Health technology assessment - Master HEPL 23/24
HTA LECTURE 1 – INTRODUCTION
TO HTA
INTRODUCTION TO HTA
HTA is an important advisory tool to make transparent and unbiased decision. In many countries it is
compulsory for deciding on reimbursement, and it assures value for money.
Key elements on the definition of HTA;
- HTA covers the
o Direct, intended consequences: which are costs incurred in direct treatment of a patient
o indirect, unintended consequences: Which are consequences incurred in indirect treatment,
such as informal treatment, where the carer needs to take more time off from work etc.
- Economic evaluation is usually the core of HTA, which compares two alternatives regarding costs and
benefits
ECONOMIC EVALUATIONS IN HTA
Here we look at the benefits and outcomes of new health technologies. Economics evaluations provide insights
in costs and effects of: (new) interventions compared with existing interventions
6 steps of performing an economic evaluation
1. Study design
2. Cost measuring
3. Benefits measuring
4. Discounting
5. Sensitivity analysis
6. Policy making
,Health technology assessment - Master HEPL 23/24
STEP 1: STUDY DESIGN
1. What perspective are we going to use for the economic evaluation, starting with who is going to pay
o We distinguish two dominant perspectives; the perspective is important as it determines
which cost and effects to include in the assessment:
Health care perspective: cost and effects falling on health care budget
Societal perspective: all relevant costs and effects.
There are also patient and health insurance perspective
2. Choice of comparator
o In an economic evaluation we always evaluate one thing to another, it is a comparison
between two alternatives, however it is important to define what we compare.
o Most efficient alternative (not perse the most effective) to -> Standard treatment
o Consider “no treatment, such as in the case that the alternative is not efficient, but is
expensive.
o Placebo not preferred
3. Type of analyses
o Only cost
Cost minimization analysis (CMA
Effects are equal, focus on cost
Generally, not done in healthcare
o Cost and effects in monetary terms
Cost benefit analysis (CBA),
Quantification of effects, for example a year is worth a certain monetary unit
o Cost In monetary terms, effects in natural units
Cost-effectiveness analysis (CEA)
E.g., progression free life years of heart attacks avoided
-> check if the outcome is in QALY, otherwise it is a CUA)
o Cost in monetary terms, effects in QALYs
Cost-utility analysis (CUA)
4. Time horizon
o All consequences must be taken into account (lifetime horizon), If there is a difference in life
expectancy of a treatment, you always have to take into account a lifetime perspective, which
is complicated because there is a lack of information of a patient’s lifetime. Thus, we can
extrapolate this from different sources of data.
o Methods:
RCT,
Observational study
Model (cohort or individual patient model)
Combination.
,Health technology assessment - Master HEPL 23/24
STEP 2: MEASURING AND VALUING COST
- Identify all relevant cost items
- Measuring resources use
- Value resource use
The costs included depend on the perspective. Whether productivity losses are relevant depends on the
patient group that you are conducting your economic evaluation for.
1. People die younger and there thus will be more productivity losses
2. People live longer and can also be productive, we then include gains or less losses in productivity
STEP 3: MEASURING AN VALUING EFFECTS
- Identify, measure and value effects of interventions
- Disease specific measures
- Generic measures
STEP 4: DISCOUNTING
- People have time preference for both costs and health effects
o The want for positive health effects now
o The want to postpone cost to the future
- Cost later in time weight less
- Effects later in time have less value
STEP 5: UNCERTAINTY
- The values used in economic evaluations are estimates, based on sample of population
- Uncertainty remains and is associated with all estimates
- Sensitivity analysis is to find out how sensitive cost-effectiveness outcomes are to changes in
parameters
,Health technology assessment - Master HEPL 23/24
STEP 6: APPLYING A DECISION RULE / POLICY MAKING
- Calculation of ICER (incremental cost-effectiveness ratio)
Cost A−Cost B
o =€ … per effect
Effects A−Effects B
o E.g., 10.000 per QALY of life year gained
o Apply the decision rule
Is ratio below or above the willingness to pay for a QALY -> WTP (V threshold)
Is ratio below or above our current healthcare production -> marginal returns (K
threshold)
- Determination of cost-effectiveness intervention
- QALY thresholds
CONCLUSION AND SUMMARY
Economic evaluations are about rationalizing rationing decisions, it is not about saving costs, but about
efficiency in health care spending and value for money.
The scarcity of resources necessitates rationing, rationing in health care is an important and delicate matter, as
it affects vulnerable people and attracts the attention of media. Decisions are preferably transparent and
accountable.
The core of HTA is the economic evaluation (EE), EE’s always compare two or more health technologies, and
conducting an EE involves 6 steps.
