Applying Health Economics to Medical Device Reimbursement

Applying Health Economics to Medical Device

Reimbursement – Some Industry Experience

Markus Siebert

Senior Director Reimbursement & Health Economics,

International

Economic Evaluation

The comparative analysis of

alternative courses of action in

terms of both their costs and health

consequences

Cost intervention B – Cost intervention A

Outcome intervention B – Outcome

intervention A

Product-specific reimbursement lists

Procedure-specific lump-sums (DRG)

(Including or not including the devices)

Hospital budgets

Reimbursement

CENTER

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Confidential. For internal use only. Not for distribution. 3

CONTENT GUIDE CONTENT GUIDE

SUBHEAD GUIDE SUBHEAD GUIDE

STAT GUIDE STAT GUIDE

HEADER GUIDE HEADER GUIDE

Market Access Mission

Remove economic disincentives for our

costumers to use our technology innovations

in an increasingly difficult environment

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TITLE GUIDE TITLE GUIDE


2011

COST EFFECTIVENESS AND BUDGET IMPACT OF FFR

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Coronary Artery Disease is mainly treated by stenting the obstructed artery

SJM is the pioneer and world leader

in FFR with:

- Evidence from 5 RCTs so far,

- Containing about 5000 patient

years of follow up data from FFR

However, a better way to decide

whether a stent needs to be

placed or not is measuring the

blood flow before and after the

stenosis (FFR)

Stents are placed by

physicians often only based on a

visual examination of the lesion

The Fractional Flow Reserve (FFR) story

1

4

2

3

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BULLET GUIDE

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CLINICAL EVIDENCE

Proportions of functionally diseased coronary arteries in patients with angiographic 3 vessel disease

“3-VD”

3-VD 14%

1-VD

34%

2-VD

43%

0-VD 9%

Pim Tonino et al JACC 2010

Angiography only: 3 VD patients

Angiography versus FFR in the FAME study

ww

w.c

ard

io-a

als

t.b

e

FFR summary

After add’l FFR:

3-VD 100%

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THE ROLE OF MARKET ACCESS

Identify the Problem

• Reimbursement system able to discriminate?

• Codes et al?

• Competing interests?

Implementation of the Plan

mainly treated by stenting

Define a Strategy

• Final objective?

• Stakeholders?

• Tools?

1 2

3

• Economic Evaluation

• Media Campaign

• Political Advocacy

• Stakeholder Engagement

Cost-Effectiveness

Health Impact & Budget Impact

Evaluated Countries: Europe and Asia-Pacific

• Germany

• France

• UK

• Italy

• Belgium

• Switzerland

• Japan

• Korea

• China

• India

• Australia

Resource Angio FFR

Guiding catheter 2.2 2.0

Regular guidewire 2.2 1.2

Pressure guidewire --- 1.3

Balloon catheter 2.1 1.7

Drug eluting stent 2.7 1.9

Bare metal stent 0.1 0.1

Hyperaemic Agent --- 1.5

Glycoprotein 2b3a receptor antagonists 0.4 0.3

Contrast agent (ml) 302.3 272.3

Days in hospital (days) 3.7 3.4

Values are means of 509 (FFR)

and 496 (Angio) patients

FAME: Resource Use Comparison

13

FAME: Cost example

FAME: Health Outcomes measured

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EQ5D profiles

Country-specific weights

QALYs

Resource Use

Index Procedure Revascularizations

Country specific

unit costs at

micro-costing level

Country specific

unit costs at

procedure level

Total cost

FAME: Country Specific Economic Evaluation

Cost-effectiveness, Budget Impact, Health Impact

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RESULTS COST-EFFECTIVENESS: FFR VS.

ANGIO

France

UK

Italy

‘Dominant’: 52%

Cost effective: 90%

Cost savings: 900 €/pat.

63%

90%

600 £/pat.

65%

86%

300 €/pat.

