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Quality Adjusted Life Years Quality Adjusted Life Years (QALY)(QALY)
Quality of life index– 1.0 = normal health– 0.0 = death (extremely bad health)
Example – Losing sense of sight– Quality of life index is 0.5– Life = 80 years– 0.5 x 80 = 40 QALYs
Most debate about the QoL estimates
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Quality of life measurementQuality of life measurement
Typically done with questionnaires– Disease specific
• International Prostate Symptom Score– Generic
• SF-36, NHP– Utility
• HUI, EQ-5D, AQoL, 15D, Rosser index Utility assessment
– SG, TTO, PTO, VAS For QALY we need utility
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EuroQol EQ-5D:EuroQol EQ-5D: oof the shelf f the shelf QALY valueQALY value
MOBILITY– I have no problems in walking about – I have some problems in walking about – I am confined to bed
SELF-CARE– I have no problems with self-care – I have some problems washing or dressing
myself – I am unable to wash or dress myself
USUAL ACTIVITIES (e.g. work, study, housework family or leisure activities)
– I have no problems with performing my usual activities
– I have some problems with performing my usual activities
– I am unable to perform my usual activities PAIN/DISCOMFORT
– I have no pain or discomfort – I have moderate pain or discomfort – I have extreme pain or discomfort
ANXIETY/DEPRESSION– I am not anxious or depressed – I am moderately anxious or depressed – I am extremely anxious or depressed
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Calculate QALYCalculate QALY
Count life years Value (V) quality of life (Q)
– V(Q) = [0..1] • 1 = Healthy• 0 = Dead
Adjusted life years (Y) for value quality of life – QALY = Y * V(Q)
• Y: numbers of life years• Q: health state• V(Q): the quality of life value of health state
Q
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A new wheelchair for elderly (iBOT)Special post natal care
Which health care program is the Which health care program is the most cost-effective? most cost-effective?
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A new wheelchair for elderly (iBOT)– Increases quality of life = 0.1 – 10 years benefit– Extra costs: $ 3,000 per life year – QALY = Y x V(Q) = 10 x 0.1 = 1 QALY– Costs are 10 x $3,000 = $30,000– Cost/QALY = 30,000/QALY
Which health care program is the Which health care program is the most cost-effective? most cost-effective?
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Special postnatal care– Quality of life = 0.8– 35 year– Costs are $250,000– QALY = 35 x 0.8 = 28 QALY– Cost/QALY = 8,929/QALY
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QALY league tableQALY league tableIntervention $ / QALY
GM-CSF in elderly with leukemia 235,958
EPO in dialysis patients 139,623
Lung transplantation 100,957
End stage renal disease management 53,513
Heart transplantation 46,775
Didronel in osteoporosis 32,047
PTA with Stent 17,889
Breast cancer screening 5,147
Viagra 5,097
Treatment of congenital anorectal malformations 2,778
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Disability Adjusted Life Years Disability Adjusted Life Years (DALYs)(DALYs)DALYs for a disease are the sum of
the years of life lost due to premature mortality (YLL) in the population and the years lost due to disability (YLD) for incident cases of the health condition. One DALY represents the loss of one year of equivalent full health.
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Disability Adjusted Life Years Disability Adjusted Life Years (DALYs)(DALYs) Measures healthy time lost from specific
diseases and injuries in a population Comparable and additive across diseases
Ex: Broken scapula = .5 DALYs lost
Protein deficiency = 2 DALYs lost
Based on relatively accessible incidence data (ICD codes)
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DALY Calculation DALY Calculation (the easiest way)(the easiest way)
Years lost to disability
Inputs Duration of
disease/injury Disability weight of
disease/injury % long-term cases
Years of lost life (YLLs)
InputsLife expectancy at age of deathAge at death
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DALY Calculation: an exampleDALY Calculation: an example
1 family dies– 10 year old girl– 8 year old boy– 38 year old mother– 42 year old father
YLLs from deaths– 70 year life expectancy– 73 year life expectancy– 46 year life expectancy– 33 year life expectancy
222 YLLs
2 people injured– 45 y/o woman – SCI– 55 y/o man – fractured
rib
YLDs from injuries- Duration (36 year LE) *
Disability Wt (.725) = 26 YLDs
- Duration (.115 years) * Disability Wt (.199) = 0.02 YLDs
A Two-Car Collision
26.02 YLDs+ = 248.02 DALYs
Cost of Illness (COI) AnalysisCost of Illness (COI) Analysis
Estimate the impact of a disease / condition on the overall costs
Include direct as well as indirect costs– Example:The overall costs for cancer in 2002
in the US was $171.6 billion (ACS, 2003), including
• $60.9 billion in direct medical costs• $15.5 billion in indirect morbidity costs• $95.2 billion in indirect mortality costs
Budget Impact Analysis (BIA)Budget Impact Analysis (BIA)
Estimate the financial effect of an intervention on a health plan or program
BIA is often requested by managed care organizations in the US or national health insurance programs (e.g., Canada, UK)– Example: Treating all stage IV NSCLC patients
in Canada with paclitaxel and cisplatin as outpatients would cost $155 million, an additional $15 million per annum compared to best supportive care.