The cost per QALY gained is valuable, but is not sufficient information for decision makers
,Health technology assessment - Master HEPL 23/24
HTA LECTURE 2 – MEDICAL
COSTS & DISCOUNTING
MEDICAL COSTS (DIRECT)
Costs are calculated with
C = q * p, where
- C= costs -> identifying
- Q = Quantity -> measuring
- P = price -> value
In costs there are a few relevant questions
- Were all the important and relevant costs and consequences for each alternative identified?
- Were costs and consequences measured accurately in appropriate physical units prior to valuations
(e.g., hours of nursing time, number of physician visits, lost work-days, gained life-years?
- Were costs and consequences valued credibly
- Were costs and consequences adjusted for differential timing?
There are three steps to determining costs
1. Identify resource items
2. Measure resource use
3. Estimate the value of resources
IDENTIFYING RESOURCE ITEMS
Health care resources consumed consist of the cost of:
,Health technology assessment - Master HEPL 23/24
- Organizing and operating the programme including dealing with the adverse events caused by the
programme
- Identification (often) listing the ingredients of the programme – both variable costs (e.g., time of
health professionals or supplies) and fixed or overhead costs (e.g., light, heat, rent, or capital costs)
At cost identification we need to determine our perspective
- Healthcare: medication, material, staff, room, food, …
- Society: healthcare costs (above) and travel costs, informal care costs, productivity losses, …
Different (common) perspectives are:
Perspective Decisions based on
Societal All costs
Healthcare Healthcare sector costs relevant or patients, family,
health care providers and government
Insurance companies Cost financed by insurance companies
Care provider (e.g., hospital) Cost particular to institution
Patient and family ‘out-of-pocket’ expenses, cost of time
Important and relevant costs need to be included. We find these cost by studying, analyzing and describing the
natural history of the disease and the treatment pathways, sources are: literature, treatment guidelines, pilot
samples and earlier studies, expert opinion and patient organizations. The focus is on large cost items (e.g.,
hospital days), and expected differences between intervention and alternatives
MEASURING RESOURCE ITEMS
Cost needs to be measured accurately and in appropriate units. Consider the following:
- The chosen perspective (defined during the identification)
- Services that are use/consumed
- The time horizon (several months/years versus lifetime)
Sources used:
- Registries (disease specific/drug-based)
- Questionnaires (patient and/or caregiver)
- Diaries (patient, home care, informal caregiver)
- Clinical practice guidelines
- Expert opinion less preferable (less reliable)
- Protocol driven costs (especially in RCT’s)
Measurement can be
- Retrospective: observational study (pro= quickly available, con= recall bias)
- Prospective: Alongside clinical trials (pro = design van be set, con= long follow up, external validity)
o Important: time interval.
, Health technology assessment - Master HEPL 23/24
ESTIMATING PRICE VALUE OF RESOURCES
The goal is to obtain an estimate of the worth of resources depleted by an illness or intervention, usually in
current year and the right currency. But if the price is ‘old’ or in another currency conversion and indexing is
needed.
The valuation of cost of medical services per unit.
Prices on competitive markets equal opportunity costs, but the healthcare market is not a competitive market.
Opportunity costs are economic net benefit forgone when selecting one option rather than the next best
alternative. The basis of cost estimates in economic evaluations: what are the benefits gained from adopting
intervention B, compared to losing benefits from the displaced intervention A?
The healthcare market is not a competitive market because prices are negotiated. There is a negotiation
between hospital, government and insurers, pharmaceutical companies.
Using pricing, charges or tariffs (such as Diagnosis related groups [DRGs]) can be misleading, because:
1. Actual cost structure might be different: tariffs etc. might include mark-ups to cover overhead, profit
or other expenses
2. Cost variation: between providers (e.g., efficiency and other local factors) might not be captured with
uniform tariffs
3. Pricing policies: may influence tariffs based on negotiations and not reflect actual costs
4. Complex direct cost allocation: might not be captured
5. Potential cross-subsidization distortions: might not be reflected
Better alternative to calculating price value is to calculate true resource costs
e.g., physical therapy: Total cost / treatment = (personnel costs (P) + material and building (MB)) / main service
e.g., hospital care: various staff, many departments, material, building, overhead, supportive/administrative
departments
Overhead costs:
- Resources serving different departments and programs
- Are not directly linked to patient services
- Need to be attributed to programs
How to value overhead costs?
- No single right approach exists
- The more important the costs items for the analysis, the greater the effort to estimate this cost should
be
- Need to be attributed to programs
Different allocation methods for overhead costs
1. Direct allocation: overhead costs are directly allocated to final costs centers (by ward’s share)
2. Overhead department are stepwise allocated to other overhead departments and the final cost center
Good and quick alternatives/solutions to price valuation is using prices from manuals, however, keep in mind to
adjust the prices to current values.
