Assessing cost-effectiveness

– what is an ICER?- Increme

ntal analysis

Usa Chaikledkaew, Ph.D.

 Outline
 How to conduct health economic ev
aluation results?
 What is an Incremental cost-effectiv
eness ratio (ICER)?

2
What is health economic evaluation?

Costs Outcomes
Refers to a study that cons
iders both the comparativ
e costs associated with tw
o or more health care inte LYGs
rventions, and the compar $ QALYs
$
ative clinical effects, meas
ured either in clinical units
, health preferences, or m
onetary benefit

Source: Drummond et al, 2005 3

 What Counts As An Economic Eval
uation?
COSTS (INPUTS) AND CONSEQUENCES
(OUTPUTS) EXAMINED?
No Yes
No Outcome Cost Cost-outcome
COMPARISON description description description

OF TWO OR Yes Outcome Cost analysis Full economic

MORE analysis evaluation
ALTERNATIVES?

Source: Drummond et al, 2005 4

 Economic Evaluation Methods
Methods Cost Outcome Results
Cost-Minimization
Analysis (CMA)
฿ Usually clinical values
(Assume to be
Cost per case

equivalent in
comparable groups)

Cost-Benefit ฿ ฿ Net benefit

Analysis (CBA) Benefit-to-cost ratio
Return on investment
(ROI)

Cost-Effectiveness ฿ Clinical values ICER (cost per LYG)

Analysis (CEA) Life year gained (LYG)
Cost-Utility
Analysis (CUA)
฿ Quality-adjusted life
years (QALYs)
ICER (cost per QALY)

5
 Incremental cost-effectiveness ratio (ICER)

(cost of treatment A) – (cost of treatment B)

(clinical success treatment A) – (clinical success treatment B)

Or (cost of treatment A) – (cost of treatment B)

(LYG A – LYG B)

Or (cost of treatment A) – (cost of treatment B)

(QALY A – QALY B)

The cost that on average needs to be sustained to obtai

n “an additional success” 6
 Cost-effectiveness threshold or WTP
 UK: < £30,000 per QALY gained
 USA: < $50,000 per QALY gained
 Countries in the World: < 3 x GDP per DALY a
verted
 Thailand: < 1.2 GNI per capita per QALY gain
ed (160,000 THB)

Source: (1) Devlin, N. and Parkin, D. Health Economics, 2004; 13: 437-452.
(2) Towse, A., Devlin, N., Pritchard, C (eds) (2002) Cost effectiveness thresholds: economic and ethical
issues. London: Office for Health Economics/King's Fund.
(3) Thavorncharoensap et al. Assessing a societal value for a ceiling threshold in Thailand. 2013.
Health Intervention and Technology Assessment Program (HITAP), Ministry of Public health, Nonthaburi,
Thailand. 7
How to conduct health econ
omic evaluation results?

8
 PE/HEE Study Designs
9

1. Prospective: alongside clinical trial

2. Model based

Combining different sources e.g. a model, based

on input from clinical trials, retrospective data, e
xpert opinion.
1.1 Decision trees
1.2 Markov models

9
How to conduct HEE results?
Define the problem

Identify the alternative interventions

Identify and measure cost and outcomes

Value costs and effectiveness

Interpret and present results

10
 Example

Source: Thavorn et al. Tobacco Control 2008;17:177–182. doi:10.1136/tc.2007.022368

11
Define the problem

 Perception of the pr
oblem
• Specific intervention
• Specific strategy
• Specific drug
• Specific surgical pro
cedure

12
Define the problem
 Selection of objectives
• A decision must be made
about how cost-effective
ness will be evaluated.

13
 Define the problem

 Perspective
• Patient
• Provider
• Third Party Payer
• Healthy System
• Public/Government
• Societal
14
 Cost Valuation by perspective
Category Subcategory Patient Provider 3rd -party Health Public/ Societal
payer system government
Direct Treatment/ charge cost Reimburse - cost cost
medical health care: Copay
Study setting premium
Other health charge - -/+ charge charge charge
facilities reimburse
Direct Personal charge - - - - charge
non facilities
medical
Travel charge - - - - charge
Food charge - - - - charge
House charge - - - - charge
Time loss income loss - - - - Productivity cost
Informal care income loss - - - - Productivity cost
Personal care charge - - - - charge
Indirect Morbidity cost income loss - - - - Productivity cost
Mortality cost income loss - - - Productivity cost
Other Welfare travel/food/ - -/+ - cost cost
sectors fee/material reimburse
P.15 Education travel/food/ - -/+ - cost cost
fee/material reimburse
Identify the alternative interventions

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 Choice of comparator(s)
• An intervention should be compared to the comparator (s) which
is most likely to be replaced by the intervention in real practice
• Current practice may be :
• The most effective clinical practice
• The most used practice
• May not always reflect the appropriate care that is
recommended according to evidence-based medicine
• Minimum clinical practice
• A practice which has the lowest cost and is more effective
than a placebo.
• “doing nothing” or no treatment

17
Identify the costs
 Sources of cost data
• Hospital (charges, unit
cost)
• Ministry of Public
Health website
• DRG
• Reimbursement list
• Standard costing menu

18
Example of cost estimates

19
Identify the outcomes

20
 Quality Adjusted Life Years (QALYs)
 Integrate mortality, morbidity, and preferenc
es into a comprehensive index number
 Related to outcomes
• Life duration
• Quality of life

 Allows comparisons of the cost-effectiveness

results with other medical interventions

21
 Quality-Adjusted Life Years (QALYs)

QALYs = number of years lived x utility*

 Patient 1: Quantity or life Quality weight

• Utility = 0.9 that represents
• Number of years = 10 HRQOL
• QALYs = 0.9 x 10 = 9 QALY
 Patient 2:
• Utility = 0.5
• Number of years = 10
• QALYs = 0.5 x 10 = 5 QALYs

