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Inaugural KEYSTONE Course on Health Policy and Systems Research 2015

Economic Evaluation

Economic EvaluationEconomic Evaluation

Keystone HPSR CourseKeystone HPSR Course

2525thth Feb 2015 Feb 2015

New DelhiNew Delhi

OverviewOverview

• Efficiency concept

• What is an economic evaluation?

• Types of economic evaluation

• Interpreting the results of an economic evaluation

• How can economic evaluation guide policy?

• Illustrations

BackgroundBackground

• Resource scarcity

– Routine health system: Resource envelope under NHM– Hospital budgets: resource based rather than need based

• Opportunity Cost

• So, how do you make choices?

– Precedence– Disease burden and effectiveness of interventions– Cost effectiveness of interventions

EfficiencyEfficiency

Investing resources to get best value for money

How to Assess Efficiency?

Economic Evaluation

The comparative analysis of alternative courses of action in terms of both their costs and

consequences

Source: Methods for the economic evaluation of health care programmes Michael F. Drummond, 2nd edition, 1997

What is economic evaluation?

Does a medical intervention (drug, device, program,

surgery) when used to prevent or treat a condition or

improve health outcomes in patients, justify

the additional dollars spent compared to the existing

medical strategy?

Costs A

Costs B

Programme A

Programme B

Consequences A

Consequences B

ChoiceChoice

No

No Yes

Examines only consequences

Examines only costs

Outcome Description Cost Description Cost Outcome

description

Yes

Efficacy or Effectiveness

EvaluationCost Analysis

Full Economic Evaluation

Cost Effectiveness AnalysisCost Utility AnalysisCost Benefit Analysis

Is there a comparison of tw

o or more

alternativesAre both the costs (inputs) and consequences (outputs) of the

alternatives examined?

Health Care Evaluation

Perspectives in economic evaluation

• Patient or client perspective

• Health System/ Donor perspective

• Societal perspective

Outcome Assessment

Type of economic evaluationType of economic evaluation Outcome can be measured byOutcome can be measured by

Cost effectiveness analysis • Clinical end points• Mortality• Years of life• Condition specific outcome measures

Cost utility analysis • Utility based quality of life scales(DALY, QALY)

Cost benefit analysis • Monetary value of health benefits

Cost Minimization analysis: Least cost with same effects

Health care sector – C1

Resource consumed

Other sector – C3

Patient and family – C2

Health care programme

Other values created (v)

Health state changed

Effects (E)

Resources saved

Health care sector – S1

Patient and family – S2

Other sector – S3

COSTS CONSEQUENCES

Total cost = C1+C2 + C3 –(S1+S2+S3)

Cost-effectiveness analysis

C1+C2 + C3 –(S1+S2+S3) /E

•Life years saved

•Mm Hg BP reduced

•Number of patients treated successfully

Health care sector – C1

Resource consumed

Other sector – C3

Patient and family – C2

Health care programme

Other values created (V)

Health state changed

Effects (E)

Resources saved

Health care sector – S1

Patient and family – S2

Other sector – S3

Health state preference (U)

COSTS CONSEQUENCES

Cost-utility analysis

C1+C2 + C3 –(S1+S2+S3) /U

•Quality adjusted life years (QALYs)

Health care sector – C1

Resource consumed

Other sector – C3

Patient and family – C2

Health care programme

Other values created (V)

Health state changed

Effects (E)

Resources saved

Health care sector – S1

Patient and family – S2

Other sector – S3

Monetary value (Rs) of health benefits

COSTS CONSEQUENCES

Cost-benefit analysis

[W+V+S1+S2+S3] – [C1+C2+C3)

Programme A

Programme B

Choice

Costs A

Costs B

Effects A

Effects B

CB – CA / EB - EA = Incremental cost effectiveness

Average cost effectiveness A = CA / EA

Average cost effectiveness B = CB / EB

Average & Incremental Cost Effectiveness Ratio

+-

+

-

O

IV

IIIII

ICost difference

Effect difference

Less effective More costly

Less effective Less costly

More effective Less costly

More effective More costly

200 300

1,00,000

2,00,000

100

Cost –effectiveness plane

x

y

●

●

●

Excluded

Questionable

Dominant

Cost-effective ? Less effective More costly

Interpretation of ICERInterpretation of ICER

• < GDP per capita : Very cost effective

• 1-3 times GDP per capita : Cost effective

• >3 times GDP per capita : Not cost effective

Examples for Illustration

India’s female sex worker HIV prevention India’s female sex worker HIV prevention programprogram

Prinja S, et al. Sex Transm Inf. 2011; 87: 354-61.

Incremental Cost Effectiveness Ratio (ICER) Value

Government perspective

USD per DALY averted 819

USD per life year gained 885

USD per Hib case averted 115

USD per Hib death averted 26,004

Societal perspective

USD per DALY averted 277

USD per life year gained 300

USD per Hib case averted 39

USD per Hib death averted 8,809

Hib vaccine in UIP: Haryana state, India Hib vaccine in UIP: Haryana state, India 19

Gupta M, Prinja S et al. Health Policy and Planning (2012).

Cost Effectiveness of IMNCI program in IndiaCost Effectiveness of IMNCI program in India

Prinja S, et al (2015). Unpublished

Incremental Cost

ICER, using different Perspective for ICER

Health system Societal

Per illness averted 1699 1183

Per infant death averted 49963 34799

Per DALY averted 1554 1082

How Can CEA Guide Policy?How Can CEA Guide Policy?

How Can CEA Guide Policy?How Can CEA Guide Policy?

How Can CEA Guide Policy?How Can CEA Guide Policy?

Does Using EE violates Equity?

• Maybe yes!

• Maybe no!

• But then what do we do?

Conclusion

• Introduction to efficiency and economic evaluation

• Efficiency should be an important consideration for planning and implementation of health programs

• Cost effectiveness analysis helps in making efficiency decisions

• Incremental cost effectiveness ratio is the key output measure

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