2000

1500

1000

500

0

-2000

-1500

-1000

-500

Incre

m. C

ost

(€)

-0.075 -0.050 -0.025 -0.000 0.025 0.050 0.075

Increm. QALY

ICER of 50,000

€/QALY

2000

1500

1000

500

0

-2000

-1500

-1000

-500

Inc

rem

. C

os

t (€

)

-0.075 -0.050 -0.025 -0.000 0.025 0.050 0.075

Increm. QALY

ICER of 50,000

€/QALY

2000

1500

1000

500

0

-2000

-1500

-1000

-500

Incre

m. C

ost

(€)

-0.075 -0.050 -0.025 -0.000 0.025 0.050 0.075

Increm. QALY

ICER of 43,700

€/QALY

(= 30,000

£/QALY)

Health Impact = Incremental QALYs * Population

Budget Impact = Incremental Cost * Population

2011 cohort 2012 cohort

2011

2012

Proportion having PCI as a result of

MI and type of MI

Market uptake for FFR testing

Projected PCIs 2011 & 2012

Proportion multi-vessel disease

Proportion with stenosis requiring FFR

diagnosis (50%-90% stenosis)

Health and Budget Impact Analysis

18

Simulation of budget impact: Germany

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2008

COST-EFFECTIVENESS AND COST-UTILITY OF AORTIC

VALVE REPLACEMENT TECHNOLOGIES

Objective

To assess the patient age of preference to use a mechanical valve vs

bioprosthesis based on a cost-effectiveness/cost-utility analysis in the UK and

in Spain

Methods

KEY METHODOLOGICAL COMPONENTS

Perspective Public payer’s perspective: direct medical costs in 2008 values (UK NHS and

SPAIN)

Target Population and

Interventions

Individuals having undergone an aortic valve replacement (AVR)

bioprosthesis / mechanical

cohorts by: sex and age

Analytical Technique Cost-utility analysis: GBP (or EUR)/QALY

(vs “do nothing” + direct comparisons)

Analytical Tool State-transition model, cycles of 1 year

(TreeAge + xls input interface)

Time Horizon Time horizons from 1 to 60 years are possible

Discount rate Annual discount rates for costs and effects were respectively 3.5%/3.5% for the

UK and 3%/3% for Spain

(Main) Data Sources Literature: treatment path probabilities, medical resource use, utilities

UK NHS / IMS Spain: cost data

WHO: life tables

Valve events: overview

Results (UK males)

Result Interpretation - Costs

Outcomes Strategy Cost Incr cost

Eff Incr Eff C/E ICER

BIOPROSTHESIS 26.9K 11.701 2,296 LY MECHANICAL

VALVE 28.7K 1.8K 11.857 0.156 2,417 11,497

BIOPROSTHESIS 26.9K 7.379 3,641 QALY MECHANICAL

VALVE 28.7K 1.8K 7.195 -0.184 3,984 Dominated

During the life-time of all patients in the cohort (i.e. until the last one has died), the biological valve therapy will have

cost £26,900 and the mechanical valve therapy £28,700. The incremental cost of the MHV therapy is thus £1,800.

Costs of future additional implants in the biological valve arm will be discounted to their net present value and when

they are e.g. 15 years away a value of e.g. a valve implant in the UK of £12,500 will “only” be counted with £7,460.

The additional costs in the mechanical valve arm from anticoagulation therapy and the treatment of bleeding events

appear however much more regularly as of day one of the therapy and discounting does not dilute these future values

so much.

This is the main mechanism why the MHV therapy somewhat surprisingly ends up with higher treatment costs for a

patient cohort of 60 years old than the THV therapy.

Result Interpretation - Outcomes




VALVE 28.7K 1.8K 11.857 0.156 2,417 11,497



Looking at Life Years Gained (LY), the mechanical valve strategy delivers more longevity. Over the life-time of the 60-

year old patient, this is on average 0.156 years, i.e. 8 weeks.

This is consistent over almost all ages in both countries: the mechanical valve therapy (almost) always has a slight

advantage in longevity, i.e. delivers most life-years.

If we weigh these life-years with the quality of the life-years gained, the picture changes: instead of about 11.7 life years

to be gained, “only” around 7.3 quality-adjusted life years (QALYs) will be gained, which is a reflection of the fact that

these are elderly patients and an additional life year will not be at perfect health and thus be weighted down when

looking at QALYs.

This occurs in both arms, MHV and THV. Nevertheless, looking at the difference in QALYs, the mechanical valve loses

its advantage and in the above example the biological valve delivers an additional 0.184 QALYs, i.e. almost 10 quality-

adjusted weeks of additional life compared to the mechanical valve.

This is a reflection of the quality-of-life impairment from bleeding and thrombotic events that occur more in the MHV

arm and more equally distributed over the years. So effects of a bleeding in the first year are considered without

discounting and carried further to the following years.

