Economic evaluation alongside clinical trials (EEACTs) Claire Hulme Academic Unit of Health Economics Leeds Institute of Health Sciences

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1 Economic evaluation alongside clinical trials (EEACTs) Claire Hulme Academic Unit of Health Economics Leeds Institute of Health Sciences

2 Introduction How does the NHS make decisions about what to prescribe or to recommend for patients? How do they decide which new technologies, programmes or service delivery models to adopt? How do we decide what represents value for money? Economic evaluation provides a tool by which to help make these decisions. In the UK economic evaluation constitutes one of the major ways that health economics contributes to the efficient running of the NHS

3 Introduction The objectives of this seminar are: To provide an introduction to economic evaluation and EEACTs and how they inform reimbursement decisions To demonstrate why, when and how health economics should be considered in clinical trials.

4 Introduction What is health economics? What is economic evaluation? What about EEACTs?

5 What is health economics? Health economics is a branch of economics concerned specifically with choices in health and health care It is based on the same premise as economics: limited resources and unlimited wants; choice in the face of budget constraints

6 Key concepts in health economics Scarcity: In health economics we assume that there are limited resources (time of a surgeon; specialised equipment; number of beds in a ward etc) and unlimited wants (unlimited needs of patients) Choice: And that choices are made in the face of budget constraints (NHS budget) Opportunity cost: The opportunity cost of undertaking an activity is defined as the benefits that must be foregone by not allocating resources to the next best activity The concept of opportunity cost is fundamental to health economics. It is based upon the idea that scarcity of resources means that use of resources on one health care activity inevitably means sacrificing activity somewhere else

7 Why is health economics important? In the UK around 8-9% of GDP is spent on healthcare and this is set to due to demographic changes, impact of new technology, rising labour costs and economic growth, increased demand for health care In England alone the 2015/16 budget is billion We need to make choices and decisions about how our resources are used No healthcare system, anywhere in the world, has achieved levels of spending sufficient to meet all its clients wants for healthcare (Morris et al, 2007:3)

8 Economic evaluation The most important issue when deciding whether to provide a healthcare intervention, service or programme is the extent to which it improves health; but. there is no such thing as a free lunch! The more a healthcare intervention or programme costs, the fewer resources are available for other programmes or interventions (opportunity cost) When we are concerned with population health cost becomes the second most important issue

9 Introduction What is health economics? What is economic evaluation? What about EEACTs?

10 Economic evaluation Economic Evaluation aims to provide robust information to inform choices It aims to ensure the benefits of programmes that are implemented exceed their opportunity costs It is a structured approach to help decision makers choose between alternative ways of using resources Economic evaluation is... the comparative analysis of alternative courses of action in terms of both their costs and consequences (Drummond, Stoddart & Torrance, 1987)

11 Economic evaluation Method Cost Outcome Cost benefit analysis Monetary value Monetary value Cost effectiveness analysis Monetary value Natural Units (e.g. life years saved) Cost utility analysis Monetary value Utility values (e.g.qalys) Choice of use of cost effectiveness analysis or cost utility analysis is connected to: Who is asking the question (the perspective)? Why the question is being asked?

12 Economic evaluation Within cost-utility analysis interventions are compared in terms of cost per quality adjusted life years (QALY) these include not just the quantity of life gained after an intervention but also the quality For the reference case, cost-effectiveness (specifically cost utility) analysis is the preferred form of economic evaluation. This seeks to establish whether differences in costs between options can be justified in terms of changes in health effects. Health effects should be expressed in terms of QALYs. (NICE, 2008:33)

13 Costs Health care system perspective: Costs born by others outside of the health care system need not be considered; e.g. employer costs; family costs NICE reference case: Health and social care provider Societal perspective: Can include cost of absence from work, informal care, out of pocket expenses, criminal justice system, housing Once the perspective is agreed: Identify; Measure; Value

14 Costs Increasingly health economics uses electronic data collected by the NHS for use in economic evaluation HES is the national statistical data warehouse for England of the care provided by NHS hospitals and for NHS hospital patients treated elsewhere. HES records: in-patient, out-patient, maternity, A&E It doesn t include primary care data or social care data For a societal perspective we need to ask the patients For valuing cost items identified with the questionnaire: PSSRU Unit costs of health and social care NHS Reference costs Once we have identified, measured and valued cost and outcomes, how do we analyse and present the results?

15 Cost effectiveness ratios Incremental Cost Effectiveness Ratio ICER = (C 1 C 2 ) / (E 1 E 2 ) = C/ E (new intervention less control) In the UK the decision rule is based on the threshold for costeffectiveness, also known as willingness-to-pay threshold: Adopt the new intervention if ICER < Threshold NICE Threshold between 20,000-30,000

16 Cost-effectiveness plan Cost ( ) More costly, less effective (Dominated) More costly, more effective Less costly, less effective Less costly, more effective (Dominates) Effect Treatment cost-effective in shaded region

17 Uncertainty; sensitivity analysis Every evaluation will contain some degree of uncertainty Allow for uncertainty by way of sensitivity analysis One-way; varying on variable at a time. Multi-way; varying more than one variable at a time Probabilistic; varying all parameters simultaneously based on probability distributions

