Econ Final
Quadrant IV
(+, -) -alternative dominated by standard -new option costs more and gives worse outcomes
Quadrant II
(+,-) -alternative dominant over standard -new option costs less and gives better outcomes
Quadrant III
(-,-) -considered a trade off -new option costs less but gives worse outcomes
What are two equations for average cost effectiveness?
(cost per patient x total # of patients) / (success rate x total number of patients) or (cost per patient x total number of patients) / (total number of positive outcomes)
ICUR equation
(cost to use drug X - cost to use drug Y) / (QALY of treatment X - QALY of treatment y) -substitute QALYs instead of using differences in effectiveness outcomes
ICER calculation
(cost to use drug X - cost to use drug Y) / (outcomes of patients treated with drug X - outcomes of patients treated with drug Y)
What is the equation for incremental net benefit?
(lambda x change in effects) - change in costs
Quadrant I
+,+ -considered a trade off -new option costs more but gives better outcomes
What is average wholesale price?
-"list price" of a drug before discounts and prices in negotiated contracts -available in red book -price is "pretend" and often not used
What are 2 cons of CBA?
-Assigning monetary values to medical outcomes is difficult -No standard way to determine these monetary values for outcomes
What is cost standardization?
-adjustments in costs can be made to standardize costs to current values -used when costs have changed over time for service or product -comparisons made over 1 year apart
What is the incremental net benefit also called?
-also called net benefit framework or net monetary benefit
What question does PE answer?
-answers the question whether the extra cost is worth the additional duration of health benefit
What is the pharmaceutical benefits advisory committee?
-australia -independent groups of experts appointed by Auz govt
What are 2 disadvantages of CUA?
-can be difficult to determine an accurate utility value of an intervention -often difficult to interpret studies using QALYs as outcomes
What is diagnosis-related group?
-classifies diagnoses and procedures based on similar resources used -an average reimbursement rate is given for each DRG
What is a cost benefit analysis?
-compares both costs and benefits in monetary units (dollars) -often used to help assess social benefit of policies or projects while balancing proper use of available resources
What is a cost minimization analysis?
-compares input costs for products or services -assumes that outcomes are equal for each option -tries to find the intervention with the least cost
What is an example to explain opportunity cost?
-cost of drug A (best) to treat = $1000 / month -cost of B not as good as A but $600 per month -$400 differences in costs, if used to buy drug A, would serve as the opportunity cost and would not be available to be used for anything else (like other drugs/services) the opportunity to use that $400 in the best way possible has to be decided to use on Drug a or something else
What are examples of intangible costs?
-cost of having nausea and vomiting from chemo -cost associated with a kidney stone
What is acquisition cost?
-cost paid by an institution to acquire a medication from a wholesaler as part of their inventory -often a negotiated cost based on contracts with the wholesaler or manufacturer -often kept as proprietary information
What is an example of a cost-benefit analysis?
-costs and benefits of vaccine program -benefits of giving vaccines can be monetized based on wages of patients from lost productivity and reduced survival associated with conditions that could be prevented with vaccines
What are direct non-medical costs?
-costs incurred by patients and their families in order to receive the service / product from the provider
What are some examples of measurable outcomes?
-cures -lives saved -symptom-free days -time to disease progression -change in lab value or test result
What are the two categories of cost in CBA?
-direct medical costs -direct non-medical costs
What are the inputs considered in PE analysis?
-drug costs -health care personnel involved (time, salary, type) -patient factors (added costs, convenience, side effects)
What are some examples of direct medical costs?
-drug costs, cost to perform diagnostic tests, physician visits, costs associated with hospital or ER visit
What is wholesale acquisition cost?
-estimates of costs to wholesaler from the manufac -does not include negotiated discounts
What does a QALY measure?
-how an intervention affects the quality of life gained by an intervention -a way to measure the impact an intervention has on the quality of life a person has (may be alive but it's kind of life that is desirable)
What falls under indirect benefits?
-increase in productivity/earnings -human capital, willingness to pay
What is the canadian agency for drugs and technology in health?
-independent not-for-profit organization that administers a set of guidelines for making informed decisions about using healthcare resources
What does the US not having govt as primary healthcare provider lead to?
-leads to variations in availability of health care and differences in costs -individual payers make their own rules on how healthcare is distributed and paid for
Why is it useful to understand healthcare systems in other countries?
-make decisions useful to see how PE studies could make healthcare better in US
How does the approval system work for Auz?
-manufac submit data to PBAC to try to get meds on PBS -system relies on PE data to make decisions about drug availability in the interests of patients and govet funding -patients pay limited amount of drug costs and the govt pays the rest
What is the willingness-to-pay technique?
-mean amount a group of people would be willing to pay for pain to go away
What are direct medical costs?
-medically related inputs to provide a service of treatment -cost incurred by the provider and charged to the payer/patient
Why is it difficult to generalize pharmacoeconomic analysis done in other countries?
-not all medications are commercially available in all countries -dollar values places on health outcomes differ between countries
How does prescription coverage in canada work?
-not mandated but each territory or province sets own rules for coverage and eligibility and which meds are covered
What differences exist in health economic guidelines?