HTA LECTURE 1 – INTRODUCTION
TO HTA
INTRODUCTION TO HTA
HTA is an important advisory tool to make transparent and unbiased decision. In many countries it is
compulsory for deciding on reimbursement, and it assures value for money.
Key elements on the definition of HTA;
- HTA covers the
o Direct, intended consequences: which are costs incurred in direct treatment of a patient
o indirect, unintended consequences: Which are consequences incurred in indirect treatment,
such as informal treatment, where the carer needs to take more time off from work etc.
- Economic evaluation is usually the core of HTA, which compares two alternatives regarding costs and
benefits
ECONOMIC EVALUATIONS IN HTA
Here we look at the benefits and outcomes of new health technologies. Economics evaluations provide insights
in costs and effects of: (new) interventions compared with existing interventions
6 steps of performing an economic evaluation
1. Study design
2. Cost measuring
3. Benefits measuring
4. Discounting
5. Sensitivity analysis
6. Policy making
,Health technology assessment - Master HEPL 23/24
STEP 1: STUDY DESIGN
1. What perspective are we going to use for the economic evaluation, starting with who is going to pay
o We distinguish two dominant perspectives; the perspective is important as it determines
which cost and effects to include in the assessment:
Health care perspective: cost and effects falling on health care budget
Societal perspective: all relevant costs and effects.
There are also patient and health insurance perspective
2. Choice of comparator
o In an economic evaluation we always evaluate one thing to another, it is a comparison
between two alternatives, however it is important to define what we compare.
o Most efficient alternative (not perse the most effective) to -> Standard treatment
o Consider “no treatment, such as in the case that the alternative is not efficient, but is
expensive.
o Placebo not preferred
3. Type of analyses
o Only cost
Cost minimization analysis (CMA
Effects are equal, focus on cost
Generally, not done in healthcare
o Cost and effects in monetary terms
Cost benefit analysis (CBA),
Quantification of effects, for example a year is worth a certain monetary unit
o Cost In monetary terms, effects in natural units
Cost-effectiveness analysis (CEA)
E.g., progression free life years of heart attacks avoided
-> check if the outcome is in QALY, otherwise it is a CUA)
o Cost in monetary terms, effects in QALYs
Cost-utility analysis (CUA)
4. Time horizon
o All consequences must be taken into account (lifetime horizon), If there is a difference in life
expectancy of a treatment, you always have to take into account a lifetime perspective, which
is complicated because there is a lack of information of a patient’s lifetime. Thus, we can
extrapolate this from different sources of data.
o Methods:
RCT,
Observational study
Model (cohort or individual patient model)
Combination.
,Health technology assessment - Master HEPL 23/24
STEP 2: MEASURING AND VALUING COST
- Identify all relevant cost items
- Measuring resources use
- Value resource use
The costs included depend on the perspective. Whether productivity losses are relevant depends on the
patient group that you are conducting your economic evaluation for.
1. People die younger and there thus will be more productivity losses
2. People live longer and can also be productive, we then include gains or less losses in productivity
STEP 3: MEASURING AN VALUING EFFECTS
- Identify, measure and value effects of interventions
- Disease specific measures
- Generic measures
STEP 4: DISCOUNTING
- People have time preference for both costs and health effects
o The want for positive health effects now
o The want to postpone cost to the future
- Cost later in time weight less
- Effects later in time have less value
STEP 5: UNCERTAINTY
- The values used in economic evaluations are estimates, based on sample of population
- Uncertainty remains and is associated with all estimates
- Sensitivity analysis is to find out how sensitive cost-effectiveness outcomes are to changes in
parameters
,Health technology assessment - Master HEPL 23/24
STEP 6: APPLYING A DECISION RULE / POLICY MAKING
- Calculation of ICER (incremental cost-effectiveness ratio)
Cost A−Cost B
o =€ … per effect
Effects A−Effects B
o E.g., 10.000 per QALY of life year gained
o Apply the decision rule
Is ratio below or above the willingness to pay for a QALY -> WTP (V threshold)
Is ratio below or above our current healthcare production -> marginal returns (K
threshold)
- Determination of cost-effectiveness intervention
- QALY thresholds
CONCLUSION AND SUMMARY
Economic evaluations are about rationalizing rationing decisions, it is not about saving costs, but about
efficiency in health care spending and value for money.
The scarcity of resources necessitates rationing, rationing in health care is an important and delicate matter, as
it affects vulnerable people and attracts the attention of media. Decisions are preferably transparent and
accountable.
The core of HTA is the economic evaluation (EE), EE’s always compare two or more health technologies, and
conducting an EE involves 6 steps.
