Economics in Biomedical Research Economic evaluation

1. STUDIES IN HEALTH
ECONOMICS
PRESENTER: DR. TANVEER REHMAN
MODERATOR: DR. SUBITHA L

2. OUTLINE
1. Introduction
2. Principles of Health Economics
3. Economic evaluation
4. Status in India
5. Challenges and ways to address
6. Health Technology Assessment
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3. History and Evolution
1. Selma Mushkin: “Toward a Definition of Health Economics” – 1958
2. Kenneth Arrow: “Uncertainty and the Welfare Economics of Medical Care” – 1963
3. Special characteristics of the medical care market :-
Unpredictability and Criticality: Demand
Expected behaviour of the physician: Moral provision
Product uncertainty: Asymmetric information
Moral Hazard
Medical care: Increased cost – imperfect information
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4. Introduction
1. The application of the theories, concepts, techniques and principles of
economics to the health sector*
2. The World Development Report 1993 - necessity of providing cost
effective healthcare for the poor and that it can contribute towards
alleviating poverty
3. Scope – productivity, finance, planning, decision making
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5. Rationale
1. Budget for health is and always will be finite
2. All resources have alternative uses within the system
3. New health technologies – compete with the existing
4. Inconsistent triad: comprehensive, quality, everyone
5. “Prioritising” or “Rationing” – by decision makers
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6. Different types of costs
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7. Different types of costs
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Costing Principles
Opportunity cost Marginal costs Social costs
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8. Efficiency
• Knapp (1984): ‘the allocation of scarce
resources that maximizes the
achievement of aims’
1. Pareto / Allocative
2. Technical
3. Economic
4. Social
Equity
• Finance of healthcare
• Distribution of healthcare
• Distribution of health
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Principles
Efficiency – equity trade off
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9. Economic Evaluation
According to Drummond et al. (2005): Comparative and Incremental analysis
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10. Economic Evaluation
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11. I. Cost - Effectiveness Analysis (CEA)
Effectiveness
1. Outcome of an intervention or service measured in natural units: ease of
communication and specificity – e.g. Cases successfully diagnosed
2. Clinical indicators - Intermediate outcome measure: implicate ultimate
health status
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12. I. Cost - Effectiveness Analysis (CEA)
1. Benefits measured in same natural units
2. Outcome reported in single unit of measurement, given in natural
units e.g. mmHg for SBP reduction, life years gained by
transplantation
3. Outcome is common to both alternatives: but achieved to a
different degree
4. Incremental cost-effectiveness ratio (ICER)
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13. Cost – Effectiveness Plane
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14. Example - CEA
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15. I. Cost - Effectiveness Analysis (CEA)
Effectiveness
Limitations:
1. More than one outcome reported for a treatment
2. May not reflect overall impact of service on patients Health-Related
Quality of Life
3. Comparisons across different outcomes cannot be done
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16. II. Cost – Utility Analysis (CUA)
Utility
1. Value attached by an individual to a specific level of health or a specific
health outcome
2. Allows patients to value their health status based on their own preferences
3. For same health status – different individuals will give different values
4. Comparisons between different illness and interventions
5. Methodologically complex
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17. Methods to Derive Utility
1. Visual Analogue Scale (VAS)
2. Standard gamble method
3. Time trade-off method
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Utility scores:
a. QALYs
b. DALYs
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18. a. QALY (Quality – Adjusted Life Years)
1. Quantity of life (survival periods) and Quality of life (health status value) –
standard unit of measuring health gain
2. QALYs are expressed in terms of “years lived in perfect health”: can be applied to
any kind of intervention.
3. It can be applied to compare different interventions
4. Limitations: validity, reliability, perspectives, quantity and quality in same metric
5. Should be discounted if they are to be added together
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19. b. DALY (Disability – Adjusted Life Years)
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20. b. DALY (Disability – Adjusted Life Years)
1. DALYs = “Years Lived with Disability” (YLDs) + “Years of Life Lost due to
premature mortality” (YLLs)
