Presenter: Chris Cameron CANNeCTIN November 8, 2013

A Primer on Health Economics & Integrating Findings from Clinical Trials into Health Technology Assessments and Decision Making

Acknowledgements
Vanier Canada Graduate Scholarships (Vanier CGS)
Canadian Institutes of Health Research (CIHR) CANNeCTIN University of Ottawa Dr. George Wells, Dr. Doug Coyle, and Dr. Tammy Clifford Drug Safety and Effectiveness Network (DSEN) University of Ottawa Heart Institute

Health Economics General Concepts

Economics is the study of unlimited needs/wants constrained by a limited number of resources (scarcity)

Choices need to be made For each choice that is made there is an opportunity cost associated with it

Opportunity Cost in Health Care

Similar principles apply when considering health technologies Since we are not able to pay for all health technologies, we need to make choices

In doing so, we need to know whether a health technology is worth the cost

Health Economic Evaluation

Provide a measure of value for money Comprised of two concepts:
1. Cost 2. Clinical / health effects

Systematic way to compare health technologies

Comparing Health Technologies

Increase in total costs (+)
Status quo better than Health Technology A Consider cost effectiveness

Decrease in total costs(-)

?
Consider cost effectiveness Reduced clinical benefit (-) 0

Health Technology A Better than status quo

Improved clinical benefits (+)

O =what health technology is compared to (e.g., status quo)

Health Economic Evaluations

Typically reported as a ratio (cost effectiveness):
Incremental Total Cost A Total Cost B Cost Effectiveness = of Health Effect A Effect B Technology A versus Health Technology B

Cost-Effectiveness Analysis
Incremental Cost Effectiveness = of Health Technology A versus Health Technology B Total Cost A Total Cost B Effect A - Effect B

-In terms of clinically meaningful outcomes e.g., survival, fracture, infection avoided.

Cost-Utility Analysis
Total Cost A Total Cost B QALY A - QALY B

Incremental = Cost Effectiveness of Drug A versus Drug B

Drug impacts patients quality of life or meaningful outcomes that in turn affect quality of life

What is a Quality Adjusted Life Year (QALY)?

Outcome measure that incorporates both quantity of life (mortality) and health-related quality of life (morbidity) Quantity how long person lives Quality factor that represents a preference for a health state

one year of perfect health = one QALY one year less than perfect health < one QALY death = zero

Cost-Utility Analysis
$50,000 $37,500

Incremental = Cost Effectiveness 0.9 QALYs-0.8 QALYs of Drug A versus Drug B

= $125,000 per QALY gained

What Constitutes Good Value for Money?

Cost-effectiveness threshold: maximum that a decision maker is willing to pay for one qualityadjusted life Cost-effectiveness threshold is not empirically estimated in Canada range of $20,000-$100,000 per QALY (Canada) range of 20,000 to 30,000 per QALY (United Kingdom) Not a cost-effectiveness threshold per se but rather a range of threshold values that may be considered acceptable depending on the context

Value for Money?

Incremental Cost

ICUR= $125,000 per QALY

$12,500

Cost-effectiveness threshold of $50,000 per QALY gained

$5,000
ICUR= $25,000 per QALY

$2,500 0.05
QALYs gained

0.1
Net Health Benefit -0.15 QALYs

0.25

Net Health Benefit 0.05 QALYs

Other Issues to Consider when interpreting Cost per QALY

Disease severity (e.g., terminally ill) Benefits in compliance with treatment (difficult to capture) Unmet need Treatment for which limited options are currently available Benefits beyond those to the health care payer (lost productivity, caregiver time)

A QALY Is a QALY Is a QALY Or is it?

Health Technology Assessment

Technology assessment in health care is a multidisciplinary field of policy analysis. It studies the medical, social, ethical, and economic implications of development, diffusion, and use of health technology (International Network of Agencies for Health Technology Assessment)

Terminology - HTA, EBM, & CER

HTA Products in Canada

Single HTA

Multi-HTA

Time & Effort

Health Economic Components

Review of Published Economic Studies Critical Appraisal of Manufacturers Pharmacoeconomic Submission Primary Health Economic Evaluation Budget Impact Analysis

Review of Published Economic Studies

Review of Submitted Pharmacoeconomic Evaluation

Model & Pharmacoeconomic Report

Decision Modeling & Primary Economic Evaluation

Introduction
Self-monitoring of blood glucose (SMBG) has unclear benefits in patients with type 2 diabetes who do not use insulin Significant expenditure on blood glucose test strips Blood glucose test strips are among the top five classes in terms of total expenditure, with costs exceeding those for all oral antidiabetes drugs combined Over 50% is expended on patients who are not using insulin Decisions regarding the prescribing and reimbursement of blood glucose test strips require consideration of both clinical and cost-effectiveness information

Methods
Incremental cost-utility analysis using United Kingdom Prospective Diabetes Study (UKPDS) Outcome Model Clinical inputs were obtained from a systematic review and meta-analysis of RCTs comparing SMBG with no self-monitoring Costs and utilities were obtained from published sources The perspective of this analysis was that of a Canadian publicly-funded Ministry of Health. Sensitivity analyses were performed to examine robustness of cost-effectiveness results.

