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Description: Overview of economic evaluation, myths in translating EEs for policy making, Types off EE Studies, Cost Benefit Analysis, Valuing Benefits in a CBA, Cost of Illness/injury (COI) approach, value of statistical life, Myth in Interpreting CBA Results, Cost--Utility Analysis (CUA), Measurement of Health Utilities, Valuation of Benefits in a CUA, Global Burden of Disease Project, Myths in Interpreting CUA Results, Cost Effectiveness Analysis (CEA), Quantifying Outcomes in a CEA, CEA Caveat.
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Economic Evaluation for Decision Making
Phaedra Corso, PhD
Centers for Disease Control and Prevention
National Center for Injury Prevention and Control
Provide an overview of economic evaluation (EE) methods Define how the benefits measure is calculated in a:
Cost-benefit analysis Cost-utility analysis Cost-effectiveness analysis
Explore myths in translating EEs for policymaking
Public Health Approach to Prevention
Problem Identification Program and Policy Development Program and Policy Evaluation Implementation and Dissemination
Risk and Protective Factor Identification
Types of EE Studies
Cost-of-illness studies Cost analyses (intervention/program costs)
Balancing costs and benefits
Cost-benefit analyses (CBAs) Cost-utility analyses (CUAs) Cost-effectiveness analyses (CEAs)
Why Use Economic Evaluation (EE) Methods?
Maximizing health outcomes is important Resources are limited, so hard (resource allocation) decisions must be made EE demonstrates the value provided from resources expended
Economic Evaluation Economics
Economics seeks to explain choices and behaviors by individuals Economic evaluation (EE) seeks to inform choices made by public policy makers, health care payers
Use of EE to Inform Prevention Policy
Tier of Decision Making
US Congress Allocation decision between health, defense, and education. Outcome comparator: $ Director of HHS Allocation decision between violence prevention and cancer screening. Outcome comparator: QALYs Local HD Allocation decision between two interventions designed to reduce child neglect. Outcome comparator: Cases of neglect prevented
CBA CUA CEA
Cost-Benefit Analysis (CBA)
Standardizes both costs and outcomes in $ Includes health and nonhealth outcomes Provides an objective summary measure
Net Benefits (B C), Net present value (NPV) Benefit-cost ratio (B / C)
Valuing Benefits in a CBA
Cost of Illness/injury (COI) approach
Medical, non-medical e.g., hospital stays, medications, travel costs
Indirect human capital approach
Time, productivity e.g., time missed from work to care for child Contingent valuation (CV) -
Willingness to Pay approach
Theoretically better measure than COI
Includes intangible costs
Wage-risk studies Consumer valuations of safety products
Expressed or Stated Preferences
Open-ended CV Binary CV
Most often used for value of statistical life (VSL) estimates Wage-risk Studies (Hedonic Wage Models)
Choice of explanatory variables important Viscusi lit review ... $3-7 million per statistical life (1990 dollars) VSL ~ WTP for year of life saved (typical health measure) Key Variable is Job Risk
Workers' perception of risk & risk aversion
Revealed Preferences (cont'd)
Consumer Valuations of Safety
Product purchased directly for safety
Air bags Smoke detectors Small vs. big cars
Similar problems as hedonic wage models
Need to collect risk perception data Health care subject to market distortions
Open-ended valuation questions
Ask directly for max WTP, or min WTA Ask about all attributes, including costs conjoint analysis
Difficult to estimate non-response problems Use aids (bidding game, payment cards)
Improve response Starting-point bias
"Now program were a nationally-sponsored child you be willing "If thisimagine we hadavailable to your state, would maltreatment to prevention program that 2 year to sponsor this program?" pay $150 in extra data, was available to 100,000 and this this "Based on national taxes perout of every your state children program was an average of the risk of child day killed due annually, orproven to reduce4 childrenaeverybeing are killed to child maltreatment by 50%. This by parents the caretakers." asa"Wouldof child willing to pay $225?" that or number of result you be maltreatment means YES children killed on average every day in the U.S. by child NO "Would you be willingfrom 4 per day to 2 per day." maltreatment is reduced to pay $75?"