18 Cost effectiveness plane Incremental cost Incremental effectiveness (Fenwick & Byford, 2005)

19 Probability Cost effectiveness acceptability Cost Effectiveness Acceptablility Curve curves Scenario 20 year time horizon ABN guidelines The CEAC indicates the probability that the intervention is cost-effective compared with the alternative If the threshold is 140k, there is a 60% probability that intervention is costeffective ,000 40,000 60,000 80, , , ,000 Cost Effectiveness Threshold If the threshold is 40,000, there is a 20% probability that the intervention is cost effective

20 What about the long term? For economic evaluation we often need to consider the long term effectiveness of a health care intervention; we need to estimate the long term effects and costs Within all areas of economic evaluation we may use decision analytical modelling with data from a number of sources Economic evaluation requires; evidence from a range of sources; comparison with all relevant alternatives; appropriate time horizon; quantification of uncertainty The need to satisfy these requirements provides a strong rationale for decision analytic modelling as a framework for economic evaluation (Briggs, 2007) Briggs A, Claxton C, Sculpher M Decision modelling for health economic evaluation. OUP: Oxford Model: Hall PS, Hulme C, McCabe C, Oluboyede Y, Round J, Cameron D Updated cost-effectiveness analysis of trastuzumab for early breast cancer: A UK perspective considering long-term toxicity and pattern of recurrence. Pharmacoeconomics 29 (5);

21 Long term cost effectiveness A good economic model should... be populated with the most appropriate and good quality clinical data reflect a realistic picture of current clinical practice use the appropriate comparator(s) be run for an appropriate time period be valid, transparent and reproducible explore uncertainty be easily interpreted Clinical effects; health state valuation Epidemiological data; expert opinion Resource use; unit costs Estimate of ICER

22 Introduction What is health economics? What is economic evaluation? What about EEACTs?

23 EEACTs Clinical trials can establish the efficacy and effectiveness of health care interventions or therapies Over the past 20 years there has been a growing trend to collect data for an economic evaluation (medical service use, cost and effect) in the clinical trial Typically economic evaluations (CEA or CUA) are incorporated into phase III and phase IV trials - and sometimes into phase II In the UK MRC and NIHR routinely expect cost effectiveness analysis to be incorporated in large scale trials Many other countries require evidence of economic value as part of their reimbursement decision

24 EEACTs By mid 1990s growing trend for EEACTs with direct observation of the impact of a therapy on costs and effect Short term economic impacts are directly observed over the trial period Longer term impacts need to be modelled In conducting a EEACT we identify, measure and value costs; and quantify the effect Calculate the ICER ICER = (C 1 C 2 ) / (E 1 E 2 ) = C/ E Account for uncertainty Identify the population for who the results apply

25 What is it we want to do in an EEACT? Quantify the cost and effect of care Assess whether, and by how much average cost and effect differ by treatment groups Compare the magnitude of differences in cost and effect evaluate the value for the cost (ICER) Identify populations for whom the results apply Glick et al., 2007

26 Six steps in designing EEACTs Preplanning in preparation for the trial? E.g. identifying length of follow up for economic endpoints, identifying the types of health and social care services used by participants, piloting data collection forms What service use is measured? E.g. Limit to disease related services; limit to delivery setting; limit participants from whom economic data are collected In what form should the data be collected? At what level should service use be aggregated e.g. micro costing, average costs Glick et al., 2007

27 Six steps in designing EEACTs Which price estimates should be used? E.g. national average, Trust costs How naturalistic should the study design be? (sample inclusion criteria; intention to treat; minimising loss to follow up) protocol induced cost and effect exclude protocol induced services as they wouldn t occur in usual practice? But do they have an impact on care? What should we do if the full benefit and cost are not expected to be observed over the trial period? Modelling Glick et al., 2007

28 When don t we need an EEACT? If the trial design means that no unbiased evidence of economic value will be observable e.g. differential in following participants based on outcome If it is believed that the result of the EEACT will not affect the decision to use the intervention e.g. a therapy may be so effective people aren t interested in cost

29 Making EEACTs relevant to policy debate Comparator Adoption of a final outcome such as a QALY Representative sample of the patient population who will use the therapy Sufficiently long period of follow up Sufficient sample size to power the trial Data on a sufficiently broad set of resources Collect data to assess/improve transferability

30 Summary EEACTs facilitate direct observation of the impact of a therapy on costs and effect over the duration of observation longer term impacts will need to be modelled Considering health economics evidence is a mandatory part of NICE clinical guidelines and technology appraisals UK funding bodies consider health economics an important component of research and research proposals

31 Text of interest Glick H, Doshi JA, Sonnad SS, Polsky D Economic Evaluation in Clinical Trials. OUP Gray AM, Clarke PM, Wolstenholme JL, Wordsworth S Applied Methods of Cost Effectiveness Analysis in Health Care. OUP Morris, S., Devlin, N., Parkin, D Economic Analysis in Health Care. John Wiley & Sons: Chichester Drummond, M.F., Sculpher, M.J., Torrance, G.W. O Brien, B., Stoddart, G.L Methods for the Economic Evaluation of Health Care Programmes. 3 rd ed. Oxford University Press: Oxford