keystone / module 5 / slideshow 3 / economic evaluation
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KEYSTONE
Inaugural KEYSTONE Course on Health Policy and Systems Research 2015
Economic Evaluation
Economic EvaluationEconomic Evaluation
Keystone HPSR CourseKeystone HPSR Course
2525thth Feb 2015 Feb 2015
New DelhiNew Delhi
OverviewOverview
• Efficiency concept
• What is an economic evaluation?
• Types of economic evaluation
• Interpreting the results of an economic evaluation
• How can economic evaluation guide policy?
• Illustrations
BackgroundBackground
• Resource scarcity
– Routine health system: Resource envelope under NHM– Hospital budgets: resource based rather than need based
• Opportunity Cost
• So, how do you make choices?
– Precedence– Disease burden and effectiveness of interventions– Cost effectiveness of interventions
EfficiencyEfficiency
Investing resources to get best value for money
How to Assess Efficiency?
Economic Evaluation
The comparative analysis of alternative courses of action in terms of both their costs and
consequences
Source: Methods for the economic evaluation of health care programmes Michael F. Drummond, 2nd edition, 1997
What is economic evaluation?
Does a medical intervention (drug, device, program,
surgery) when used to prevent or treat a condition or
improve health outcomes in patients, justify
the additional dollars spent compared to the existing
medical strategy?
Costs A
Costs B
Programme A
Programme B
Consequences A
Consequences B
ChoiceChoice
No
No Yes
Examines only consequences
Examines only costs
Outcome Description Cost Description Cost Outcome
description
Yes
Efficacy or Effectiveness
EvaluationCost Analysis
Full Economic Evaluation
Cost Effectiveness AnalysisCost Utility AnalysisCost Benefit Analysis
Is there a comparison of tw
o or more
alternativesAre both the costs (inputs) and consequences (outputs) of the
alternatives examined?
Health Care Evaluation
Perspectives in economic evaluation
• Patient or client perspective
• Health System/ Donor perspective
• Societal perspective
Outcome Assessment
Type of economic evaluationType of economic evaluation Outcome can be measured byOutcome can be measured by
Cost effectiveness analysis • Clinical end points• Mortality• Years of life• Condition specific outcome measures
Cost utility analysis • Utility based quality of life scales(DALY, QALY)
Cost benefit analysis • Monetary value of health benefits
Cost Minimization analysis: Least cost with same effects
Health care sector – C1
Resource consumed
Other sector – C3
Patient and family – C2
Health care programme
Other values created (v)
Health state changed
Effects (E)
Resources saved
Health care sector – S1
Patient and family – S2
Other sector – S3
COSTS CONSEQUENCES
Total cost = C1+C2 + C3 –(S1+S2+S3)
Cost-effectiveness analysis
C1+C2 + C3 –(S1+S2+S3) /E
•Life years saved
•Mm Hg BP reduced
•Number of patients treated successfully
Health care sector – C1
Resource consumed
Other sector – C3
Patient and family – C2
Health care programme
Other values created (V)
Health state changed
Effects (E)
Resources saved
Health care sector – S1
Patient and family – S2
Other sector – S3
Health state preference (U)
COSTS CONSEQUENCES
Cost-utility analysis
C1+C2 + C3 –(S1+S2+S3) /U
•Quality adjusted life years (QALYs)
Health care sector – C1
Resource consumed
Other sector – C3
Patient and family – C2
Health care programme
Other values created (V)
Health state changed
Effects (E)
Resources saved
Health care sector – S1
Patient and family – S2
Other sector – S3
Monetary value (Rs) of health benefits
COSTS CONSEQUENCES
Cost-benefit analysis
[W+V+S1+S2+S3] – [C1+C2+C3)
Programme A
Programme B
Choice
Costs A
Costs B
Effects A
Effects B
CB – CA / EB - EA = Incremental cost effectiveness
Average cost effectiveness A = CA / EA
Average cost effectiveness B = CB / EB
Average & Incremental Cost Effectiveness Ratio
+-
+
-
O
IV
IIIII
ICost difference
Effect difference
Less effective More costly
Less effective Less costly
More effective Less costly
More effective More costly
200 300
1,00,000
2,00,000
100
Cost –effectiveness plane
x
y
●
●
●
Excluded
Questionable
Dominant
Cost-effective ? Less effective More costly
Interpretation of ICERInterpretation of ICER
• < GDP per capita : Very cost effective
• 1-3 times GDP per capita : Cost effective
• >3 times GDP per capita : Not cost effective
Examples for Illustration
India’s female sex worker HIV prevention India’s female sex worker HIV prevention programprogram
Prinja S, et al. Sex Transm Inf. 2011; 87: 354-61.
Incremental Cost Effectiveness Ratio (ICER) Value
Government perspective
USD per DALY averted 819
USD per life year gained 885
USD per Hib case averted 115
USD per Hib death averted 26,004
Societal perspective
USD per DALY averted 277
USD per life year gained 300
USD per Hib case averted 39
USD per Hib death averted 8,809
Hib vaccine in UIP: Haryana state, India Hib vaccine in UIP: Haryana state, India 19
Gupta M, Prinja S et al. Health Policy and Planning (2012).
Cost Effectiveness of IMNCI program in IndiaCost Effectiveness of IMNCI program in India
Prinja S, et al (2015). Unpublished
Incremental Cost
ICER, using different Perspective for ICER
Health system Societal
Per illness averted 1699 1183
Per infant death averted 49963 34799
Per DALY averted 1554 1082
How Can CEA Guide Policy?How Can CEA Guide Policy?
How Can CEA Guide Policy?How Can CEA Guide Policy?
How Can CEA Guide Policy?How Can CEA Guide Policy?
Does Using EE violates Equity?
• Maybe yes!
• Maybe no!
• But then what do we do?
Conclusion
• Introduction to efficiency and economic evaluation
• Efficiency should be an important consideration for planning and implementation of health programs
• Cost effectiveness analysis helps in making efficiency decisions
• Incremental cost effectiveness ratio is the key output measure
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