―A positive value means that the target treatment is more costeffective compared to the reference treatment ―A negative value means the target treatment is NOT more costeffective compared to the reference treatment Health Care Cost, Quality, and Outcomes: ISPOR Book of Terms, 2003 39 Willingness to Pay (WTP) • This is the society’s willingness to pay for a unit of health (qualityadjusted life year, a symptom-free day) ―Society in the broader sense (if taking a societal perspective), but could be the WTP of a hospital pharmacy and therapeutics (P&T) committee for drug formulary, or the WTP for a patient, an MCOs, or Medicare • Therefore, the ‘cost-effectiveness’ of an alternative is determined by the WTP amount • It is recommended to conduct sensitivity analyses for range of values of the WTP 40 Outcome Measures Is efficacy and effectiveness one and the same in outcomes research? 41 Efficacy • Efficacy refers to the ability of a drug to work when given under ‘controlled,’ supervised, or ideal conditions ―Hence, the name “randomized controlled trials” (RCTs) ―RCTs are the gold standard to help determine if a medication is efficacious ―RCTs are required before FDA can approve a medication for use in the general population 42 Effectiveness • Effectiveness assesses if a drug works in real-world clinical practice ―Effectiveness is determined after a drug has been in use in the general population, post-FDA approval ―PE studies are interested in the assessment of drug effectiveness (for example, cost-effectiveness) and not in drug efficacy 43 CEA- Summary 1. In CEA, costs are measured in dollars while outcomes are measured in natural health units 2. CEA is the most common type of PE analysis 3. CUA is a sub-type of CEA ―Overcomes a deficiency of CEA with the ability to combine several outcomes of interest into one unit called the QALY 4. ‘Cost-effective’ does not mean ‘cost-saving’ or less costly ―It means the added benefit is of value and is worth the higher cost 44 CEA- Summary 5. ICER is the recommended way to present CEA results 6. A dominant alternative refers to an alternative that is both less costly and more effective ―Subsequently chosen, no ICER calculation is required 7. A dominated alternative refers to an alternative that is both more costly and less effective ―Subsequently eliminated, no ICER calculation is required 8. Trade-offs occur when an alternative is more costly and more effective compared to another alternative which is less costly and less effective ―ICER calculation is needed to see if added benefit is worth the added cost 45 CEA- Summary 9. Cost-effectiveness grid and cost-effectiveness plane are two ways to graphically present the results of CEA 10. INB is a new alternative method to ICER to demonstrate cost-effectiveness ―Positive INB means the alternative of interest is cost-effective ―Negative INB means the alternative of interest is NOT cost-effective 11. INB can be expressed as INMB (unit=cost) or INHB (unit=outcome) 12. Efficacy answers the question: Can a drug work under controlled conditions? ― RCTs are used 13. Effectiveness answers the question: Does a drug work in everyday clinical environment? ― Observational studies such as cohort, case-control, and PE analyses are used 46