-on the valuation of resources and perspective of decisions (societal, corporate)
How are outcomes determined in CEA?
-outcomes are determined by the service or product and disease or condition being treated
What falls under intangible benefits?
-patient preferences, pain and suffering -willingness to pay
What is micro-costing?
-patient records are reviewed to determine specific services used and assigning costs to those services (meds, labs, procsdures) -required good record keeping and documentation -computerization improves accuracy and ease
What are 3 methods to control spending?
-price negotiation - price setting -formulary management -PE studies serve as a basis for making decision within these contexts
What is. average manufacturer's price?
-prices paid by wholesalers that include discounts from the manufac -more precise estimate of what pharmacies pay -still does not reflect the actual price paid, which is usually kept confidential for each pharmacy, hospital or corporation
What is an incremental cost effectiveness ratio?
-ratio of difference in costs divided by difference in outcomes of two different interventions
What is a cost-effectiveness ratio?
-ratio of resources used per unit of benefit is calculated for each intervention -these ratios can then be compared to each other for different interventions
Why do we need to standardize costs based on timing?
-sometimes costs used in an analysis are gathered years prior (past) -due to inflation or price changes, those old costs don't truly represent their current value
What is the equation of CER?
-total cost of using drug X / number of positive outcomes in patients using drug X -enables calculation of the cost to gain one extra positive outcome when using drug X
What is a cost effectiveness analysis used to compare?
-used to compare costs of an intervention (product / service) and health related outcomes -allows for evaluations of costs and outcomes (cost effectiveness) -often calculated as a ratio of the costs and effects
What is a cost-benefit analysis?
-values costs and benefits in monetary terms -helps determine if benefits outweigh costs of product or service -enables comparison of different interventions with unrelated outcomes (because everything is in terms of dollars)
What is a QALY used to measure?
-way to measure the burden of living with a disease -a year of life adjusted for its quality that is not as good as being perfectly healthy
What are 4 steps of calculating a QALY?
1. Develop a detailed description of each disease state or condition 2. Choose a method to determine utilities 3. Choose subjects who will determine utilities 4. Sum the product of utility scores by the length of life for each option to obtain the QALY
What are the two methods of adjusting in cost standardization?
1. apply unit costs from one point in time (current dollar amounts applied to all units throughout time even if older costs were different) 2. multiply all costs from each year the data was collected by medical inflation rates to get the costs in 2020 $$$
What does pharmacoeconomics consider? 2
1. considers other factors besides just effectiveness and safety 2. considers benefit from different viewpoints
What are the 4 types of PE studies?
1. cost minimization analysis 2. cost-effective analysis 3. cost-utility analysis 4. cost-benefit analysis
What are examples of cost?
1. cost of drug 2. cost of treating a patient admitted to a hospital for having HA or stroke 3. cost of vaccine 4. cost of patient with flu seeing physician 5. cost of tamiflu to treat patients with flu 6. cost of dasatnib compared to some other drug to treat CML 7. cost of loss of productivity due to leukemia patient being unable to work 8. cost of a pharmacist's time to teach proper inhaler technique 9. cost of hospitalization for asthma exacerbation 10. cost of medications for diabetes 11. cost of managing complications resulting from poor diabetes control
What are 3 examples of cost minimization analysis?
1. costs of generic drug vs brand 2. costs of receiving the same drug in 2 different environments 3. costs of getting a flu shot at pharmacy vs physicians office
What are the three benefits in CBA?
1. direct benefits 2. indirect benefits 3. intangible benefits
What are 4 types of pharmacoeconomic costs?
1. direct medical costs 2. direct nonmedical costs 3. indirect costs 4. intangible costs
What falls under direct benefits?
1. direct medical savings (less cost of one intervention vs another) 3. direct nonmedical savings (less expenses incurrent by a patient with one intervention vs another)
Why is PE important? 3
1. enables better decision making regarding healthcare products and services 2. encourages creation of products and services 3. identified substandard products and services that need to be replaced or re-designed
What are the different viewpoint systems of pharmacoeconomics?
1. healthcare systems 2. society 3. patients
What are the most commonly used methods to determine monetary value of health benefits?
1. human capital method 2. willingness to pay -often most difficult part of CBA
What are the 3 steps of calculating discounted costs or savings?
1. identify future resources and present costs 2. select the expected discount rate (r usually btw 3-5%) 3. calculate discount factor for each year (t)
What are the 4 types of missed work days?
1. missed work 2. missed housekeeping 3. restricted activity days 4. caregiver time (last 3 often require an estimation of productivity loss since an actual wage is not associated with this work)
What are the 3 formats of calculating a CBA?
1. net benefit 2. benefit to cost and cost to benefit ratios 3. internal rate of return
What are examples of measurable outcomes?
1. number of patients that had a HA or stroke over 5 years 2. number of patients who has influenza in a year 3. measuring the duration of survival of a patient with CML 4. number of hospitalizations patients with asthma have in a year 5. onset of development of micro and macrovascular complications related to diabetes (neuropathy, retinopathy, nephropathy, cardia disease)
What are the 4 types of questions rate the value of the intervention in WTP?
