Summary lectures - Economic Evaluation in Healthcare
Lecture 1 – Introduction
Health Technology Assessment (HTA): evaluation of health technology from a variety of perspectives
in order to inform health policy. (Social sciences • Medicine • Epidemiology • Demography •
Economy • Health Law • Medical Ethics • Organisational science)
Health Economics: evaluation of health technology in terms of costs and health outcomes.
Goal of HE: balance care demand and provision + support decisions on investment, designing,
research, pricing, market access and introduction into the benefit package.
Objective evaluation:
– Prevention, diagnostics, therapy, recovery, palliative care
– Safety and efficacy
– (Future) impact on (clinical) outcomes
– (Future) impact on non-clinical patient outcomes
– (Future) costs (cost savings)
Why do we need economic evaluation in health care?
Constrained budgets in health care (mostly funded by government; insurers; out of packet payments
of patients). Every euro can be spent once → How to we get the biggest health bang for our buck?
Development of economics in health care:
70s: international as part of health technology assessment – Valuing new medical
technologies based on safety, effectiveness, economic, social, lawful and ethical aspects
80s: introduction of expensive treatments such as heart and liver transplants/IVF: “Grenzen
aan de groei van het verstrekkingenpakket
90s: Fund for developmental medical care. Systematic studies into cost-effectiveness of
advanced expensive new medical technologies
2005: lawful obligation for pharma to submit a pharma-economic evaluation when
requesting reimbursement for a new technology – Added value of a new technology only justified
when it has ‘sufficient additional value’ for patients – Value-based reimbursement system
➔ New high cost medical products!
It is not just about how much we spend, it is also how we spend it! Efficiency, doelmatigheid, cost-
effectiveness. Optimal use of scare health care resources.
Health care budgets are limited – Care demands and expectations of patients are unlimited.
Assumptions:
- Efficient and fair allocation of constrained resources to maximize (societal) health benefits.
- Individual people and society wishes to maximize utility and aim to achieve the greatest
benefit for the greatest number.
,Pareto efficiency: the loss of some people is compensated with gains of others (societal perspective)
Opportunity costs: value of the best alternative; in a situation in which a choice needs to be made
between several mutually exclusive alternatives given limited resources. The cost incurred by not
enjoying the benefit that would be had by taking the second best choice available.
Increasing the national healthcare budget will reduce budgets for education, military defense, etc.
Suboptimal use of the healthcare budget means: loss of money → loss of health.
Guidelines for health economics:
- Quality
- Efficacy
- Safety
- Cost-effectiveness
The cost-effectiveness of an intervention does not exist because, the cost-effectiveness depends on
the interventions that are compared.
Economic evaluation:
- Comparative analysis of two or more alternative investment possibilities (interventions/
strategies, policies) to perform incremental (cost effectiveness) analysis.
- Goals is to systematically identify, measure, value, and compare costs and effects
(consequences) of different alternative policies/interventions.
For typical questions → see slides.
Is this particular intervention (drug, technology, device, service, healthcare delivery strategy)
valuable when compared to other interventions that could be paid for with the same budget?
Comparators: systematic identification of all relevant alternative interventions. Including: ‘do-
nothing’/ ‘watchful waiting’ / ‘active surveillance’.
Perspective: determines the outcome of the economic evaluation. Patient, hospital, insurer, society
Timing → ideally after proof of efficacy and before large scale implementation of technology.
Concept:
, Types of (full) economic evaluation:
- Cost Effectiveness Analysis (CEA)
o Can express effects in any measure of interest for intervention under study.
o Not comparable across conditions, only within a condition or within on type of
intervention. (with exception for life years gained)
- Cost Benefit Analysis (CBA)
o All effects of interest have to be translated into monetary units (cost effects + health
effects).
o Advantage: net cost can easily be compared, allows for comparison across
conditions, even across different sectors of the economy, as traffic/environment
o Monetary value on health using a willingness-to-pay threshold (WTP)
- Cost Utility Analysis (CUA)
o Costs alternatives expressed in monetary units
o Effects expressed as Quality-Adjusted Life Years (QALYs)
o Allows comparison of interventions extending life with strategies (also) improving
quality of life.
o Particularly relevant when an intervention/strategy has positive as well as negative
impact on health (side effects, complications)
- Cost Minimization Analysis (CMA)
o Compare the costs of interventions to determine the cheapest intervention.
o Only applicable if there are no differences in effectiveness, effects are considered to
be exactly the same for all patients (no heterogeneity). Hardly ever valid assumption!
Main difference between methods:
How (health) effects of interventions are measured and valued. Measurement of effects determines
to what other interventions one can compare the intervention under study.
Benefit cost ratio (BCR) is partial economic evaluation → health effects are not valued.
Cost of Illness (COI):
- Identify and measure all the costs of a particular disease.
- The output, expressed in monetary terms, is an estimate of the total cost burden of a
particular disease (to society).