BIA (cont.)BIA (cont.)
Most BIA analysis has a one year time frame.
BIA taking a longer time frame need to consider the impact of new interventions on the underlying disease prevalence and make appropriate adjustments in analyses.
What are the DIFFERENCES What are the DIFFERENCES between each type of analysis?between each type of analysis?
Economic Evaluation MethodologiesEconomic Evaluation MethodologiesMethod Cost Outcome Focus CMA
Dollars Equivalent outcomes
Efficiency
CBA Dollars Dollars Most beneficial use of limited resources
CEA Dollars Natural units (Life-years gained)
Least costly way to achieve an objective
CUA
Dollars Natural units (QALYs)
Least costly way to achieve an QALY gain
CBA vs. CEACBA vs. CEA
Uses dollar values for outcome measurements
Maximizes benefit of investment/intervention
Assumes limited resources
Compares programs with different objectives
Uses nonmonetary outcome measurements
Minimizes cost of program
Assumes adequate resources
Compares programs with the same objectives
More Concepts in Economic More Concepts in Economic Evaluation …Evaluation …
Cost CategoriesCost Categories
Direct medical: medical care services Direct non-medical:
– Patient time cost for treatment or intervention– Formal and informal caregiver time– Transportation
Productivity (morbidity and mortality)– absenteeism– Presenteeism
Inclusion and measurement will depend on the study’s perspective and its time frame.
InflationInflation
Inflation is a sustained increase in the average level of prices. The rate of inflation is the percentage change in average prices from one year to the next
For prices that tend to increase at the rate of general prices (e.g., consumer goods), use the Consumer Price Index (CPI)
For items whose prices rise faster than the general rate of inflation, use a component of the CPI, such as the Medical Care component of CPI
For wages, use either an index of hourly wages or earnings
ExampleExample
Suppose you want to use information from a published manuscript that listed the cost of a severe adverse event of febrile neutropenia in 1983 dollars to be $1,531. How would you adjust that figure to current dollars?
Index: – 1983 (base year)=100– 1998 = 242.7
C(1998) = $1,531 * 242.7 / 100 = $3,716
DiscountingDiscounting
Many decisions made today will have repercussions next year and in the years thereafter.
We need a method for comparing the desirability of outcomes that include consequences occurring at different times in the future.
The Theory of DiscountingThe Theory of Discounting
The theoretical justification for discounting is based on two facts:– time preference: most people would
accept less money to receive it sooner; and
– opportunity cost: less money can be invested by society and allowed to grow at a compound rate of interest to yield the money required for future costs.
Discounting ProcessDiscounting Process
Given a stream of costs C1, C2, …, CT,
the present value is calculated as:
, where 1/(1+r) t is called the discount factor
T
tt
t
r
CPV
1 )1(
Issues in DiscountingIssues in Discounting
While there is universal acceptance of the need to discount, there is much controversy over – the appropriate discount rate to use, – whether to discount health benefits as
well as costs, and– whether to use the same rate to
discount costs and benefits.
ExampleExample
Year Curative Program (A)
Preventive Program (B)
1 5 15
2 10 10
3 15 4
ExampleExample
A comparison of Programs A and B, adjusted for the differential timing of costs would yield:– PVA = 5/(1.05) + 10/(1.05)2 + 15/(1.05)3 =
26.79
– PVB = 15/(1.05) + 10/(1.05)2 + 4/(1.05)3 = 26.81
What is the Theoretical What is the Theoretical Foundation of CEA?Foundation of CEA?
