AN INTRODUCTION TO

HEALTH ECONOMICS andMEDICAL TECHNOLOGIES

PART I: IN THEORY

MASTER OF SCIENCE BIOMEDICAL ENGINEERING2015

HEALTH ECONOMICS FORNON –ECONOMISTS

AN INTRODUCTION TO THE CONCEPTS, METHODS ANDPITFALLS OF HEALTH ECONOMIC EVALUATIONS

PROF. L. ANNEMANS PhDINTERUNIVERSITY CENTER FORHEALTH ECONOMICS RESEARCH (I-CHER)

ISBN 978 90 382 1274 6

« HEALTH IS PRICELESS »

BUT IS IT REALLY ?

WHAT IS A HEALTH ECONOMIC EVALUATION?

The COMPARATIVE ANALYSIS OF ALTERNATIVE COURSES OF ACTION

IN TERMS OF BOTH THEIR COSTSAND HEALTH CONSEQUENCES

TREATMENT OF PERSISTENT AIR LEAKS

new

current

cost of amedical technology

new

current

average othertreatment costs

hospitaldrugs

physicians

+ =

new current

total cost

netsavings

NEW MT VS CURRENT MT

new

current

cost of amedical technology

new

current

average othertreatment costs

hospitaldrugs

physicians

+ =

new current

total cost

net costsNEW MT VS CURRENT MT

new

current

cost of amedical technology

newcurrent

average othertreatment costs

hospitaldrugs

physicians

+ =

new current

total cost

netcostsNEW MT VS CURRENT MT

NEUROSTIMULATORS vs. (INTRATHECAL) DRUG PUMPS FOR CHRONIC PAIN

Neurostimulators send electrical impulses to the spine. These impulses replace pain also providing pain relief.

Drug pumps deliver pain medication directly to the fluid around the spinal cord, providing pain relief.

Lower back pain

Treatment A

Treatment B

success

success

failure

failure

0.700

0.300

0.900

0.100

1000

1000 +10000

2000

2000 +10000

EXERCISE:WHICH IS THE LESS EXPENSIVE STRATEGY FROM THE PERSPECTIVE OF THE PAYER ?

4000

3000

BUT REMEMBER THE DEFINITION!

THE COMPARATIVE ANALYSIS OF ALTERNATIVE COURSES OF ACTION

IN TERMS OF BOTH THEIR COSTS

AND HEALTH CONSEQUENCES

10 QALY’s

QALY = QUALITY ADJUSTED LIFE YEARS

death 0

perfect 1health

INDEX (‘utility level’)

TIME

0.5

0.6

20 25

0.6 * 25 = 15- 0.5 * 20 = 10

5

2.0

2.5

0.5

MEDICAL NEED: IS A QALY A QALY?

0

1

0

1

0,4

0,2

0,8

0,6

?

E. Nord, person trade off method

3/4 1/4

HOW SHOULD THE INDEX BE MEASURED

QUALITY OF LIFE QUESTIONNAIRES

DIRECT- VISUAL ANALOGUE SCALE (VAS) - STANDARD GAMBLE (SG)- TIME TRADE OFF (TTO)

INDIRECT- EUROQOL 5D (EQ 5D)- SHORTFORM (36) HEALTH SURVEY (SF-36)

PAIN

Mobility1. I have no problems in walking about2. I have some problems in walking about3. I am confined to bed

Self-Care1. I have no problems with self-care2. I have some problems washing or dressing myself3. I am unable to wash or dress myself

Usual activities (e.g. work, study, housework, family or leisure activities)1. I have no problems with performing my actual activities2. I have some problems with performing my actual activities3. I am unable to perform my usual activities

Pain/Discomfort1. I have no pain or discomfort2. I have moderate pain or discomfort3. I have extreme pain or discomfort

Anxiety/Depression1. I am not anxious or depressed2. I am moderately anxious or depressed3. I am extremely anxious or depressed

���

���

���

���

���

�

�

�

�

�

12222

0.5473

EQ-5D

EXERCISE:CALCULATE THE GAIN IN QALY’s

death 0

perfect 1health

INDEX (‘utility level’)

YEARS

0.4

0.8

0.5

52 6

1.9 QALY’S

INCREMENTAL COST-FFECTIVENESS RATIO ?

Cnew – ColdICER =

EFFnew - Effold

Cnew – ColdICUR =

QALYnew - QALYold

new medical technologyless effective

and more costly

A

new medical technologycheaper but less

effective

B

new medical technologymore effective and less costly

C

TOTAL COST

HEALTH EFFECT (QALY)O

D

new medical technologymore effective

but more costly

current medical technology?