1. open ended questions 2. close ended questions (dichotomous, take it or leave it) 3. bidding game 4. payment card
What are the 4 groups of participants that can determine utilities?
1. patients with disease 2. health care providers 3. caregivers 4. people from general public
What are the 3 perspectives in PE studied?
1. payer 2. patient 3. provider
What are 4 methods of calculating hospital costs?
1. per diem ( least precise) 2. disease-specific per diem 3. disgnodid-related group 4. micro-costing (most specific)
What 3 things fall under direct elicitation?
1. rating scale 2. standard gamble 3. time tradeoff
What are examples of drug therapy and services?
1. using atorvastatin to reduce cholesterol 2. flu shot to reduce risk of flu 3. using dasatinib to manage patients with chronic myelogenous leukemia 4. counseling patients on proper use of an inhaler in asthma patients 5. calling patients from the pharmacy and reminding them not to forget to refill Rx for diabetes med
Calculate an ICER using the information provided: Atorvastatin costs $3.85 for a 10 mg tablet Rosuvastatin costs $6.52 for a 10 mg tablet Each drug is given once per day Taking atorvastatin over 10 years prevents a stroke or MI in 60% of patients Taking rosuvastatin over 10 years prevents a stroke or MI in 70% of patients
97,455.50
In which situation would QALYs be useful? A.Comparing the impact of infliximab in improving mobility in patients with arthritis with use of gabapentin to reduce pain in patients with diabetic neuropathy B.Comparing the costs of inhaled aclidinium with tiotropium to treat patients with chronic obstructive pulmonary disease (COPD) C.Comparing the costs and benefits of surgery vs chemotherapy to treat early stage non-small cell lung cancer D.Comparing the amount an oral surgeon charges for dental implants with using dentures instead
A
What is the purpose of sensitivity analysis? A.Determine if analytical results stay the same when using a range of input values B.Determine what members of the community could be harmed by an intervention C.Determine the impact an intervention could have on a department budget D.Determine impact an intervention has on specific disease parameters
A
A group of researchers is evaluating the pharmacoeconomics of a new drug to treat hypertension.300 people were randomized to either standard of care or use of VascusavUsing time trade off, a utility of 0.65 was determined for hypertensionOver the 10 years of the study, patients getting Vascusav lived a median of 8 years while those on standard of care lived 5 yearsWhat is the QALY of using Vascusav? (ie, convert years of life lived to QALY) A.1.95 years B.5.2 years C.3.25 years D.6.5 years
B
Quick ReviewWhich one of the following situations would cost-minimization analysis be useful? A.Comparing the cost and effectiveness between two drugs B.Comparing the costs of using two drug that have the equal outcomes C.Comparing the profit margins of two different drugs D.Comparing the cost:benefit ratio of using multiple interventions
B
When using the standard gamble method to determine the utility of a health state, what must participants decide? A.Between two interventions with the same cost but different outcomes B.Between getting an intervention that might make them healthy or cause their death vs just living with the disease C.Between two interventions with different cost-effectiveness D.Between two interventions that provide the same outcomes and costs but vary in the net benefit
B
Which one of the following can be used to determine a monetary value for indirect or intangible benefits of an intervention? A.Internal rate of return B.Willingness to pay C.Rank sum assessments D.Incremental benefit assessments
B
A pharmacoeconomic study is evaluating drug A (alternative) and drug B (standard) to treat hypertension. A value for INB was calculated to be -$150. What does this mean? A.Drug A is more cost effective than drug B B.Drug A provides better outcomes than B C.Drug A is not more cost effective than drug B D.Drug A does not provide better outcomes than drug B
C
Loss of productivity from illness or death is which one of the following types of costs? • A. Direct medical costs B. Direct nonmedical costs C. Indirect medical costs D. Intangible costs
C
Which one of the following is a primary outcome (ie, NOT a surrogate outcome)? A.Mean change in hemoglobin A1C for patients with diabetes treated with sitagliptin B.Median cost of antibiotic use in patients with bacteremia C.5-year survival rate for patients with colon cancer treated with bevacizumab D.Mean length of stay in a hospital after a kidney transplant
C
Which one of these statements best describes "benefit" obtained with an intervention? A.The dollar amount remaining after costs are used on an intervention B.The dollar amount earned using an intervention C.The dollar amount people place on either achieving a positive or avoiding a negative health outcome D.The dollar amount used to achieve a specific health outcome
C
λ is the benefit value of achieving a specific outcome.Where do we get values for λ? A.Available in online references B.Calculated as the difference between cost and benefit C.Determined through methods such as willingness to pay D.It's the inverse ratio of cost to benefit
C
What type of data is compared and what assumption is made by researchers in a COST-MINIMIZATION ANALYSIS?