Theoretical Foundation of CEATheoretical Foundation of CEA
Theoretical foundation of CEA was established by a landmark article by Garber & Phelps (1997).
Derive ICER in terms of 3-period U function
E(U) = U1(Y1-C1) + P2(C1)*U2(Y2-C2) + P2(C1)P3(C2)U3(Y3)
, where Yi = income;
Ci = medical care expenditure
Pi = probability of surviving into period i
CEA and Welfare EconomicsCEA and Welfare Economics
Use prob. of surviving as “effectiveness” measure Incremental cost-effectiveness ratio can be
derived from the F.O.C.:– Max. E(U) w.r.t. C1
Decision criteria based on CEA is justified in welfare economics achieve optimal resource allocation
...2
1
dP
dC
E
CICER
What are the Decision What are the Decision Criteria under CEA?Criteria under CEA?
CEA FrameworkCEA Framework
Two treatments (trx): new (A) vs. old (B) Costs:
– Pts in the new trx group: Ca1, Ca2, ….CaK – Pts in the old trx group: Cb1, Cb2, ….CbJ
Effectiveness:– Examples of effectiveness measures:
• Quality-adjusted life years (QALYs)• Life year saved
– Pts in the new tx group: Ea1, Ea2, ….EaK – Pts in the old tx group: Eb1, Eb2, ….EbJ
AC
BC
AE
BE
Incremental Cost-Effectiveness Ratio Incremental Cost-Effectiveness Ratio (ICER)(ICER)
Decision Rule: If IĈER < , then the new treatment is cost-effective
E
C
EBEA
CBCAICER
E
C
EE
CCERCI
ba
ba
ˆ
Making inference about the true (but unobservable) population ICER
Making Decisions Using ICERMaking Decisions Using ICER
If the ICER doesn’t fall into the quadrant of dominating or dominating strategy, then decision makings based on CE-ratio become a bit tricky.
Rule 1: value judgement specified by an organization– $20,000 per QALY used in Ontario guidelines
Problems?
Making Decisions Using ICER Making Decisions Using ICER (cont.)(cont.)Rule 2: comparison with the
commonly used medical procedures.Rationale: Society should be willing
to pay as much for new procedures/technologies as it does for procedures that are currently in common use.
League tables
League Table ExampleLeague Table ExampleTreatment $/QALY
Coronary artery bypass surgeryfor left main coronary artery
$4,200
Treatment of severehypertension in males age 40
$9,400
Treatment of mild hypertensionin males age 40
$19,100
Estrogen therapy forpostmenopausal symptoms
$27,000
Hospital dialysis $54,000
Statistical Consideration of Statistical Consideration of CEA?CEA?
Recent Advances in CEA - 1Recent Advances in CEA - 1
Estimate confidence interval of ICERStatistical Methods:
– Box method– Delta Method (Taylor Series Method)– Fieller Theorem Method– Nonparametric Bootstrap Method– ….
Problems with Inferences Based Problems with Inferences Based on ICER on ICER Negative ratios are difficult to interpretC.I. derived from CE ellipses only make
sense when E > 0
Solution: Net Health Benefit approach
Recent Advances in CEARecent Advances in CEA
Net Health Benefit Approach– NB() = E - C
Decision rule: Choose the new technology if NB()>0
Methods developed from NHB:– Cost-Effectiveness Acceptability Curve – Bayesian Approach– Regression-based Approach
Ten Steps of Performing An Ten Steps of Performing An Economic Evaluation StudyEconomic Evaluation Study
Establish the perspective Describe or specify the alternatives For each alternative, specify the
possible outcomes and the probability of their occurrence
Specify and monitor the health-care resource consumed in each alternative
Assign dollar values to each resource consumed
Ten Steps of Performing An Ten Steps of Performing An Economic Evaluation Study (cont.)Economic Evaluation Study (cont.)