EFFECTIVENESS AND COST-EFFECTIVENESS ARE NOT ENOUGH

IT MUST ALSO BE AFFORDABLE

BUDGET IMPACT

GDP BELGIUM 2012 = € 369.0 BILLIONPOPULATION BELGIUM 31-12-2012 = 11.1 MILLION

AVERAGE GDP PER CAPITA = +/- € 30,000

http://www.nbb.be/belgostat/DataAccesLinker?Lang=E&Dom=2&Table=30

THE LIMITS OF « AFFORDABILITY »

At risk for CHD

No prevention

Prevention

No MI

MI

0.700

0.300

0.800

0.200

EXERCISE:WHAT IS THE INCREMENTAL COST-EFFECTIVENESS RATIO OF PREVENTION ?

30008.8 QALY

60009.2 QALY

No MI

MI

10 QALY

€ 0

6 QALY

€ 10000

10 QALY

€ 4000

6 QALY

€ 14000

€ 7500/QALY

ARR = 10% ABSOLUTE RISK REDUCTIONNNT = 10 NUMBER NEEDED TO TREAT

TAKE-HOME EXERCISE

Carotid stenosis is a narrowing of the carotid arteries, the two major arteries that carry oxygen-rich blood from the heart tothe brain. Carotid stenosis is caused by a buildup of plaque inside the artery wall that reduces blood flow to the brain and is amajor risk factor for stroke. There are different types of treatments:

• No medical treatment (by being physically active)• Medical management following a medication regimen such as taking:

• platelet aggregation inhibitor medication (aspirin)• cholesterol-lowering medication (statins)• antihypertensive medication (ACE inhibitors)

•Minimally invasive vascular surgery: carotid stenting + adjuvant drug therapy

Surgery does not always the most optimal outcome, only 89% of patient gain significant health benefit from operation, healthstatus of additional 10.5% remains unchanged compared to their health status before the surgery. Surgery is not risk-free andthereby 0.5% of patients die during the surgery.

TAKE-HOME EXERCISE

1. WHICH TREATMENT FOR CAROTID STENOSIS IS THE MORE COST-EFFECTIVE COMPARED TO THE NO MEDICAL

TREATMENT: THE MEDICAL MANAGEMENT OR THE MINIMALLY INVASIVE VASCULAR SURGERY CONSIDERING

FOLLOWING DATA?

2. WOULD YOU RECOMMEND THE BELGIAN NATIONAL INSTITUTE FOR HEALTH AND DISABILITY INSURANCE

(NIHDI) TO REIMBURSE THE MINIMALLY INVASIVE VASCULAR SURGERY?

Expected life years:

• no medical treatment 5 years

• medical mangement 9 years

• successful surgery 15 years

• unsuccessful surgery 9 years

Utility weights

Average utility weight for each life year until death

• no medical treatment 0.5

• medical management 0.6

• successful surgery 0.7

• unsuccessful surgery 0.6

Cost

• no medical treatment 0 €/year

• medical management 650 €/year

• surgery + carotid stent 7.450 €

• adjuvant drug therapy to carotid stenting 200 €/year

• unsuccessful surgery 650 €/year

Discounting

• discounting rate 0%

successful surgery = cost surgery + total cost adjuvant drug therapyunsuccessful surgery = cost surgery + carotid stent + total cost medical managementpatient died = cost surgery + carotid stent

probability total cost life years utility

no medical treatment 100% 0 € 5 0.5

medical management 100% 5.850 € 9 0.6

carotid stenting + adjuvant

drug therapy

successful

89% 10.450 € 15 0.7

carotid stenting + adjuvant

drug therapy

unsuccessful

10.5% 13.300 € 9 0.6

carotid stenting + adjuvant

drug therapy

patient died

0.5% 7.450 €

total cost QALY ICER = ∆cost/∆QALY

no medical treatment 0 € 2.5

medical management 5.850 € 5.4 2.017 €/QALY

carotid stenting + adjuvant

drug therapy10.734 € 9.9 1.448 €/QALY

ANSWER

1. Carotid stenting + adjuvant drug therapy is more cost-effective than medical management as treatment for carotid

artery stenosis.

1. Yes

The World Health Organization WHO states that the limit for being prepared to pay should be related to the wealth of

a country.

Following this rationale, a result expressed in cost per QALY which is lower than the level of the Gross Domestic

Product per person would be called cost-effective.

GDP BELGIUM 2012 = 369 BILLION €

POPULATION BELGIUM 31-12-2012 = 11,1 MILLION

AVERAGE GDP PER CAPITA = +/- 30.000 €

Thus in this hypothetical example the Belgian national payer SHOULD be in favor of reimbursing the carotid stenting

+ adjuvant drug therapy because the ICER is far below the 30.000 €/QALY.