Compares the total costs of two interventions Assumes the outcomes of interventions being compared are equal
Discounting future costs and savings is used for which one of the following purposes? • A.Get the best price possible for current purchases B.Eliminate the impact of inflation C.Calculate the net benefit of a superior product or service D.Determine future values in dollars based on inflation
D
What is the equation for discount factor
Discount factor = 1/ (1+r)^t
Which of the following is/are included in the calculation of incremental cost effectiveness ratio (ICER)? • A.Cost of drug A B.Cost of drug B C.Outcome percent when using drug A D.Outcome percent when using drug B E.A and B F.A and C G.B and D H.All the above
H
List two methods used to determine monetary values for indirect benefits or intangible benefits
Human capital and willingness to pay
What are 4 cons of willingness to pay?
Hypothetical nature of scenarios explained to people may not get real-life responses Potential bias due to providing selected values to choose from in close-ended questions, bidding game, and payment card People may have difficulty placing a dollar amount on quality of life Compliance bias could exist for people trying to provide a bid they think they should be selecting not what they really want to select
QUESTION: We asked 500 people how much they would be willing to pay to be 10% less likely for themselves or a family member to have a heart attack or stroke over the next 10 years? We got an answer of $5000 Now let's calculate our incremental net benefit
INB - $9245.50 0 is greater so not cost effective
What are 3 cons of human capital method?
May be biased against unemployed individuals like children, elderly, and unemployed but employable adults Bias based on earnings for some individuals that do not equal their output (Ex. wage rate of football player vs teacher) Requires consideration from a societal perspective so use an average instead of individual values Does not include values for pain and suffering if they don't affect productivity Ex. baldness affects a patients QoL but not productivity
Who regulates HC in UK?
NHS
What does canada use to make decisions about drug availability and cost?
PE data
How is a QALY measured? (scale)
QALY ranges on a scale from 0.0 to 1 per each year lived
What are the 6 steps of CBA?
Step 1: determine the primary intervention being considered (ie, service, drug, etc) Step 2: identify alternative(s) to the intervention (ie, the control) Step 3: determine the perspective of the study (usually use the societal perspective in CBA) Step 4: identify costs and benefits Step 5: assign a monetary value to health benefits Step 6: calculate results of costs and benefit analysis
T/F The higher the benefit:cost ratio the better the intervention
T
True or False The incremental cost effectiveness ratio (ICER) calculates the cost for one additional unit of benefit achieved by comparing two interventions based on the differences between costs and outcomes of the two interventions
T
True or False: Higher values of incremental net benefit are better than lower values
True
A person with cancer is expected to live 12 years. He is willing to trade away 8 years of living with cancer to live 4 years in good health.What would be the calculated utility score for living with the cancer according to the patient's time trade off responses? A.0.33 B.0.5 C.0.67 D.1.0
a
What does a negative QALY indicate?
a disease considered worse than death
What is a cost effectiveness study?
a study in which the costs and outcomes are measured -better analysis than just a cost-minimization analysis
The four types of PR costs can be...
added together to calculate the cost of a product or service
The perspective will affect...
affect the interpretation of the result
What is an example of indirect benefit?
after procedure, patient was able to work full time and productivity improved
What is the reimbursed amount?
allowable charge = price -negotiated discounts
What does an ICER allow?
allows for determination that one drug is better (dominant) than another because it costs less and/or is more effective
INB > 0
alternative intervention is deemed cost effective compared to the standard -the higher the INB the more favorable the intervention
Why can it be difficult to interpret an ICER?
ambiguity of results -need to perform more analysis that takes into account something else like the benefits of the interventions
What does robust mean?
an analysis in which the conclusions are insensitive is more powerful and is described as robust
What is per diem?
an average cost/day for all hospitalizations regardless of reason for hospitalization
What is a cost-effective analysis?
assesses cost and measures outcomes in easily quantified units (lab measures and symptom free days)
Average cost per QALY equation
average cost per QALY = mean cost per patient / QALY -used as an alternative to average cost ffectiveness
What is disease-specific per diem?
average cost/day for specific reason of hospitalization
Which of the following BEST describes opportunity cost? A.The total cost of using the "best" option B.The cost of the "best" option over the "next best option" C.The net cost of using an inferior product D.The savings achieved by using a product to prevent illness
b.
Why is future savings valued less than future savings?
because money is worth more today
What is used more often and easier to interpret?
benefit to cost -bigger the number the beetter
Benefit to cost equation
benefit to cost = total benefits / total costs
When is the intervention considered cost-beneficial? benefit to cost
benefit to cost > 1 or cost to benefit <1
How is the value of a health outcome determined?
by the maximum acceptable willingness to pay (lambda) for the outcome
How does an intervention affect a QALY?
can move a person's baseline QALY up or down
What is cost-minimization analysis?
compared costs of 2 interventions when outcomes are the same
What does PE analyses compare?
compared factors in selecting drugs available within healthcare systems -formulary availability
What are the considerations of willingness to pay?
considers both patient preference and quality of life between health outcomes
What is a cost-utility analysis?
considers life outcome gained based on its quality (spectrum of quality between perfect health (1) and death (0))
What does the pharmacoeconomic analysis consider?
considers options available on both sides of the equation
In the example of a hospital charges $X to give a patient a dose of acetaminophen, what is the cost?
cost = cost of acetaminophen tablet + cost of service provided (small portions of the salary of the pharmacist, tech, nurse)
Vertical line
cost differences (- on bottom and + on top)
Cost to benefit equation
cost to benefit = total costs / total benefits
What are examples of nonmedical costs?
