Cost-Effectiveness Analysis and Ageism

Daniel Eisenberg, PhD

Dept of Health Management and PolicySchool of Public HealthUniversity of Michigan

AcademyHealth Annual Research Meeting

2006

University of MichiganSchool of Public Health

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Allez Les Bleus!

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Go Blue!

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Background: Economic Methods for Evaluating Health Interventions

• Cost effectiveness analysis (CEA): $/life-year ($/LY) or $/disability-adjusted-life-year ($/DALY)

• Cost utility analysis (CUA): $/quality-adjusted-life-year ($/QALY)

• In CEA and CUA, the unit of health, whether it’s a LY, DALY, or QALY, is typically weighted the same at all ages (e.g. 1 QALY at age 10 = 1 QALY at age 70)

• Cost benefit analysis (CBA) often uses single “value of a statistical life” for all ages

• Thus, CEA and CUA account for life expectancy whereas CBA typically does not

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Background: Economic Methods (cont’d)

Standard CEA/CUA

CBA w/ single value-of-life

Modified CEA/CUA?

Increasing priority for health of young

Decreasing priority for health of young

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Policy Context

• Debate within federal government about whether agencies should be doing CEA vs CBA vs CUA

• Who gets influenza vaccines first?– Recent article in Science (Emanuel and Wertheimer

2006) critiquing priorities of National Vaccine Advisory Committee (NVAC) and the Advisory Committee on Immunization Policy (ACIP)

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Key Question

• How can we modify cost effectiveness analysis (CEA) methods to reflect more accurately our society's valuation of health improvements by age?

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Synthesis of Related Theoretical and Methodological Literature

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Synthesis of Arguments in Literature on Why CEA Should Be Modified

1. Future health gains should be weighted more to reflect society’s increase in willingness-to-pay over time for health• 1-2 % increase per year

2. Net resource use should be included in costs• Consumption minus productivity (Meltzer)

3. Younger life-years should receive priority for equity reasons• “Fair innings” argument: young have not had their

share of life yet

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Evidence on Argument #1

• Value of health gains rises at least in proportion to income:– Costa, Dora L. and Matthew E. Kahn (2004) J of Risk

and Uncertainty.– Hammitt, James K., Jin-Tan Liu, and Jin-Long Liu

(2004). Harvard Univ. mimeo.– Hall, Robert, and Chad Jones. (2006). Forthcoming in

Quarterly J of Economics.

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Evidence on #2 (Net Resource Use)

• Net resource use (consumption minus productivity) (Meltzer 1997 J of Health Econ):– Positive for children and adolescents– Negative for adults until retirement age– Positive for adults after retirement age

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Evidence on #3

• Equity concern is supported consistently in a variety of survey studies

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Survey Evidence on Valuation of Health by Age

Suppose a choice must be made between two medical programs. The programs cost the same but there is only enough money for one.

• Program A will save 100 lives from diseases that kill 20-year-olds.

• Program B will save 200 lives from diseases that kill 60-year-olds.

Which program would you choose?

Example from Cropper et al (1994). Journal of Risk and Uncertainty 8: 243-265.

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Survey Evidence (cont’d)

• Several studies (from a variety of countries) find that respondents not only place higher values on younger lives, but they do so more so than can be explained by differences in life expectancy

• These preferences are consistent for all age groups of survey respondents

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Translating Survey Evidence Into Modifications for CEA Methods

Age Weights from World Bank Guidelines and Rodriguez & Pinto

2000)

0

0.5

1

1.5

2

age 10 19 28 37 46 55 64 73 82

wei

gh

t

Standard CEA

Age Weights

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Implications for CEA Methods

1. Increasing valuation of health over time -> weight life-years by increasing amount: (1+x)^t

2. Net resource use -> add it to costs

3. Equity concerns -> construct age weights based on survey data on preferences

Does it make sense to do all of these at once?

That depends on interpretation of survey data.

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Example: Re-analysis of Recently Conducted CEAs

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CEAs to be Re-Analyzed

• We selected for re-analysis CEAs that:– Were published within last 10 years– Evaluated interventions for people of ages under 21– Yielded cost-effectiveness ratios between $50,000

and $500,000 per LY (i.e. dubious cost effectiveness)

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Two CEAs Identified for Re-analysis

• Jacobs et al (2003). Regional variation in the cost effectiveness of childhood hepatitis A immunization. Pediatr Infect Dis J 22: 904-14.– Universal immunization in low prevalence states

• Kulasingam, S.L. and E.R. Myers (2003). Potential health and economic impact of adding a human papillomavirus vaccine to screening programs. JAMA 290(6): 781-9.– Vaccine plus screening starting at age 24 versus

vaccine plus screening starting at age 18

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Methods for Re-analyses

We separately applied the following methods:

1) Standard CEA

2) Increasing value of health over time (2% year)

3) Age-weights

4) #2 and #3

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Results: Cost EffectivenessUnder Each Method

Study Units (1)

HepA vac. $/QALY 63,000

HPV vac. $/LY 96,000

(1) Standard CEA (discount rate = 3%)

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Results: Cost EffectivenessUnder Each Method

Study Units (1) (2)

HepA vac. $/QALY 63,000 52,000

HPV vac. $/LY 96,000 46,000

(1) Standard CEA (discount rate = 3%)

(2) Increasing valuation of health effects (2% per year)

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Results: Cost EffectivenessUnder Each Method

Study Units (1) (2) (3)

HepA vac. $/QALY 63,000 52,000 49,000

HPV vac. $/LY 96,000 46,000 72,000

(1) Standard CEA (discount rate = 3%)

(2) Increasing valuation of health effects (2% per year)

(3) Age-weighting by formula in Rodriguez & Pinto (2000) (w/ 3% discounting)

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Results: Cost EffectivenessUnder Each Method

Study Units (1) (2) (3) (4)

HepA vac. $/QALY 63,000 52,000 49,000 39,000

HPV vac. $/LY 96,000 46,000 72,000 37,000

(1) Standard CEA (discount rate = 3%)

(2) Increasing valuation of health effects (2% per year)

(3) Age-weighting by formula in Rodriguez & Pinto (2000) (w/ 3% discounting)

(4) Combination of (2) and (3)

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Conclusion

• Standard CEA methods do not reflect societal preferences related to age

• Modifications grounded in theoretical and empirical evidence lower CE ratios substantially for interventions targeted at young people

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Implications

• CEA practitioners can use adjustments for increasing value of health over time and age weights to reflect these concerns

• Readers of CEAs should bear in mind that the technique, as currently practiced, does not reflect societal preferences with respect to age

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Acknowledgements

• Gary Freed, MD, MPH• R. Jake Jacobs, MPA and co-authors on Jacobs

et al (2003)• Shalini L. Kulasingam, PhD and Evan R. Myers,

MD, MPH• R. Douglas Scott, PhD