ANSWER

THE VALIDITY OF HEALTH ECONOMIC MODELS

SENSITIVITY ANALYSESAssessment of robustness

The extent to which results of the model are sensitive to changes in input data

ONE-WAY SENSITIVITY ANALYSISTWO-WAY SENSITIVITY ANALYSIS

TORNADO DIAGRAM

PROBABILISTIC SENSITIVITY ANALYSISOR MONTE CARLO ANALYSIS

TIME HORIZON

GUIDELINE

THE TIME HORIZON SHOULD BE CHOSEN IN ORDER TO CAPTURE

ALL RELEVANT COSTS AND OUTCOMES

THE MARKOV MODEL

HEALTHY SICK

DEAD

0.1

0.20.01

TRANSITION PROBABILITY

EXERCISE:CALCULATE THE NUMBER OF PEOPLE IN EACH CONDITION AFTER THREE YEARS

At the start After 1 year After 2 years After 3 years

Healthy 1000 890 792 705

Sick 0 100 169 214

Dead 0 10 39 81

Total 1000 1000 1000 1000

THE MARKOV MODEL

HEALTHY SICK

DEAD

0.05

0.20.01

HOW TO CALCULATE AMARKOV MODEL?

LIKE A DECISION TREE (REPEATED)

EXERCISE:CALCULATE THE NUMBER OF PEOPLE IN EACH CONDITION AFTER THREE YEARS

At the start After 1 year After 2 years After 3 years

Healthy 1000 ? ? ?

Sick 0 ? ? ?

Dead 0 ? ? ?

Total 1000 1000 1000 1000

EXERCISE:CALCULATE THE NUMBER OF PEOPLE IN EACH CONDITION AFTER THREE YEARS

At the start After 1 year After 2 years After 3 years

Healthy 1000 940 884 831

Sick 0 50 87 114

Dead 0 10 29 56

Total 1000 1000 1000 1000

TIME PREFERENCE?

ONE PREFERS TO POSTPONE PAYMENTS

ONE PREFERS TO RECEIVE A PAYMENT YESTERDAY RATHER THAN TODAY

FUTURE AMOUNTSHAVE TO BE RECALCULATED TO

THEIR ACTUAL VALUE=

DISCOUNTING

DISCOUNTING FUTURE AMOUNTS

EXERCISE:CALCULATE THE NET COST OF A PROJECT OVER 5 YEARS

YEAR 0 1 2 3 4 TOTAL

savings 500 500 1000 2000 6000 10000

0.03

0.05

=B$2/(1+$A3)^B$1

? ? ? ? ? ?

? ? ? ? ? ?

x (1+i) y

=C$2/(1+$A3)^C$1

=D$2/(1+$A3)^D$1

=E$2/(1+$A3)^E$1

=F$2/(1+$A3)^F$1

=B$2/(1+$A4)^B$1

=C$2/(1+$A4)^C$1

=D$2/(1+$A4)^D$1

=E$2/(1+$A4)^E$1

=F$2/(1+$A4)^F$1

∑

∑

DISCOUNTING FUTURE AMOUNTS

EXERCISE:CALCULATE THE NET COST OF A PROJECT OVER 5 YEARS

YEAR 0 1 2 3 4 TOTAL

savings 500 500 1000 2000 6000 10000

0.03 500 485.4 942.6 1830.3 5330.9 9089.2

0.05 500 476.2 907.0 1727.7 4936.2 8547.1

GUIDELINES FORHEALTH ECONOMIC EVALUATIONS

1. Medical problem and the target population must be clearlyexplained

2. Comparative therapies to described3. Perspective of the evaluation must be clearly stated4. Design of the study5. Calculating the costs6. Calculating health effects7. Time horizon8. Uncertainty analysis9. Discounting future amounts10. Conclusions

HOSPITAL STAY MEDICAL FEESMEDICAL

TECHNOLOGIESPHARMACEUTICALS

…

INTRAMUROS EXTRAMUROS

INNOVATION BUDGET – CONDITIONAL REIMBURSEMENT « COVERAGE UPON EVIDENCE »

A PLEA FOR A « TRANSVERSAL APPROACH » IN HEALTHCAREA POTENTIAL LEVERAGE FOR THE FINANCING OF

NEW INDICATIONS BY NOVEL MEDICAL TECHNOLOGIES

BIO HANS HELLINCKX

• Bachelor clinical chemistry (CTL-BME)• Master biomedical sciences (health sciences - administration health care and hospital

management) (VUB)• Master after Master in business administration (2y) (VUB) • Master after Master in health care data management (1y) (UA-RUG-VUB)• Postgraduate health economics (HUB-UGent)• Certificat interuniversitaire en économie de la santé (UCL-ULB-ULg)• Life sciences and biomedical technology (UGent)• Quality management in a biomedical, biotechnical and pharmaceutical environment (KU Leuven)

• Staff member financial and medical director UZ Brussel• Project manager public pharmacies (700) KAVA• Product and marketing manager Benelux IVD Menarini Diagnostics Benelux• Advisor medical consumables UNAMEC

Advisor medical equipment and systems UNAMECAdvisor health economics, financing and reimbursement UNAMEC

Guest lecturer Health Economics and Medical Technologies KU Leuven, UGent, UCL-ULB-Ulg(Biomedical Engineering)Member of the Board “MedTech Flanders vzw”

++32 (0)473/292.592 - h.hellinckx@unamec.be