Myth in Interpreting CBA Results
Only implement programs with + NB or NPV (benefits costs > 0)
NPV > $0, net savings--argument for investment
NPV < $0, net cost--need additional reasons for investment (ethical, moral, political)
Program with highest NPV should be funded first.
Cost-Utility Analysis (CUA)
Length of life (survival), and Quality of life
Compares disparate outcomes in terms of utility preferences for health states Derives a ratio of cost per health outcome
$/Quality-adjusted life year (QALY) $/Disability-adjusted life year (DALY)
What is a Utility?
Utility is a numerical measurement of the desirability of, or preference for, a health state Grounded in tenets of Expected Utility Theory
(von Neumann and Morgenstern)
Utility is (most often) anchored by
1, for perfect health 0, for death
Measurement of Health Utilities
Direct utility elicitation very intensive
A description of the health state Surveys to measure preferences: Rating scales, timetradeoffs, standard gambles, or person-tradeoffs (for DALYs)
Indirect: Use of multi-attribute utility functions
Administer instrument with description of health to "classify health state" Preference weights obtained from population-based samples
For some conditions, utility weights are available "off the shelf"
Risky approach, may not be transferable
First: Define the health state What the person can do
Physical ability Self-care Role/Social
How the person feels
Pain Energy Emotional well-being
Second: Elicit preference weights for the health states
Question type Response method Certainty "value" Scale Choice Rating Scale Time-Trade Off Standard Gamble Uncertainty "utility"
Rating Scale (RS)
Blindness in both eyes Worst possible state Best possible state
Time Trade-off (TTO)
U(healthy) = 1.0
blind both eyes
U(blind both eyes) = ?
Standard Gamble (SG)
blind both eyes Utility= ? prob=? prob=1.0 1 - prob perfect vision Utility= 1.0 death Utility= 0
U (blind in both eyes) = prob (perfect vision)
Utilities (preference-based), not to be confused with...
SF-12 SF-36 HRQOL-4 from BRFSS
Utilities: Indirect Measurement
Health Utilities Index (HUI) EuroQOL (EQ-5D) Quality of Well-Being (QWB) SF-6D
Attributes (number of levels): VISION (6) HEARING (6) SPEECH (5) AMBULATION (6) DEXTERITY (6) EMOTION (5) COGNITION (6) PAIN (5)
Number of unique health states: 6 x 6 x 5 ... x 5 = 972,000
A Comparison of Scales
# of health states HUI 972,000 Valuation technique RS, transformed into SG RS Method of extrapolation MAUT* Sample Country
504 (general) 866 (general) 3395 (general) 611 (general)
US (San Diego) UK
TTO and RS
* Multi-attribute utility theory
Preference measures should be generic. Health-state classification system should reflect important domains for problem at hand. Community weights most appropriate.
* U.S. Panel on Cost-effectiveness in Health and Medicine
Source of Preference Weights, 1976 1997*
Source of preference Author Clinician Patient Community n 74 59 55 52 % 32.4% 25.9% 24.1% 22.8%
* Source: Harvard SPH, CEA Registry
Utilities for Selected Health States
Health State Perfect Health (reference case) Chronic stable angina (TTO, patients) Chronic stable angina (SG, patients) HIV without symptoms (TTO, patients) HIV without symptoms (TTO, physicians) Home dialysis (TTO, patients) HIV without symptoms (TTO, public) Chronic stable angina (RS, patients) Home dialysis (TTO, public) Death (reference case) Utility 1.00 0.93 0.87 0.87 0.69 0.64 0.63 0.59 0.54 0.00
Sources: Nease et al. JAMA 1995;273:1185 Owens et al.Quality of Life Research 1997;6:77 Torrance and Feeny. Int J of Tech Assess in Hlth Care 1989;5:559.