2. Health gap
3. Global Burden of Diseases (GBD) study: comparing disease burdens
across all regions of the world (Murray and Lopez 1996)
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21. II. Cost – Utility Analysis (CUA)
1. Outcome measured through effect on quantity & quality of life
2. To overcome limitations associated with effectiveness measures
3. Common metric that allows comparisons across: allocate resources to
different services
4. Form of CEA but outcomes measured using utility values
5. ICER presented as Cost per additional QALY Gained (CQG)
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22. Example - CUA
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23. Example - CUA
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24. III. Cost – Benefit Analysis (CBA)
Monetary terms
1. How much an individual would be willing to pay to avoid an illness or obtain the benefits
of a treatment
2. Contingent valuation or ‘willingness to pay’ (WTP) method
3. Possible to attach value to both health & non-health effects
4. Practical difficulty of monetary valuation of benefits and human life
5. Income closely related to WTP values
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25. III. Cost – Benefit Analysis (CBA)
1. Most comprehensive method of economic evaluation: returns in health investment
can be compared with other areas of economy
2. Both cost & benefit measured in monetary units
3. An activity should be undertaken if the sum of the benefits is greater than the sum
of the costs: Allocative efficiency
4. ICER need not be generated: Societal viewpoint taken
5. Can be used to allocate resources to different interventions like CUA
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26. Example - CBA
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27. IV. Cost-Minimization Analysis (CMA)
1. No difference in outcome measure
2. Outcomes being compared is same or assumed to be equal
3. Consideration of costs of each option – preferred option is cheapest
4. Simple and easy to interpret
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28. Example - CMA
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29. Status of economic evaluation studies in India
1. 104 full economic evaluations: 1980 - 2014
2. CEA – 64%, CUA – 30%, CBA – 6%
3. 70% - affiliated to a foreign institution
4. Lead authors: clinicians (36%) or public-health professional (41%)
5. Half of the studies - provider or payer perspective (48%)
6. 30% - pharmaceuticals, 26% - programme,19% vaccines, 12% screening
7. 14% Southern India, 7% Delhi, 6% Gujarat,5% Maharashtra
8. 74% authors reported the intervention as cost effective
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30. EXAMPLES IN INDIAN CONTEXT
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31. Challenges
1. Dearth of economic evaluation evidence for health-care interventions
2. No specialty courses in the field of health economics for those who
undertake mainstream economics courses or in medical or public health
3. General lack of awareness in terms of its value or potential application in
clinical or public-health research
4. Lack of government funding for economic evaluation studies in India
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32. Way forward
1. Capacity building: quality economic evaluations
2. Creation of Schools of Public Health
3. Demand for such studies as well as a scope for its use in policy making
4. Associations for health economics— the Indian Health Economics and Policy
Association (IHEPA) and the Health Economics Association of India (HEAI)
5. Institutional mechanisms - MTAB
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33. Health Technology Assessment
1. Health Technology: any method used to promote health, prevent and treat
disease and improve rehabilitation or long-term care
2. Health Technology Assessment (HTA) - evaluation of effectiveness and resource
use associated with new medical technologies for the purpose of providing input
to a policy decision.
3. Medical Technology Assessment Board (MTAB) - landmark development towards
evidence-based health policy making - essential step towards India’s path to UHC
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34. Goal of MTAB
After evaluating HT on their efficacy, appropriateness and cost effectiveness
Reduce the cost and variations in patient care, expenditure on medical
equipment in directly affecting the cost of patient care, overall cost of medical
treatment, reduction in out of pocket expenditure of patients and streamline
the medical reimbursement procedures for effective implementation of the
Universal Coverage Programme
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36. SUMMARY
1. History and evolution
2. Costs, costing principles, efficiency - equity
3. Four types of economic evaluation
4. Status in India
5. Challenges and ways to address
6. Health Technology Assessment
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37. THANK YOU
NEXT WEEK
NATIONAL POPULATION POLICY – REVIEW
Presenter: DR DINESH
Moderator: DR MAHALAKSHMY

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