The need of recurrent valve replacement in the THV arm has an effect on QALY but this is only very small: it takes

place after 10 years or later, is thus very sensitive to discounting and is only an acute effect, with no long term

consequences.

IMS Health - Cost-Effectiveness of AVR • November 4th, 2008

29

Results: UK males

Intervention QALYs per Age Cohort

65 66 67 68 69 70

BIOPROSTHESIS 6.1251 5.9022 5.6677 5.4937 5.2686 5.0380

MECHANICAL VALVE 6.1307 5.9030 5.6741 5.4974 5.2678 5.0337

• Threshold LY age: 68.98

From age 69 onward, the mechanical valve becomes a dominated strategy for the UK male cohort, i.e. it costs more and delivers less life years compared to the biological valve:

Sensitivity analysis discount rates (UK males, 60y)

Costs Effects Cost/QALY saved

of MHV

Cost/Life year saved of

MHV

3% 3% basecase MHV dominated £11,497

0% 0% £5,334 £3,127

6% 6% MHV dominated £18,187

Result Interpretation – Cost-effectiveness




VALVE 28.7K 1.8K 11.857 0.156 2,417 11,497



In the case of dominant treatments, as with biological valves when looking at QALY outcomes, no ICER can be

calculated. The dominant treatment delivers better results and less costs and no trade-off needs to be made.

Looking at the life-years gained however, we can put the extra costs (plus £1,800) into relation to the extra

outcome (plus 0.156 Life Years Gained).

By dividing the incremental costs by the incremental outcomes, we will get the incremental cost per one QALY

(or LY) gained (ICER), i.e. we will bring the denominator to one. This is a convention, which allows comparing

cost-effectiveness across different health care interventions. In the above case it delivers an extra QALY at

£11,497, which is clearly below the lower NICE threshold of £20,000 and thus cost-effective.

Please note that the ICERs are different for each patient cohort, depending on their age of first implant, as this

will obviously impact their need to valve replacements, their incidence of bleeding events etc.

Please note as well, that the therapy delivers more than only 1 QALY. If we speak of cost-per-QALY of in this

case £11,497, this is a construct to make the therapy comparable to others. In reality, valve replacement will offer

many more additional years to the patient. In our model, we have not compared valve replacements to ‘no

replacements’, but from Wu et al 2007 we know that aortic valve surgery offers 10.2 years of longevity and

8.2 years of quality-adjusted life years to patients, compared to optimal medical management.

Result Interpretation Sensitivity Analysis

The model results are very sensitive to discount rates. It was already shown above that the costs in the MHV arm

are more front-loaded and that the costs in the THV from valve related events and re-operation are somewhat

watered down as result of discounting. A discount rate of only 1% (instead of 3.5%) for the outcomes would move

the MHV away from being dominated to actually being cost-effective.

The model is also sensitive to changes in the thrombo-embolism rates in the THV cohort. Changing the rate

from 0.9% (Puvimanasinghe 2004) to 2.11%, as reported by Eichinger et al 2008 will change the base case (UK

male, 60 years) from the MHV being dominated to the THV being dominated for both outcomes, life-years gained

and QALYs.

If we instead vary the thrombo-embolism rate in the MHV cohort from 1.15% (Puvimanasinghe 2004) to 1.58%

(Grunkemeier et al, 2003), then MHV will still be dominated by THV when we look at QALYs and even when looking

at life years instead, will not make them cost-effective any longer.

Conclusion: the thrombo-embolism rates for THV and MHV are critical input parameters for the model!

Learnings & Questions

Strong & meaningful clinical evidence is needed for starters (garbage in – garbage out). Therapy vs brand specific evidence?

Be prepared to complement this with state-of-the-art economic evidence, but not at any price. Do not build a model, because you can, but because you need to.

Ensure credibility of your HE work through transparency, dialogue and focus on what really matters (sensitivity analysis)

Market Access is a multi-stakeholder exercise, both externally (physicians, government institutions, policy makers, etc) and internally (Clinical, Marketing, Public Affairs, Public Relations)

Health Economics is a means, not an end. The objective is to inform decision making on funding and uptake.

How to capture the dynamics: new technologies, new prices, trade-offs into other areas of healthcare etc

Documents

Applying Health Economics to Medical Device Reimbursement