Specify and monitor nonmedical resources consumed by each alternative
Specify the unit of outcome measurement Specify other noneconomic attributes of
the alternatives, if appropriate Analyze the data Conduct a sensitivity analysis
CBA ExampleCBA Example
Cost per flu shot = $10 Treatment cost per flu = $250 Productivity loss from sick leave = $4,000 Employees = 1000 W/o vaccine: 50 have flu, 3 absence W/ vaccine: 30 have flu, 1 absence What should the manager do?
CBA Example (cont.)CBA Example (cont.)
Net Benefit
= benefit - cost
=(number of flu avoided)*$250
+ (number of absence avoided)*$4000
- $10*1000
=20*$250+2*$4000-$10000
=$3000 > 0
CBA Example (cont.)CBA Example (cont.)
New flu vaccine availableCost = $20W/ the new vaccine:
– 5 have flu, no absence from workWhich one should the manager
choose?
CBA Example (cont.)CBA Example (cont.)
NB(new) =45*$250+3*$4,000-$20*1,000
=$3,250 NB(new) > NB(old)
choose the new vaccine However, if productivity loss = $3000, then
NB(old)=$1000, and NB(new)=$250, then the old vaccine will be chosen
CEA ExampleCEA Example
C-E of two mumps vaccines Perspective:
– Several possibilities: state government, or other third party payers.
Describe alternatives: – Vaccine A (old): cheaper, not as effective– Vaccine B (new): more expensive, more
effective– Do nothing
CEA Example (cont.)CEA Example (cont.)
Possible outcomes and prob.– Outcomes: Mumps infection, death– probability of infections
• Vaccine A:3%, Vaccine B: 0.5%, do nothing: 5%
– probability of death:• vaccine A: 0.1%, vaccine B: 0%, do nothing: 0.3%
Health care resource consumed: – Vaccine A: vaccine cost + treatment cost– Vaccine B: vaccine cost + treatment cost– Do nothing: treatment cost
CEA Example (cont.)CEA Example (cont.)
Assign $ to each resource consumed – Vaccine A: $10 /shot, $250 per treatment– Vaccine B: $20 /shot, $250 per treatment– Do nothing: $250 per treatment
Nonmedical resources – Vaccine A: None – Vaccine B: None – Do thong: None
Unit of outcome measures – Death avoided from vaccination
CEA Example (cont.)CEA Example (cont.)
Analyze the data – Note: what we want to construct in CEA
is ICER– ICER for vaccine A (vs. do nothing)
C=(differences in cost between A and do nothing)=(vaccine cost+treatment cost) -(treating cost) = (10*1000+30*250)-(50*250)=5000
E=(death avoided)=(3-1)=2Therefore, ICER(A) = $5000/2 = $2500 (per life saved)
CEA Example (cont.)CEA Example (cont.)
Analyze the data (cont.)– ICER for vaccine B (vs. do nothing)
C=(differences in cost between B and do nothing) =(vaccine cost+treatment cost) -(treating cost) = (20*1000+5*250)-(50*250)=8750
E=(death avoided)=(3-0)=3
Therefore,
ICER(B) = $8750/3 = $2916 (per life saved)
CEA Example (cont.)CEA Example (cont.)
Results: (Compare ICER)– ICER(A) < ICER(B) – Choose vaccine A
Sensitivity Analysis – Used to test how robust the previous
conclusions are when assumptions vary.
– For example, discount rate, probability of infection, ... etc.
CUA Example (cont.)CUA Example (cont.)
Assume Life Expectancy=50Utility with mumps=0.8What’s the outcome measure ?
– QALYThat is, 10 years with mumps
infection = 8 years in good health
CUA Example (cont.)CUA Example (cont.)
Calculate ICER– ICER for vaccine A (vs. do nothing)
C=5000
E=(quality adjusted life years saved from death avoided)+(QALY saved from mumps avoided) =(2*50)+(50)*(50-30)*0.8=900
• Therefore,
ICER (A) = $5000/900 = $5.55 (per QALY saved)
CUA Example (cont.)CUA Example (cont.)
Calculate ICER (cont.)– ICER for vaccine B (vs. do nothing)
C=8750
E=(quality adjusted life years saved from death avoided)+(QALY saved from mumps avoided) =(3*50)+(50-5)*0.8*50=1950
• Therefore,
ICER (B) = $8750/1950 = $4.48 (per QALY saved)
ICER(A)=$5.55 > ICER(B)=$4.48
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