cost to travel from physician's office, child care, food, lodging, extended periods of treatment or family member hospital stay
CBA has two categories of......
costs
What is a cost-consequence analysis?
costs and outcomes are identified but no ratio calculated
What are intangible costs?
costs of pain, suffering, anxiety or fatigue due to the disease state of associated with the treatment for the disease state -difficult to assign a monetary value compared to other types of costs
What are personnel costs?
costs spent by provider (hospital, pharmacy, clinic, MD office) based on time spent providing service -costs include salary and benefits for the service provider based on time spent -very commonly used in pharmacy world to assess metrics used by chain pharmacies
What are indirect benefits?
could also occur and include the savings from having to pay indirect costs
What are examples of outcomes?
cure rates, recurrence rates, side effects, rate of resolution and signs and symptoms
What are examples of outcomes?
cure, prolonged survival, blood pressure control etc.
How do you estimate work timee?
days worked or days worked / year
0.0
death
What does perspective describe?
describes the viewpoint to determine whose costs are being considered in a PE study
What does the willingness to pay determine?
determines a value of how much people are willing to pay to reduce the chance of an adverse health outcome
What does the PBAC determine?
determines what medications are listen on Auz pharmaceutical benefits scheme -govt subsidizes the cost of medications on this list -this is the only way that medications would be covered with public funds
ICER equation
difference in costs between two options / difference in outcomes
What are the two basic categories to determine QALY values?
direct elicitation indirect elicitation
What are reimbursement. rates paid by payers?
discounted list prices based on negotiated contracts
What does a CUA not require?
does not require estimation of monetary value of benefit (like with incremental net benefit)
Why do we discount costs?
done to make sure that future savings or costs are viewed with a more likely degree of actual value -inflation is the most predictable reason why future dollars will be worth less than present dollars -discounting is just a prediction of what future dollars will be worth
What is included in indirect benefits?
earnings or productivity saved from receiving the product or service that corrects an issue that would have resulted in more loss of productivity
horizontal line
effect differences (- on left, + on right)
What does pharmacoeconomics enable?
enables an assessment of total costs of treatment and options
What is cost analysis?
evaluated just the costs -how much does drug C cost more than Y
What is the economic analysis?
evaluated just the outcomes -patients getting drug X lived longer than those given drug Y
What does cost standardization allow for?
fairness in costs compared from different years
Why was the national institute for clinical excellence formed?
formed to evaluate clinical and economic benefit of HC tech (including medications) and make recs to NHS
What are govt agencies formed for?
formed to use these data to make roles and guidelines to help manufac
We can also discount...
future savings
What is the cost-effectiveness grid?
graphical analysis of cost-effectiveness compatisons
What does the reimbursed amount need to be greater than?
greater than the cost of the provider loses money
What do differences result in?
health care costs and distribution and availability of products and services -no system is perfect and all have significant limitations
What does PE analysis help to determine?
helps determine use of limited resources by putting a value on health care (either services or drugs)
What does the continued use to PE analysis help?
helps guide better decision making and systems evolution in the future
What is a strong motivator to make sure healthcare dollars are spent appropriately in countries with a govt payer system?
high cost of healthcare
What are Health economic guidelines?
how govt HC decisions are made -from europe, NA, and auz are fairly consistent
What is the idea of discounting based on?
idea that money is worth more today -inflation (increasing costs) means you buy less with the same $ in the future -it's not that things actually cost more, it's really that a dollar is worth less
What does sensitive mean?
if the conclusion with the different costs changes within the range of different costs used, then the results are considered to be sensitive (changes costs changes our conclusion)
What does insensitive mean?
if the conclusion with the different costs stays the same compared to the original costs then the results are insensitive (the results were not sensitive to the cost range)
ICUR
incremental cost utility ration
What factors are considered for drug approval by the PBAC?
indications, effectiveness, safety and cost-effectiveness
What is the reason older costs are lower than present costs?
inflation but could be other reasons like supply and demand or changes in manufacturing
What does it mean that WTP is based on contingent valuation?
involves asking a person to rate the value of an intervention in a detailed hypothetical scenario
What does the human capital method require you to know?
knowledge of income and job benefits for a specific occupation by gender and age -bureau of labor stats -census -self-report
Incremental costs are also known as...
marginal costs
What does PE analysis help to identify?
may identify the best choice of therapy for patients based on individual characteristics
What does pharmacoeconomics measure?
measures costs and consequences (outcomes) of medications and services
Lower cost and lower effectiveness, same effectiveness and same cost, and higher effectiveness and higher cost all need...
more information by calculating the ICER or evaluating other factors
In the example of a hospital charges $X to give a patient a dose of acetaminophen, if the total cost is $1, how much does the hospital need to be reimbursed?
more than $1
How do you calculate human capital?
multiply the wage rate x missed work time
Not all benefit categories...
need to be included in CBA but at least 1
Same effectiveness and lower cost, higher effectiveness and lower cost and higher effectiveness with same cost indicate..