Clinical Trial Data

Clinical Trial Data

Base Case Results

Cumulative incidence(%) in no selfmonitoring of blood glucose arm Myocardial infarction Ischemic heart disease Heart Failure Stroke Amputation Blindness End-stage renal disease 36.58% 13.12% 17.64% 16.34% 3.55% 8.69% 2.29% Cumulative incidence(%) in self-monitoring of blood glucose arm ARR (%) NNT

36.21% 13.04% 17.20% 16.14% 3.34% 8.49% 2.21%

0.38% 0.09% 0.44% 0.20% 0.21% 0.19% 0.08%

266 1,136 228 500 467 518 1,299

Base Case Results (continued)

No SMBG SMBG Difference Between SMBG and No SMBG 0.02385 $2,711 $113,643

Quality-adjusted life-years gained* Total direct costs [C$]*

7.298 $27,997

7.322 $30,708

Incremental cost per QALY gained (ICUR)*

= difference; ICER = incremental cost-effectiveness ratio; ICUR = incremental cost-utility ratio; QALY = quality-adjusted life-year; SMBG = self-monitoring of blood glucose. *Discounted at 5% per year. Cost in $C per incremental life-year gained. Cost in $C per incremental quality-adjusted life-year gained.

Sensitivity Analysis
ICUR (C$/QALY) Reference Case $113,643/QALY

Lower limit of 95% CI for WMD in A1c from 7 RCTs (A1c=-0.39%)

Upper limit of 95% CI for WMD in A1c from 7 RCTs (A1c=-0.15%) Price per test strip reduced by 25% (C$0.55/strip) Price per test strip reduced by 50% (C$0.36/strip) Price per test strip reduced by 75% (C$0.18/strip) History of diabetes-related complications reflective of patients in DICE study and Canadian diabetes atlases

$77,706/QALY
$189,376/QALY $86,129/QALY $58,615/QALY $31,101/QALY $89,656/QALY

SMBG <1/day, (A1C=-0.20%; frequency= 0.77 SMBG/day)

SMBG 1-2/day, (A1C=-0.26%; frequency= 1.46 SMBG/day) SMBG >2/day, (A1C=-0.47%; frequency= 3.5 SMBG/day) Baseline A1c< 8.0% (WMD in A1C%=0.16%, Baseline A1C=7.5%) Baseline A1c, 8.0 to 10.5% (WMD in A1C%=0.30%, Baseline A1C=8.7%) Patients using OAD(s) Patients using diet only therapy

$81,654/QALY
$122,416/QALY $169,120/QALY $213,503/QALY $94,443/QALY $91,724/QALY $292,144/QALY

Primary Economic Evaluation Blood Glucose Test Strips

Over $330 million expended annually 50% is for patients not using insulin Top five class in terms of total expenditure in drug plans

~ $1/day in patients not using insulin

Modest clinical benefits in patients not using insulin in non-industry sponsored RCTs Frequent use (>1 per day) not cost-effective in patients not using insulin - incremental cost per QALY of $113,643 per QALY Reduced price of strips or frequency (e.g., 1 or 2 per week) would improve cost-effectiveness

Cost effectiveness vs Budget Impact Analysis

Cost effectiveness helps us assess whether a health technology is worth the cost provides good value for money
Cost effectiveness does not provide information on affordability, i.e., can we afford it A health technology might be cost effective but the financial impact to a drug plan may be such that it cannot list the health technology Affordability decisions are made by the participating decision makers based on their budgets and priorities

Cost effectiveness vs Budget Impact Analysis

Question Goal Unit BIA Is it affordable? Plan financial impact (cost containment) Entire Population CEA Is it good value for money? Economic efficiency (max. health with resources) Individual Usually broader (health system costs) Included Incr. cost per unit of outcome

Scope of Costs Narrow perspective (decision-maker costs) Health Excluded Outcomes Measure Total expenditure ($)
Market dynamics Usually included

Usually not modeled

Usually longer (lifetime?)

