3/12/2009 decision and cost-effectiveness analysis james g. kahn after eran bendavid when...

3/12/2009Decision and Cost-Effectiveness Analysis

James G. Kahnafter

Eran Bendavid

When Rationality Falters: Limitations and Extensions of

Decision Analysis


Decision & cost-effectiveness analysis: Utilitarian & rational decision-making Everyone is equally deserving

Alternative (more realistic) assumptions: Behavioral economics Equity

Overview

Mental Accounting


You set off to buy an iPod shuffle at what you believe to be the cheapest store in your neighborhood. When you arrive, you discover that the price of the Shuffle is $75, a price you believe is consistent with low estimates of the retail price.

A friend walks into the store and tells you a store 10 minutes away sells Shuffles for $55.

Do you go to the other store?Now suppose you are buying a MacBook Pro for

$1960, and a friend tells you it sells for $1940 in a store 10 minutes away. Do you go?

Normative Problem Formulation


Classical decision theory axioms Ordering of preference Transitivity of preference Quantification of

judgment Comparison of

alternatives It’s the delta that matters

Cost benefit rationale

“Risky prospects arecharacterized by their possible outcomes and by the probabilities of these outcomes.

The same option, however, can be framed or described

in different ways.” -- Tversky & Kahneman, 1981

Framing Effects in Medical Decision-Making: Treatments


When framed positively (i.e. survival vs. mortality): Respondents 1.5 x more likely to choose surgery

over other treatments (i.e. radiotherapy) Respondents demonstrated increased preference

for invasive/toxic treatments Same framing effect noted in hypothetical &

real life treatment decisionsIntervention use intention higher when

results presented as RRR vs. ARR or NNT

RRR, ARR, and NNT


RRR = Relative Risk ReductionARR = Absolute Risk ReductionNNT = Numbers Needed to Treat Dead AliveMeds 404 921CABG 350 974

Risk of death (from having CABG) = 350/1324 = 0.264Relative risk of death = 0.264/0.305 = 0.87 = 87%RRR = Amt of risk of death is reduced by surgery: 100% - 87%

= 13% ARR = Absolute amt of risk surgery reduces death: 30.5% -

25.4% = 4.1% NNT = # pts needing surgery to prevent 1 death: 1/ARR = 24

Source: http://www.ebm.worcestervts.co.uk/trial_results.htm

Role of equity


Efficiency and Equity Both important for health care resource allocation

decisions Few guidelines for measuring or incorporating

equity Equity ~ Values

How can equity concerns be incorporated in cost-effectiveness analyses?

What is equity?


An equal and fair distributionAre treatments fairly allocated? Or

Are benefits fairly distributed? No guidance on how to assess

Vertical Equity


Principle of vertical equity = allocation linked to “need”

Greater care is given to people with greater health needs

Sicker patients first priority for funding Goal is to create equity in eventual health status

Paying attention to equity: Could make some relatively inefficient technologies more

attractive If benefits groups with greater claim to treatment Or could make efficient options less attractive


Vertical equity may be controversial -- if your definition of “need” is different than mine

Assume we accept vertical equityWhat characterizes equity?How should it measured?

Controversy

Are All QALYs Gains Equivalent?


4 QALYs

0

5

10

15

20

25

0 0.2 0.4 0.6 0.8 1

Quality of Life

Life

Exp

ect

an

cy

B

A

CD

E

1 QALY

7 QALYs

A’

B ′

E ′

C ′D ′

Each associated with a gain of 3 QALYs!

Steps in Applying Equity to CEA


1.Define groups which could receive priority to advance equity

2.Derive equity weights3.Determine how equity weights can be applied to

results of cost-effectiveness analyses (CEA) 4.Apply equity weighting to CEA results as a form of

sensitivity analysis

Some Possible Equity Factors


Baseline life expectancy

Baseline quality of life

Improvement in or final life expectancy

Improvement in or final quality of life

Distribution of benefits (number of people)

Health care endowment (prior expenditure)

Age

Personal behaviours

Relation to others

Social status

Survey to Understand Equity

3/5/2009MS&E 292 - Health Policy Modeling

Pilot in elected officials, municipal and provincial public clerks.

Participants recruited from waiting rooms at major Toronto downtown teaching hospital.

Asked to imagine they were voting in a referendum between 2 programs.

An Example


AttributesScenario

A B

Baseline QOL 30 30

Gain in QOL 0 15

Baseline LE 10 10

Gain in LE 10 2

N 10,000 100

Prior Allocation 50,000 5,000

Age 75 15

Number Selecting (%) 79 (29) 191 (71)

Significant factors in equity…


Consistent with prioritization for those with poorer health

Less prior resource allocation viewed as having priority

Equal priority two groups alike except: Had a quality of life that was 50 points worse Had received about $13,000 less in prior

resources

Some Factors Not Significant


Number of people expected to benefit

Potential improvement in quality of life

Could have important implications for resource allocation models

Distributional aspects (“how many benefit?”) may be less important than the characteristics of individuals (“who benefits?”)

Equity-Weighted QALYs: eQALYs


Vertical equity Implies society values some health gains

more than othersFor example

A QALY gain a sick person more valuable than a QALY gain for a well person

Cancer drug vs. lifestyle drugThus increase or decrease QALYsQALYs transformed into “eQALYs”

= equity-weighted QALYs

Limitations of eQALYs


QALYs already controversialConstruct is artificial, somewhat foreignMeasurement issuesAlready conflate survival, quality of lifePutting equity in might confuse more than it

illuminatesAnd exacerbate concerns about subjectivity, valuesi.e. eQALY components:

Survival Objective Quality of life (preference) Subjective Equity weight Subjective and

value-laden



1.Define groups which should receive priority to advance equity




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