The cost per QALY gained is valuable, but is not sufficient information for decision makers
,Health technology assessment - Master HEPL 23/24
HTA LECTURE 2 – MEDICAL
COSTS & DISCOUNTING
MEDICAL COSTS (DIRECT)
Costs are calculated with
C = q * p, where
- C= costs -> identifying
- Q = Quantity -> measuring
- P = price -> value
In costs there are a few relevant questions
- Were all the important and relevant costs and consequences for each alternative identified?
- Were costs and consequences measured accurately in appropriate physical units prior to valuations
(e.g., hours of nursing time, number of physician visits, lost work-days, gained life-years?
- Were costs and consequences valued credibly
- Were costs and consequences adjusted for differential timing?
There are three steps to determining costs
1. Identify resource items
2. Measure resource use
3. Estimate the value of resources
IDENTIFYING RESOURCE ITEMS
Health care resources consumed consist of the cost of:
,Health technology assessment - Master HEPL 23/24
- Organizing and operating the programme including dealing with the adverse events caused by the
programme
- Identification (often) listing the ingredients of the programme – both variable costs (e.g., time of
health professionals or supplies) and fixed or overhead costs (e.g., light, heat, rent, or capital costs)
At cost identification we need to determine our perspective
- Healthcare: medication, material, staff, room, food, …
- Society: healthcare costs (above) and travel costs, informal care costs, productivity losses, …
Different (common) perspectives are:
Perspective Decisions based on
Societal All costs
Healthcare Healthcare sector costs relevant or patients, family,
health care providers and government
Insurance companies Cost financed by insurance companies
Care provider (e.g., hospital) Cost particular to institution
Patient and family ‘out-of-pocket’ expenses, cost of time
Important and relevant costs need to be included. We find these cost by studying, analyzing and describing the
natural history of the disease and the treatment pathways, sources are: literature, treatment guidelines, pilot
samples and earlier studies, expert opinion and patient organizations. The focus is on large cost items (e.g.,
hospital days), and expected differences between intervention and alternatives
MEASURING RESOURCE ITEMS
Cost needs to be measured accurately and in appropriate units. Consider the following:
- The chosen perspective (defined during the identification)
- Services that are use/consumed
- The time horizon (several months/years versus lifetime)
Sources used:
- Registries (disease specific/drug-based)
- Questionnaires (patient and/or caregiver)
- Diaries (patient, home care, informal caregiver)
- Clinical practice guidelines
- Expert opinion less preferable (less reliable)
- Protocol driven costs (especially in RCT’s)
Measurement can be
- Retrospective: observational study (pro= quickly available, con= recall bias)
- Prospective: Alongside clinical trials (pro = design van be set, con= long follow up, external validity)
o Important: time interval.
, Health technology assessment - Master HEPL 23/24
ESTIMATING PRICE VALUE OF RESOURCES
The goal is to obtain an estimate of the worth of resources depleted by an illness or intervention, usually in
current year and the right currency. But if the price is ‘old’ or in another currency conversion and indexing is
needed.
The valuation of cost of medical services per unit.
Prices on competitive markets equal opportunity costs, but the healthcare market is not a competitive market.
Opportunity costs are economic net benefit forgone when selecting one option rather than the next best
alternative. The basis of cost estimates in economic evaluations: what are the benefits gained from adopting
intervention B, compared to losing benefits from the displaced intervention A?
The healthcare market is not a competitive market because prices are negotiated. There is a negotiation
between hospital, government and insurers, pharmaceutical companies.
Using pricing, charges or tariffs (such as Diagnosis related groups [DRGs]) can be misleading, because:
1. Actual cost structure might be different: tariffs etc. might include mark-ups to cover overhead, profit
or other expenses
2. Cost variation: between providers (e.g., efficiency and other local factors) might not be captured with
uniform tariffs
3. Pricing policies: may influence tariffs based on negotiations and not reflect actual costs
4. Complex direct cost allocation: might not be captured
5. Potential cross-subsidization distortions: might not be reflected
Better alternative to calculating price value is to calculate true resource costs
e.g., physical therapy: Total cost / treatment = (personnel costs (P) + material and building (MB)) / main service
e.g., hospital care: various staff, many departments, material, building, overhead, supportive/administrative
departments
Overhead costs:
- Resources serving different departments and programs
- Are not directly linked to patient services
- Need to be attributed to programs
How to value overhead costs?
- No single right approach exists
- The more important the costs items for the analysis, the greater the effort to estimate this cost should
be
- Need to be attributed to programs
Different allocation methods for overhead costs
1. Direct allocation: overhead costs are directly allocated to final costs centers (by ward’s share)
2. Overhead department are stepwise allocated to other overhead departments and the final cost center
Good and quick alternatives/solutions to price valuation is using prices from manuals, however, keep in mind to
adjust the prices to current values.
