Economics Evaluation

Faculty of Public Health,

University of Muhammadiyah Jakarta
Ridhwan Fauzi, MPH
ridhwan.fauzi@hotmail.com
08121914211
 Ilustrasi
• Seorang kepala keluarga dengan status ekonomi
menengah mengalami sakit demam. Dokter di
puskesmas menawarkan dua alternatif obat
untuk terapi
– Obat A memiliki harga lebih mahal tapi waktu
penyembuhan relatif singkat (2-3 hari)
– Obat B memiliki harga lebih murah tapi waktu
penyembuhan lebih lama (1 minggu)
• Obat mana yang harus dipilih oleh kepala
keluarga tersebut?
 Evaluasi Ekonomi
• Sumber daya sangat terbatas bahkan di negara
maju
• Evaluasi ekonomi digunakan untuk memberi
insight bagi pengambil kebijakan dalam
penggunaan dan pengalokasian sumber daya.
 Evaluasi Ekonomi
Economic evaluation is “The comparative analysis of
alternative courses of action in terms of both their
costs and consequences in order to assist policy
decisions” (Drummond 1997).
Program Konsekuensi
Biaya

Pilihan Input Proses Output

Biaya
Pembanding Konsekuensi
 Purpose
• To compare alternative courses of action that
are solutions to the same problem.
• Link the alternative courses of actions’ inputs
and outputs and provide a comparative
analysis of alternative courses of action in
terms of the value of their inputs and outputs.
 Tahapan Evaluasi Ekonomi
• MengidentifikasiMengukurMenilai/meng
hitungMembandingkan biaya dan
konsekuensi (efek) dari beberapa alternatif
yang dibandingkan

Identify Measure Value Compare

 Benefit Categories

Intervention

Direct Benefits Indirect Benefits

Reduced health
Improved Family and
services Savings in
patient health friends quality
resource use productivity.
status / utility. of life.
eg. LoS.
 Cost Analysis
• Estimates total program costs and determines
who incurs those costs
• Includes both financial and economic costs.
– Financial costs show up on a budget sheet.
– Economic costs include in-kind services.
 Cost Analysis (1)
Financial Costs:
• Expenditures for resources to implement the
program based on market prices.
• Often in the budget proposal.
• Convenient, sometimes incomplete, measure
of costs.
– Examples: Salaries for project personnel, Supply
costs, Computer purchases, Cost of curriculum
materials.
 Cost Analysis (2)
Economic Costs (Opportunity Costs)
• Value of the lost benefit because the resource
is not available for its next best use.
• A resource’s cost = the sacrifice necessary to
obtain goods or services.
– Examples: Volunteer time, Donated space.
• Shadow prices may be used when market
price does not accurately reflect the value of
the good.
 Cost Categories
Intervention

Direct Cost Indirect Costs

Health services Non-health

Wider cost
resource use. services resource
implications to Costs to family
Eg. Inpatient, use. Eg. patient
society eg. lost and friends.
outpatient, tests, transportation,
production.
drugs informal care

• Which to include depends on perspective taken

 Determine forms of evaluation
2. Are at least 2 alternatives compared?

1. Are both costs (inputs) and consequences (outputs) examined?

NO YES

Examines only Examines only

consequences costs
NO 2 PARTIAL EVALUATION
1A PARTIAL EVALUATION 1B
• Outcome • Cost description. • Cost-outcome description.
description.
3A PARTIAL EVALUATION 3B 4 FULL ECONOMIC EVALUATION
• Efficacy or • Cost analysis.
YES
effectiveness • Cost-minimisation analysis.
evaluation. • Cost-effectiveness analysis.
• Cost-utility analysis.
• Cost-benefit analysis.
 Method of Analysis
• The choice of method of analysis depends on
the research question and must be justified
 Cost Minimisation Analysis
• The cost-minimisation analysis may be called
cost outcome analysis, programmatic analysis,
or cost consequence analysis.
• It is an economic study in which two or more
therapeutic alternatives with the same
effectiveness or efficacy are compared in
terms of net costs in order to establish the
cheapest alternative.
 Cost Benefit Analysis
• The cost-benefit analysis assesses all effects,
including health effects, in monetary units.
• The disadvantage of the cost-benefit analysis
is that a monetary assessment of clinical
results must be made even though
methodologically this is difficult to perform.
 Cost Benefit Analysis (1)
• Compares costs and benefits of an intervention.
– Standardizes all costs and benefits in monetary terms.
• Lists all costs and benefits over time:
– Can have different time lines for costs and benefits.
– Can include non-health benefits.
• Used primarily in regulatory policy analyses.
– Clean Water Act, Clean Air Act.
• Increasingly applied to public health
 Cost Benefit Analysis (2)
• Benefit-cost ratio (B/C).
– Very popular with stakeholders.
– For every dollar spent on X, you will save Y
dollars.‖
– Implement if B/C ratio > 1.
• Net benefit (B – C).
– Subtract costs from benefits.
– Implement if net benefit > 0
 Cost Effectiveness Analysis
• Estimates costs and outcomes of
interventions.
• Expresses outcomes in natural units.
– e.g., cases prevented, lives saved.
• Compares results with other interventions
affecting the same outcome.
 Cost Effectiveness Analysis (2)
• Intermediate outcomes:
– Increased physical activity.
– Decreased blood pressure.