new option is cost effective (has either lower costs with same/higher effectiveness or same cost with higher effectiveness)
Same cost lower effectiveness, higher cost and lower effectiveness and higher cost and same effectiveness all indicate...
new option is not cost effective -has either higher costs with lower/same effectiveness or same cost with lower effectiveness
How many times can resources be used?
once
What does a true CMA assume?
outcomes are equal but possible they are not
What is an example of an indirect cost?
patient getting surgery loses paid time from work and inability to complete tasks at work or unable to do household activities
Decrease of X means...
patient is not willing to live a longer lifetime with the disease
increase of X means...
patient is willing to live a longer lifetime with disease
What are examples of indirect costs?
patient lost work time due to having a procedure
What is the patient perspective?
patients want the most benefit with the least cost
What is restricted activity days?
percent of time for which missed work or housekeeping was limited
1.0
perfect health
What does the pharmacoeconomic equation provide a basic premise of?
pharmacoeconomics -there is a cost to purchase a product or service and there should be come outcome that can be measured - Cost -> product or service -> outcomes
What is utility sometimes called?
preference weight or preference value
In the example of a hospital charges $X to give a patient a dose of acetaminophen, what is the price?
price = cost + profit margin (profit margin is the difference between the price and cost)
Why do Rx drugs cost less in canada?
price controls
In human capital method, what is assume that the value lost =
productivity gained if it were to occur due to the inteervntion
What does using resources once encourage?
proper use and avoiding waste
What does the NHS do?
provide free universal HC at point of use
In Uk, voluntary guidelines are
provided by the country but not consistently followed
What is the provider perspective?
providers want to minimize costs and maximize profit
QALY considers both...
quality and quantity of life lived
What is an incremental cost?
refers to the difference in costs between options being compared
What is identifying costs used to estimate?
resources used (usually represented as dollars) to provide a good or service
What is an indirect cost?
result from loss of productivity due to illness or death
When is cost standardization used?
retrospective analysis
What are marginal costs?
sometimes used to describe costs to produce one extra unit of outcome or product
INB <0
the alternative intervention is deemed NOT to be effective compared to the standard -the lower the INB, the less favorable the intervention
What is price?
the amount charges to payer (patient, health insurance company, or govt) that pays for a treatment or service
What is cost?
the amount needed for the provider of a service or product to provide that service or product (drug acquisition costs, salaries, materials)
What are inputs?
the cost of providing a product or service
What is the opportunity cost?
the cost of the best option over the next best option -loss of potential gain (the extra cost incurred) from the other options when one option (the more costly one) is chosen
What is pharmacoeconomics?
the description and analysis of costs of drug therapy
What does the IRR always have to be more than?
the hurdle rate
What is the human capital method based on?
the idea that people's time and effort is worth something
What does the equation represent?
the inputs with the outcomes
What does using resources once emphasize?
the need to use analysis to identify the best way to do things
A QALY standardizes...
the outcomes being used to compare different interventions
CUA takes into account...
the utility of an intervention which is a way to measure patient preferences
Why do we standardize costs?
to make sure old numbers aren't used for current calculations
What does the net benefit =
total benefits - total costs
What does the net cost =
total costs - total benefits
Canada has universal HC but not...
universal prescption coverage
What is an incremental cost effectiveness ratio used for?
used to assess one option against another
What is a discounting rate used to calculate?
used to calculate future costs to estimate what they may be as a present value
What is a discounting cost?
used to estimate costs of dollars spent or saved in the future
What is incremental net benefit used for?
used to estimate the value of the health outcome in an incremental analysis
What are PE analyses used to evaluate?
used to evaluate input of healthcare personnel -ex - how many pharmacists are needed for a hospital pharmacy to perform certain services
What is pharmacoeconomics useful for?
useful in helping to determine the added value of one intervention over another
How is the willingness-to-pay method useful?
useful to value both indirect and intangible components of a disease/condition
What is a sensitivity analysis?
uses a range of cost values to determine whether the results of analysis would change if some of the costs changed
How does NICE make recommendations?
using own data and not from manufac
QALY equation
utility for each year of life saved x years of life saved by the intervention
What does the human capital method estimate?
wages and productivity lost due to illness, disability or death
What is the payer perspective?
want to minimize the amount reimbursed or paid out
When is the intervention considered cost-beneficial?
when net benefit > 0 or net cost <0
IRR is usually not. calculated...
without a computer
If a disease is v. bad...
you would be willing to give up more sick years to live only a small amount of healthy yeard
If the disease isn't that bad...
you would not be willing to give up as many years in order to live a smaller amount of healthy years
Which is better: a benefit: cost ratio >1 or <1
Ø>1 is better and the larger the number, the better
What is the hurdle rate for a rate of return?
ØIt's minimal amount of benefit to get a positive internal rate of return ØIn other words, it's the point at which costs=benefits
Why should we do sensitivity analysis when we already have an answer from running a CBA?
ØSensitivity analysis allows us to determine whether varying amounts of costs or benefit results in different conclusions
Open-ended questions
• asks people how much they would be willing-to-pay for the intervention to avoid getting or treat some ill condition
What are some methods of determining the value of a QALY?
