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The use of health economic analysis in SMC decision-making
Ailsa Brown, Lead Health Economist, SMC
Presentation overview
• Overview of health economics and the quality-adjusted life-year (QALY)
• How SMC’s uses health economic analysis and what are the common problems
• How health economic analysis impacts on decision-making
A starter question….
There should always be limits to what the NHS can provide.....
Agree?
Disagree?
UK public view…
2006 2014
Agree 44% 58%
Disagree 48% 39%
ISPOS MORI Poll
Strongly agree Tend to agree Tend to disagree Strongly disagree Don't know
The basics of health economics
Costs
Benefits
And what it isn’t about….only costs!
Scarcity, choice and economic evaluation
• Branch of economics concerning the allocation of scarce health care resources
Scarcity= we can’t do everything Choice= Scarcity means we must make tough
choices on how to spend the health care budget
Opportunity cost= benefits foregone in the next best use of resources
• Economic evaluation is a tool to help make the difficult decisions on how to spend the NHS resource cake
Economic evaluation defined
“the comparative analysis of alternativecourses of action in terms of both their cost
and consequences”
Types of economic evaluationCost minimisation analysis (CMA)
•Common outcome e.g. cases cured
•Both treatment options are identical in terms of outcome
•Essentially search for least cost way of achieving the outcome
Cost Effectiveness analysis (CEA)
•Common outcome but the treatment options achieve it to different degrees e.g. One increases survival by 10%, one by 20%
•Compare interventions on cost per unit of effect e.g. Cost per life year gained, cost per case detected
Cost utility analysis (CUA)
• Outcome measured in terms of quality adjusted life years (QALY) i.e. quantity of life adjusted for the quality of life in that period
• Treatment options are not equally effective
• Treatment options compared in terms of the cost per QALY ratio
Cost Benefit Analysis
•Treatment outcomes measured in terms of monetary units ($, £,€)
•Health outcome e.g. Survival gain translated into £ by asking about willingness to pay for the benefit
•Result expressed in terms of excess of benefit over cost (i.e. Willingness to pay being greater than the cost
Economic evaluation types
Cost-utility analysis and the QALY
Interventions with a cost per QALY ratio of <£30,000 per QALY are generally considered a cost-effective use of NHS resources.
Above this level-displacing more health gain than you are getting.
How does SMC use economic evaluations?
• Companies must provide SMC with an estimate of the cost-effectiveness of their medicine, most often using a ‘cost per QALY’
• SMC has a team of health economists who critically appraise the company’s estimate; stripping out bias in data and over-optimistic assumptions
• SMC committee members use the cost-effectiveness evidence as a factor in their decision-making
• Only one factor- sometimes medicines not judged cost-effective are accepted for use for other reasons e.g. unmet need, rarity of the condition, treatments for end of life
Problems with the cost-effectiveness evidence
• Company hasn’t compared to a medicine we use in NHS Scotland
• Company has a very uncertain evidence base in terms of the extra benefits over existing treatment e.g. indirect comparisons
• Company has made assumptions about long term benefits of the medicine
• Lack of research/ data on quality of life impacts• Additional cost of the medicine is very high compared to the
extra benefits it offers
Impact of cost-effectiveness on decision-making
Figures from pre-2014 (New Medicines Review)
Impact of greater flexibility in decision-making; pre-PACE (2011- 2013) versus post-PACE
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
All submissions Orphan Cancer
Pace eligible medicines 2014 to September 2017
Role of budget impact
Key points
• Economic evaluation can help make resource allocation decisions on a consistent and transparent basis
• Every SMC decision to accept a medicine has an opportunity cost (individual vs population)
• The cost-effectiveness assessment of a medicine is not just about medicines costs
• Cost per QALY is important....but only one of many important factors
• Budget impact is not part of SMC decision-making
The Scottish Medicines Consortium is part of Healthcare Improvement Scotland