* Utility can be ranged from 0 (worst health state) to 1 (bes

22
t health state/healthy)
Valuing costs and outcomes
 Model based
• Decision tree model
• Markov model
 Discounting to presen
t value if its been mor
e than one year
 Uncertainty analysis

23
What is an Incremental cost
-effectiveness ratio (ICER)?

24
 Interpretation and presentation of resul
25
ts
 Incremental cost-effectiveness ratio (ICER)

(cost of treatment A) – (cost of treatment B)

(clinical success treatment A) – (clinical success treatment B)

Or (cost of treatment A) – (cost of treatment B)

(LYG A – LYG B)

Or (cost of treatment A) – (cost of treatment B)

(QALY A – QALY B)

 The cost that on average needs to be sustained to ob

tain “an additional success”
25
The need for incremental thinking

 Marginal analysis: requires assessme

nt of relative costs and benefits of e
ach marginal addition or reduction i
n production or consumption

26
Numb
ero
Number f
oft
est
test T
ot
alcas
Totales
cases T
ot
alcos
Total t
s (
$)($)
costs A
ve
rageco
Averagests(
$)($)
costs
d
et
ecte
d
detected
1 1 6
5.
946965.9469 7
7,
511 77,511 1
,
175 1,175
2 2 7
1.
442471.4424 1
07,
690 107,690 1
,
507 1,507
3 3 7
1.
900371.9003 1
30,
199 130,199 1
,
811 1,811
4 4 7
1.
938571.9385 1
48,
116 148,116 2
,
059 2,059
5 7
1.
9417 1
63,
141
5 71.9417 163,141 2
,
268
2,268
6 7
1.
9420 1
76,
331 2
,
451
6 71.9420 176,331 2,451

Nu
m b
ero
Number f
oft
est
test I
n crementa
lc as
Incrementale
s I
nc r
emen
ta
lc o
Incrementalsts I
costs ncre
m e n t
alc
Incremental ost
s /
costs
detect
e
casesd detected (
$) ($) c
ase($)/ case ($)
1 1 65.9469 65.9469 77.5
11 77.511 1
,175 1,175
2 2 5.4956 5.4956 30.1
79 30.179 5.492 5,492
3 0.4580 22.5
09 4
9.150
3 0.4580 22.509 49,150
4 0.0382 17.9
17 4
69.534
4 0.0382 17.917 469,534
5 0.0032 15.0
24 4
.724.69 5
5 0.0032 15.024 4,724,695
6 0.0003 13.1
90 4
7.107.2 14
6 0.0003 13.190 47,107,214

Source: 1975 article from Neuhauser and Levicky: “what do we gain from
the sixth stool-guaic” (N Engl J Med) on stool tests do detect colonic 27
cancer 27
 Interpretation and presentation of resul
28
ts
 Incremental cost-effectiveness ratio (ICER)

(cost of CPSC) – (cost of treatment of Usual Care)

(Life Years of CPSC) – (Life Years of Usual Care)

 The cost that on average needs to be sustained to ob

tain “one Life Year gained”
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ICER of CPSC compared to Usual Care by Age and Sex
Life years ICERs of CPSC
Gender/Age Incremental cost
gained compared to Usual Care
(year) (THB) (Years) (THB per LY gained†)
Male, 40 -17,504 0.181 -96,705 (Dominant)
-16,356 0.152 -107,603
Male, 50 (Dominant)
-12,387 0.121 -102,373
Male, 60 (Dominant)
Female, 40 -21,500 0.244 -88,114 (Dominant)
Female, 50 -20,074 0.205 -97,922 (Dominant)
Female, 60 -14,889 0.161 -92,479 (Dominant)

*Negative ICER due to higher effectiveness and lower costs of CPSC

compared with Usual Care
29
 Cost-effectiveness plane
more costly

D B
Intervention is less Intervention is more
effective and more costly effective and more costly

decrease in health effects increase in health effects

C A
Intervention is less Intervention is more
effective and less costly effective and less costly

30
less costly
Conclusions

31
 Cost-effectiveness league table of selected interventions in Thailand
Health Interventions Baht/QALY Coverage
(2008)
Antiretroviral treatment vs. palliative care 26,000 Yes
Prevention of vertical HIV transmission (AZT + NVP) vs. null 25,000 Yes
Statin (generic) in men >30% CVD risk vs. null 82,000 Yes
Cytomegalovirus retinitis: Gancyclovir vs. palliative 185,000 Yes
Antidiabetic: Pioglitazone vs. Rosiglitazone 211,000 No
HPV vaccine at age 15 vs. Pap smear, 35-60 years old, q 5 247,000 No
years
Osteoporosis: Alendronate vs. calcium + vitamin D 296,000 No
Osteoporosis: Residronate vs. calcium + vitamin D 328,000 No
Peritoneal dialysis vs. palliative care included anyway cs ethic 435,000 Yes
issues/ surviability
Hemodialysis vs. palliative care included anyway cs ethic 449,000 Yes
issues/ surviability
Osteoporosis: Raloxifene vs. calcium + vitamin D 634,000 No
Osteoporosis: Calcitonin vs. calcium + vitamin D 1,024,000 No
HPV vaccine at age > 25 vs. Pap smear, 35-60 years old, q 5 2,500,000 No
years
Anemia in cancer patients: Erythropoitin vs. blood transfusion 2,700,000 No
Thank you, Any question?

33

usa.c@hitap.net