•$50,000 per QALY (unknown source) •WHO method: 3x the nation's gross domestic product per capita (~$108,000) •Policy making bodies (like US Congress) •Research articles that use the value society places on the outcome •'Willingness to pay' method •'Contingent valuation' method •'Public valuation' method
Utility score for a "not so bad" disease...
•A not so bad disease would have a higher x giving a ratio of x/t closer to 1 •The disease is tolerable so patients would be willing to live with it and trade less years •In other words, they would be okay living with the disease instead of trading away whatever amount of years of their life to live healthy
What are 2 pros of time trade off?
•Adaptable to many types of disease states •Incorporates time more easily into the decision
What is an advantages of CUA?
•Allows comparison of different types of health outcomes (ie, health states) from different diseases (like symptom free days in COPD or risk of heart attack in HTN or progression free survival in cancer) with one common unit...the QALY
What are 2 pros of willingness to pay?
•Allows determination of a dollar amount on intangible benefits •Incorporates patient preference and choice similar to the free-market system
What are 3 pros of CBA?
•Allows for comparison of many different outcomes (eg, cancer cure, stroke prevention, glucose control in diabetes, etc) as long as they are valued in monetary units •Determines whether the benefit of an intervention outweighs the cost •Enables identification of the intervention with the greatest benefit
What is a cost-effectiveness plane?
•Another graphical representation of cost-effectiveness comparisons between 2 interventions (new alternative vs. standard intervention)
What is an average cost-effectiveness ratio used to measure?
•Another method that may help clear up some confusing conclusions of cost-effectiveness from ICER that used only costs and outcomes •Calculate an average cost of successful outcome for each drug •Takes into account costs for each patient and the number of patients achieving successful outcomes
Why do we need cost-utility analysis?
•But sometimes we get stuck because we have two interventions where one of them gives better outcomes, but also costs more •This leaves us wondering if the additional cost is worth the better outcomes
What does the net benefits (net cost) calculate?
•Calculates the result of cost vs benefit as the difference between the total costs and benefits
What are factors in how to describe a disease?
•Consider factors such as pain, discomfort, restrictions on activities, period of time receiving treatment, or possible anxiety level
What are the pros of standard gambling?
•Considered the "gold standard" for determining utility for a health state due to clear selection of one treatment choice over another
How are different diseases compared using utility?
•Different diseases or conditions can be considered relative to each other (eg, being in a coma versus having seasonal allergies)
What are 3 pros of human capital method?
•Easy to use •Multiple sources available for wages •Days lost to illness are easily measured
What are advantages / disadvantages of using a utility scale?
•Easy to use, but does not consider periods of time easily
What is an example of a limitation of a surrogate outcome?
•Ex. cholesterol levels have been shown to be linked to risk of myocardial infarction or stroke (MI or stroke are primary outcomes) •Use cholesterol level as the surrogate outcome for MI or stroke when measuring the impact of a drug which we are using to help reduce MI or stroke
What are examples of surrogate outcomes?
•Examples: lab value or disease marker such as cholesterol level in patients with high cholesterol or blood pressure readings in hypertension
What is the time horizon and why is it important?
•For any of the formats selected, the time horizon (ie, the period of time over which the analysis covers) is important to identify •May require discounting or adjusting costs and benefits due to changes in dollar values
How are utilities rated?
•For each method, the disease description from step 1 is provided to people •They then rate that disease or condition between 0 to 1 (between death and perfect health) based on how they think the disease impacts their lives •The people have to imagine what it would be like to have that condition
The cost-effectiveness plane has...
•Four quadrants are created by a vertical and horizontal line •Each quadrant suggests a different conclusion about the comparisons of the two interventions based on their costs and effects
What value does time trade off give?
•Gives a value for the quality of life of the years of living with the condition •Equates years willing to give up living in order to become healthy based on the degree of badness of living longer but having the illness
What is the goal of IRR?
•Goal is to find the rate of return such that costs = benefits
What are the benefit/disadvantages of HC professionals?
•Have broader perspective of many different diseases •May not fully appreciate actual discomfort and disability experienced by patients
What is the hurdle rate?
•Hurdle rate is the minimum rate of benefit expected from a project •A project would be acceptable if its rate of return is > hurdle rate •The hurdle rate could be comparable rates of return on something else like interest rates on loans or rate of returns on other investments
How is the monetary value of a QALY helpful?
•Identifying a monetary value of a QALY could help determine how much should be paid (either by insurance companies, the government or patients) to improve one's health
How is time trade off a hypothetical discussion?
•It's a hypothetical discussion in which the time tradeoff comes from the participant being willing to trade years of living with the condition in order to be healthy (ie, living shorter but healthier)
What outcomes are desirable?
•It's desirable to use outcomes that give a good indication of the response to the intervention •Outcomes also need to be measurable
What are limitations of surrogate outcomes?
•Limitations of surrogate outcomes is that they have to have a strong association with the primary outcome
What are the cons of standard gamble?