• Final outcomes:
– Heart disease cases prevented.
– Lives or life years saved.
 Cost Effectiveness Analysis (3)

C/E ratio = net cost/net benefits

Net cost = positive cost + negative cost

Net benefit = positive benefit + negative benefit

Negative cost = cost saving, eg reduced LoS

Negative benefit = reduced health, eg adverse event

 Decision Rules: CEA
CEA result = CEI (c/e). eg cost per LY gained
Decision rule = adopt lowest CEI
Application = technical efficiency
Qst addressed = “Should we undertake program
“X” or program “Y” to treat condition “A”?
 Cost Utility Analysis
• Same principle as Cost Effectiveness Analysis
• Costs are assessed in monetary units and the
benefit is measured as a non-monetary but
utility-adjusted outcome
• Combines life expectancy and quality of life.
• Compares disparate outcomes in terms of utility
(interventions obesity, nutritional outcomes, and
cardiovascular disease).
– Quality-adjusted life years (QALYs).
– Disability-adjusted life years (DALYs).
 Cost Utility Analysis (1)
• Utilities, or preference weights, are:
– A quantitative approach for describing preferences
for quality of life.
– Typically based on a 0 to 1 scale, where:
QALYs
0 = death. 1 = perfect health
DALYs
1 = death. 0 = perfect health
CUA Weight Resources
 Selected Disability Weights: WHO Global
Burden of Disease 2000 Study
Mortality (the highest weight) =1 (1)
Diarrheal disease ~ 0.11 (0.061-0.281)
Upper respiratory infection ~ 0.26
Lower respiratory infection ~ 0.28
Untreated HIV (not yet AIDS) ~ 0.14 (0.221)
Untreated AIDS ~ 0.51 (0.547)
Tuberculosis ~ 0.27 (0.331-0.399)
Symptomatic COPD ~ 0.17-0.32 (0.192=0.383)
Stroke: Acute ~ 0.92, Long-term ~ 0.27 (0.021-0.567)
Congestive heart failure ~ 0.25 (0.037-0.186)
Terminal cancer ~ 0.81 (0.508-0.519)
Blindness ~ 0.51-0.60 (0.195)
Unipolar/bipolar depression or schizophrenia ~ 0.30-0.57 (0.159-0.756)
Burns >60% of body ~ 0.26
Amputation of leg ~ 0.30 (0.021-0.494)
• Note: Disability weights are revised sometimes, and not all organizations use the same
weights in calculating disease burden.
 Disability-adjusted life-years lost
(DALYs)
• When we consider burden of disease in the population, we consider
frequency, severity, and duration of disease.
• The DALY is the major unit of disease burden in the WHO Burden of
Disease studies.
• Rationale: People can lose years of life because they die
prematurely. They can also lose years of healthy life because they
have disease or disability, even though they do not die.

Abbreviations:
DALY = Total Disability-adjusted life-years lost
YLL = Years of Life Lost (due to mortality)
YLD = Years Lost due to Disability (illness and injury)

DALY = YLL + YLD

 Calculation of DALY
A. 100,000 infants (<1 year old) are affected for 1 week with an illness
that has a disability weight of 0.3. Also, 2% of these 100,000 children
die at 1 year old. Assume that life expectancy at 1 year old is 80 years.

DALY = YLL (= 100,000 x .02 x 80) +

YLD (=100,000 x (7/365) x 0.3) =
160,000 + 575.3 = 160,575.3

B. 100,000 adults <80 years old are affected for 2 years with an illness
that has a disability weight of 0.6. Also, 20% die at 80 years old.
Assume that life expectancy at 80 years old is 8 years.

DALY = YLL (= 100,000 x .20 x 8) +

YLD (=100,000 x 2 x 0.6) =
160,000 + 120,000 = 280,000

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 Quality Adjusted Life Years (QALYs)
Adjusts data on quantity of life years saved to
reflect a valuation of the quality (or utility, ie,
consumer’s preferences) of those years:
• If healthy: QALY = 1
• If unhealthy QALY < 1
 Calculation of QALYs
• A new medical treatment has become available which will improve
the health of post-stroke victims, but will increase the number of
deaths
• Assume:
– New medical treatment costs same as current medical
treatment
– 100 people will suffer from stroke
– Each individual has a 30 year life expectancy
– There are 3 health states
• Dead (utility = 0)
• State X (utility = 0.5)
• Good health (utility = 1.0)
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 Calculation of QALYs (1)

Treatment No Death No State X Death

Current 10 80 10
New Drug 60 20 20

Current
= (80 x 0.5 x 30) + (10 x 1 x 30) = (1,200 + 300) = 1,500
New medical treatment
= (20 x 0.5 x 30) + (60 x 1 x 30) = (300 + 1,800) = 2,100

QALY gain = 2,100 - 1,500 = 600

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 Conclusions
• Economic evaluation is valuable to decision-
making and in setting health policy.
• Economic evaluation is both art and science.
• Economic evaluation can help prioritize
resources.
• For researchers in public health and
prevention, this is an important component of
program evaluation.
• Demand for these analyses is growing.