Time Horizon Usually short (1 5 years)

Budget Impact Analysis: Can we afford not to?

Rising Costs of Test Strips

Budget Impact of Test Strips

Could the money be better spent?

2,200 nurses
OR

The >$150 million spent annually on blood glucose test strips among patients with type 2 diabetes who are not using insulin could be used to pay for

2,800 dieticians/ nutritionists

OR

Universal coverage of insulin for all patients with type 1 diabetes in Canada.. and then some.

OR

All oral Diabetes medication

Primary Economic Evaluation & Budget Impact Example

Opportunities for enhancing the role of Health Economic Evaluation and HTA in Canada
Proximity to Decision Application of payer-specific data Opportunity to integrate HTAs Larger role for sub-group analysis

Measure impact of HTAs

Proximity to Decision
Evidence Generation & Synthesis globalize the evidence, localize the decision Decision Making

HTA Report & Decision HTA Report & Recommendation HTA Report

Payer-specific Data
Payer specific prices
Incorporate local clinical/epidemiological data into HTA More accurate estimates of budget impact Contextual issues

Integrating Health Technology Assessment(s) vs. One-off HTA(s)

# of disease areas considered simultaneously

# of health technologies considered simultaneously

Assessment of one technology in one disease area

Assessment of multiple technologies in one disease area Assessment of multiple technologies in multiple disease areas

Assessment of one technology in multiple disease areas

More seamless integration of evidence along the continuum

Seamless integration of network metaanalysis with economic analysis Value-based pricing Managed entry agreements Research Prioritization

Enhanced role of sub-group analysis

Studies typically report mean or average effect estimates. However, there are individuals on both sides on the mean those who benefit more and those who benefit less (in some cases those who dont benefit at all).

Conveying Opportunity Costs of Decisions

2,200 nurses
OR

The >$150 million spent annually on blood glucose test strips among patients with type 2 diabetes who are not using insulin could be used to pay for

2,800 dieticians/ nutritionists

OR

Universal coverage of insulin for all patients with type 1 diabetes in Canada.. and then some.

OR

All oral Diabetes medication

Current Challenges with applying Health Economic Evaluation and HTA in Canada
Health economics capacity in Canada Issues not captured in a QALY Prioritization of HTA Topics & Level of effort of Health Economic Evaluation Perspective of HTA Coordination of HTA & Health Economic Evaluations in Canada

Decision Modeling & Health Economics Capacity in Canada

Expertise in Decision Modeling & Health economics limited in Canada Recruitment and retention is a challenge in Canada
Capacity within HTA units often requires a blend of internal health economist(s) expertise and external contractors

Government & QuasiGovernment

Universities

Pharmaceutical & Biotech Sector

Healthcare Consulting

Insurance Industry

Prioritization of HTAs and level of effort devoted to Health Economic component

Big Ticket Health Technologies

Devices

Time & Effort

Drugs

Primary Economic Evaluation & Budget Impact Analysis

Procedures

Critical Appraisal of Pharmacoeconomic Submission (if applicable) Review of Published Economic Studies and/or rapid budget impact analysis

Small Ticket Health Technologies

Prioritization Criteria

Incorporating items not captured in a QALY

Disease severity (e.g., terminally ill) Benefits in compliance with treatment (difficult to capture) Unmet need Treatment for which limited options are currently available Benefits beyond those to the health care payer (lost productivity, caregiver time)

A QALY Is a QALY Is a QALY Or is it?

Incorporating elements not captured in QALYs

Emerging Approaches for formally incorporating these elements

Breaking the silos- Enhanced Pan-Canadian Coordination

- Budget impact/Affordability - Price Negotiation - Managed Entry Agreements

Other Health Technologies?

- Efficacy versus Tx - Cost-effectiveness versus Tx

- Efficacy versus placebo - Safety

Purchasing & Price Negotiation Power

Perspective of Evaluation
Payer Considerations Health System or Societal Considerations

- 2,000 new taxi cabs licences In New York City - Generate one time $ 1 Billion US

- Catch taxi quicker but in taxi longer

- $500 million a year in lost time

Summary & Conclusions

Clinical trial and epidemiological data form the foundation for health economic evaluations Health economics is an essential component of HTA There are several health economic methodologies that are applicable for decision making There are opportunities for improving the application of health economic evaluation and HTA in Canada There are also challenges but these challenges are not insurmountable

Questions?
cgcamero@gmail.com

What is a network meta-analysis?