Budget Impact Analysis (BIA):
- Analysis of financial consequences of the use of alternative intervention compared to current
situation for certain budget holder (for example: hospital/health insurer,/Ministry of Health)
Lecture 1 – Introduction
Health Technology Assessment (HTA): evaluation of health technology from a variety of perspectives
in order to inform health policy. (Social sciences • Medicine • Epidemiology • Demography •
Economy • Health Law • Medical Ethics • Organisational science)
Health Economics: evaluation of health technology in terms of costs and health outcomes.
Goal of HE: balance care demand and provision + support decisions on investment, designing,
research, pricing, market access and introduction into the benefit package.
Objective evaluation:
– Prevention, diagnostics, therapy, recovery, palliative care
– Safety and efficacy
– (Future) impact on (clinical) outcomes
– (Future) impact on non-clinical patient outcomes
– (Future) costs (cost savings)
Why do we need economic evaluation in health care?
Constrained budgets in health care (mostly funded by government; insurers; out of packet payments
of patients). Every euro can be spent once → How to we get the biggest health bang for our buck?
Development of economics in health care:
70s: international as part of health technology assessment – Valuing new medical
technologies based on safety, effectiveness, economic, social, lawful and ethical aspects
80s: introduction of expensive treatments such as heart and liver transplants/IVF: “Grenzen
aan de groei van het verstrekkingenpakket
90s: Fund for developmental medical care. Systematic studies into cost-effectiveness of
advanced expensive new medical technologies
2005: lawful obligation for pharma to submit a pharma-economic evaluation when
requesting reimbursement for a new technology – Added value of a new technology only justified
when it has ‘sufficient additional value’ for patients – Value-based reimbursement system
➔ New high cost medical products!
It is not just about how much we spend, it is also how we spend it! Efficiency, doelmatigheid, cost-
effectiveness. Optimal use of scare health care resources.
Health care budgets are limited – Care demands and expectations of patients are unlimited.
Assumptions:
- Efficient and fair allocation of constrained resources to maximize (societal) health benefits.
- Individual people and society wishes to maximize utility and aim to achieve the greatest
benefit for the greatest number.
,Pareto efficiency: the loss of some people is compensated with gains of others (societal perspective)
Opportunity costs: value of the best alternative; in a situation in which a choice needs to be made
between several mutually exclusive alternatives given limited resources. The cost incurred by not
enjoying the benefit that would be had by taking the second best choice available.
Increasing the national healthcare budget will reduce budgets for education, military defense, etc.
Suboptimal use of the healthcare budget means: loss of money → loss of health.
Guidelines for health economics:
- Quality
- Efficacy
- Safety
- Cost-effectiveness
The cost-effectiveness of an intervention does not exist because, the cost-effectiveness depends on
the interventions that are compared.
Economic evaluation:
- Comparative analysis of two or more alternative investment possibilities (interventions/
strategies, policies) to perform incremental (cost effectiveness) analysis.
- Goals is to systematically identify, measure, value, and compare costs and effects
(consequences) of different alternative policies/interventions.
For typical questions → see slides.
Is this particular intervention (drug, technology, device, service, healthcare delivery strategy)
valuable when compared to other interventions that could be paid for with the same budget?
Comparators: systematic identification of all relevant alternative interventions. Including: ‘do-
nothing’/ ‘watchful waiting’ / ‘active surveillance’.
Perspective: determines the outcome of the economic evaluation. Patient, hospital, insurer, society
Timing → ideally after proof of efficacy and before large scale implementation of technology.
Concept:
, Types of (full) economic evaluation:
- Cost Effectiveness Analysis (CEA)
o Can express effects in any measure of interest for intervention under study.
o Not comparable across conditions, only within a condition or within on type of
intervention. (with exception for life years gained)
- Cost Benefit Analysis (CBA)
o All effects of interest have to be translated into monetary units (cost effects + health
effects).
o Advantage: net cost can easily be compared, allows for comparison across
conditions, even across different sectors of the economy, as traffic/environment
o Monetary value on health using a willingness-to-pay threshold (WTP)
- Cost Utility Analysis (CUA)
o Costs alternatives expressed in monetary units
o Effects expressed as Quality-Adjusted Life Years (QALYs)
o Allows comparison of interventions extending life with strategies (also) improving
quality of life.
o Particularly relevant when an intervention/strategy has positive as well as negative
impact on health (side effects, complications)
- Cost Minimization Analysis (CMA)
o Compare the costs of interventions to determine the cheapest intervention.
o Only applicable if there are no differences in effectiveness, effects are considered to
be exactly the same for all patients (no heterogeneity). Hardly ever valid assumption!
Main difference between methods:
How (health) effects of interventions are measured and valued. Measurement of effects determines
to what other interventions one can compare the intervention under study.
Benefit cost ratio (BCR) is partial economic evaluation → health effects are not valued.
Cost of Illness (COI):
- Identify and measure all the costs of a particular disease.
- The output, expressed in monetary terms, is an estimate of the total cost burden of a
particular disease (to society).
Budget Impact Analysis (BIA):
- Analysis of financial consequences of the use of alternative intervention compared to current
situation for certain budget holder (for example: hospital/health insurer,/Ministry of Health)