From Utilities to QALYs
Quality-adjusted life year = a year of life in a health state adjusted by the utility associated with the health state. QALYs summarize expected health profiles over time QALYs are a measure of the difference in value of two profiles Tradeoff between health and longevity
Valuation of Benefits in a CUA:
Combining Length of Life with Quality of Life
QUALITY OF LIFE (weights)
without intervention 0.0 birth LENGTH OF LIFE (Years) death death'
What is a DALY?
Global Burden of Disease Project (WHO/Harvard) Disability Adjusted Life Years (DALYs) a composite measure of disease burden YL lost due to premature mortality + YL lived with disability (adjusted for severity) Utility weights (called disability weights) are based on preferences elicited using the person trade-off (PTO) technique administered to a panel of experts.
DALYs Utility Assessment
PTO1 Project A can extend life of 1,000 healthy persons for 1 yr. Project B can extend life of X blind people by 1 yr. What does X have to be for the two projects to be =? PTO2 Project A can extend life of 1,000 healthy persons for 1 yr. Project B can give Y people their eyesight back for 1 yr. What does Y have to be for the two projects to be =?
Adjust responses so that X = Y
DALYs Pros and Cons
Useful for monitoring disease burden Some reasonable assumptions
Time as a unit of measurement Using age and sex to calculate disease burden
Age-weighting Whose values are elicited?
U.S. Burden of Disease - Men
Major depression Self-inflicted injuries Pulmonary disease Homicide and violence Cerebrovascular disease Alcohol use HIV/AIDS Lung/tracheal cancer Motor vehicle crashes Ischemic heart disease
7 4 9 3 8 2 5 1
Percentage of Total DALYs Lost, 1996
Source: Michaud, Murray, Bloom. Burden of disease: Implications for future research. 38 JAMA 2001;285(5):535-539.
U.S. Burden of Disease - Women
Motor vehicle crashes Diabetes Dementia Pulmonary disease Breast Cancer Osteoarthritis Lung/tracheal cancer Cerebrovascular disease Major depression Ischemic heart disease
9 6 8 4 5 3 2 1
Percentage of Total DALYs Lost, 1996
Source: Michaud, Murray, Bloom. Burden of disease: Implications for future research. 39 JAMA 2001;285(5):535-539.
Myth in Interpreting CUA Results
Only implement programs less than $50,000/QALY saved (or some other threshold)
$$/QALY: What is a good "value"?
Pneumoccocal vaccine vs no vaccine in 65 cohort Nicotine patch vs no patch in 25-29 males Mammography screening vs no screening in 45-69 women Driver side airbag vs no airbag in driving population Hypertension screening/treatment vs no screening in asympt. 20 yo women
2,500 5,200 18,000 27,000 61,000
Cost-Effectiveness Analysis (CEA)
Expresses outcomes in natural units.
(e.g., number of cases prevented or lives saved)
Compares results with other interventions affecting the same outcome. Derives a ratio of cost per unit of outcome.
$/case prevented $/life saved $/life year saved
Quantifying Outcomes in a CEA
Increased pro-social skill development Enhanced school climate
Aggressive behavior prevented Pro-social behavior increased Academic achievement improved
Outcomes cannot be combined, so one or two of the most important effectiveness measures should be considered for the CEA. The number of summary measures depends on the number of outcomes chosen.
If 2 outcomes, A and B, are considered the most important for evaluation, then
Cost/outcome A Cost/outcome B
Myth in Interpreting CEA Results
Cost effective = Cost saving
Cost-effective = Cost-saving
25000 $/LY saved 20000 15000 10000 5000 0 -5000 0% 20% 40% 60% 80% 100%
% people vaccinated
Economic evaluation is both art and science It should involve multiple disciplines
Epidemiology Statistics Economics Health outcomes research
Published analyses often not authored or reviewed by people with expertise in methods Results should be interpreted with caution
Economic evaluation is valuable to decision making and for setting health policy. Yes, YOU too can do an EE at home.
Read some key references Haddix, Teutsch, Corso (OUP, 2003) Gold et al. (OUP, 1996) Seek advice and consultation Have fun!