COST-EFFECTIVENESS Flashcards
Definition of Economic Evaluation?
A comparative analysis of alternative courses of action (treatments or interventions) in terms of both their costs and outcomes (consequences)
2 key introduction quotes?
- economic evaluation is the process of measuring cost effectiveness [Goodacre, 2002]
- the primary objective of any health system is to maximise the health of indvs/pop they serve; and to do so in an equitable way within budgetary parameters [OECD, 2019]
Definition of Cost Effectiveness (Utility) Analysis?
Looks at alternative courses of action (treatment/interventions) and identifies where more QALYs can be produced at the same cost or where a lower cost can be achieved for the same QALYs
Defintion for QALYs?
Quality-Adjusted Life Years … measure of the state of health of a person in which the benefits, in terms of length of life, are adjusted to reflect the quality of life
- One QALY is equal to 1 year of life in perfect health
Definition of Incremental Cost Effectiveness Ratio (ICER)?
Measures the incremental cost of an activity relative to its best alternative divided by its incremental effect … extra cost per 1 QALY
What type of economic analysis does NICE use?
Cost-effectiveness (utility) analysis
- only accepts QALYs as a measure of utility
Definition of Simple Dominance (Dominated Treatment)?
Treatment offers fewer QALYs and higher costs compared to the next best alternative … another treatment is cheaper and more effective
the treatment will be EXCLUDED due to SIMPLE DOMINANCE
Definition of Extended Dominance (Extendedly Dominated Treatment)?
Treatment offers a higher ICER (higher cost per QALY) than that of the treatment immediately further down the list … treatment offering both higher costs and worse health outcomes than a linear combination of other options
the treatment will be EXCLUDED due to EXTENDED DOMINANCE
Definition of Cost Effectiveness Plane?
Plots the incremental cost and incremental effect (ICERS) of the next best new intervention vs. the existing intervention (existing/no treatment)
NICE ceiling ratio/threshold?
£20,000
NICE’s ‘threshold’ ICER is intended to represent the opportunity cost to a fixed-budget NHS of adopting a technology in terms of QALYs forgone (Dakin et al., 2014)
Decision Rule of ICER?
Adopt the treatment option with the highest ICER below the threshold
- ICER < RC … the activity is cost effective … adopt the new treatment
- ICER > RC … the activity is not cost effective … reject the new treatment
- ICER = RC … the activity is same cost effective … indifferent between existing (no) treatment and new treatment
Definition of Net Benefit Approach (MNB)?
Measures effects and costs in the same units
Monetary net benefit (MNB) = (Rc * ∆QALY) - ∆Cost
net health benefit = MNB/Rc
Definition of MNB?
- Activity is cost-effective if MNB > 0
- Activity is not cost-effective if MNB < 0
Analysis of CUA?
CUA depends on the PERSPECTIVE of the decision maker
- in healthcare and the NICE approach … only healthcare costs being included in CEA, based on the argument that the healthcare budget should be used to maximise health
Analysis of the £20,000 threshold?
Best estimate is that NHS produces health at the margin at £12,936 per QALY … so when NICE approves a new treatment at £20,000 it is damaging population health
Ultimately, this figure of £20,000-£30,000 is relatively arbitrary – never been formal justification published for why NICE approves treatments at £20,000-£30,000 per QALY
Despite good evidence that – if we want to maximise health – we should reduce the threshold, there seems little sign that this will happen
- Even though repeated estimates of productivity of NHS have shown different cost effectiveness