•Limited by lack of "curability" for many disease states •Ex: Asthma, Alzheimer's, Crohn's, Diabetes, epilepsy, osteoporosis, Parkinson's •Typically requires providing assistance and/or time investment to guide participants though the alternative choices
What is a con of time trade off?
•Limited by lengthy process of repeated questioning to make final decision
What does time trade off measure?
•Measures the quality of life a patient could be experiencing with a certain disease
What are the benefit/disadvantages of patients with disease?
•Most likely to understand what its like to go through the disease •Potential for bias toward their disease compared to other diseases
What is a CBA used for?
•Need to figure out how to use all the information and make a decision about the value of the intervention
What does a negative ICER indicate?
•Negative ICER ratio indicates the dominant option is more effective and less expensive than the dominated option (-/+=-)
When are caregiver participants often used?
•Often used in disease (eg. Alzheimer's) or ages (young kids) in which the patients could not provide input
How is utility score calculated with time trade off?
•Once the location for x is finalized by "trading" years for health, the utility score for the health state is then calculated as x/t (ex. 15 years left after trading t-x years/25 years they would otherwise live with the disease=0.6)
List 4 ways to conduct willingness to pay
•Open-ended question •Closed-ended question •Bidding game •Payment card
How are participants presented information int TTO?
•Participants are told to pretend they have a disease and are given the choice of 2 alternative scenarios based on the disease or condition •Alternative 1: having the disease state for a specific length of time t, based on the life expectancy of a typical patient with the disease •Alternative 2: becoming healthy for at least some time (x), which is less than t because you would have to trade life years to become healthy
What does a positive ICER indicate?
•Positive ICER ratio indicates the dominant option is more expensive and more effective and the ICER can be used to calculate the magnitude of the additional cost for each benefit gained (+/+=+)
What do primary (aka final) outcomes include?
•Primary (aka final) outcomes include assessment of terminal points of treatment (eg, cure of disease, eradication of infection, life years saved) •These types of outcomes are preferred, but not always possible to collect due to limitations of time or financial resources
What are 3 methods of determining utilities?
•Rating scale •Standard gamble •Time tradeoff
What does the standard gamble method use to determine utility?
•Requires each participant to make a decision between two alternative health states (ie, outcomes) from different interventions •Choice 1: will either return to perfect health with the intervention (ie, best outcome) or could suffer immediate death (ie, worst outcome) •Choice 2: would have the chronic disease for the rest of your life
Utility score for a bad disease...
•So a bad disease would have a low x giving a ratio of x/t closer to 0 •It's so bad that patients would be willing to trade off more years to be healthy •In other words, they would rather live less time healthy than longer with the disease
Examples of PE analysis: is the product or service worth the outcome?
•Study the cost-effectiveness of using atorvastatin in patients with hypercholesterolemia to reduce the incidence of strokes and heart attacks •Study the cost-effectiveness of administering the flu vaccine to a population of patients •Determining whether use of dasatinib or another drug is more cost-effective in managing patients with CML •Evaluating the cost-benefit of using a dedicated pharmacist to teach asthma patients how to properly use their inhaler •Assessing the cost-minimization of having a pharmacist, tech, or computer from a clinic call patients to remind them to refill their diabetes medications every 90 days
What are surrogate (aka intermediate) outcomes?
•Surrogate (aka intermediate) outcomes are often used in place of primary outcomes •Typically easier to measure •Lots of choices •Related to disease or condition
What does the internal part ignore?
•The 'internal' part ignores other factors such as inflation or external costs
How is probability used in standard gamble?
•The probability of achieving normal health in alternative 1 is assigned a number, p (and the probability of death would be 1-p) •The value of p is then varied (up or down between 0-1) until the participant is unable to decide between treatment alternatives 1 and 2
How are outcomes adjusted in cost-utility analysis?
•Type of cost-effective analysis in which outcomes are typically assessed using quality adjusted life years (QALY)
What is the ultimate choice of participant often dependent on?
•Ultimate choice often dependent on perspective of analysis and availability •'Society' perspective may be best served by people from general public even though the average person may not understand all the disease details •Health care professionals are usually the most easily accessible
How do you use a linear score for utility?
•Uses a linear scale from 0-100 •Then divide score by 100 so rating is between 0-1
How is X adjusted in time trade off?
•X is then ↑ or ↓ by the researcher based on the participant's answers until a point is reached where he/she can't decide (ie, becomes indifferent) between the two options of living sick or living less time but healthy
So at a starting point of X...
•healthy years after making the trade) is selected for the participant to decide whether its worth trading some sick years of life in order to live the amount of healthy 'x' years OR to live longer but stay sick
What is the internal rate of return?
•is equal to the present value of benefits compared to the present value of costs
close-ended questions
•people asked whether they would or would not pay a specific amount for the intervention •(ex. Would you pay $100 to avoid getting the flu; YES or NO)
bidding game
•resembles an auction in which an initial bid is subsequently ↑or ↓ based on the person's response to get to a maximum value •(ex. if you would pay $100 to avoid the flu, would you pay $150? $175? $200?...
payment card
•the person selects one value from a list of possible amounts •aka multiple choice (ex. how much would you pay to avoid the flu: A) $50 B) $75 C) $100 D) $200