the reference icer for the australian health system: estimation and barriers to use

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The reference ICER for the Australian health system: estimation & barriers to use

Dr Laura Edney ([email protected])Professor Jon Karnon, Dr Hossein Afzali, Dr Terence Cheng

University of Adelaide 2

Professor Jon Karnon

Dr Hossein Haji Ali Afzali

Dr Terence Cheng

Professor Annette Braunack-Mayer

Dr Drew Carter

University of York: Professor Mark Sculpher, Professor Karl Claxton, Dr James Lomas

Advisory group members


Overview


Introduction

Overview


Introduction Methods & Results

Overview



Mortality-related QALYs

Overview




Morbidity-related QALYs

Overview





Reference ICER

Overview



Barriers to use



Reference ICER

Introduction

• Spending on new healthcare technologies increases net population health only when the benefits of the new technology are greater than their opportunity costs

School of Public Health, University of Adelaide 12

Introduction


Introduction


Empirical estimate of opportunity cost for English NHS

£12,936 per QALY

Introduction



£12,936 per QALY

Introduction



£12,936 per QALY

Empirical estimate of opportunity cost for Spanish NHS

£21,421 per QALY

Context in Australia


Total health expenditure in Australia (AIHW, 2015)

≈ $155b in 2013-14 (9.78% of total GDP)


70,000

80,000

90,000

100,000

110,000

120,000

130,000

140,000

150,000

160,000

Constant prices to 2013-14 prices

Total health expenditure ($ million)



• Between 2013/14 to 2015/16:

– Commonwealth spending on patented pharmaceuticals increased by 27.2%

– Script volume declined by 13.6%

• These new pharmaceuticals may represent good value for money, but the basis for assessing value is limited by lack of empirical information on the opportunity cost of decisions to fund new health technologies



• Constrained budget

• Pharmaceutical Benefits Advisory Committee (PBAC) & Medical Services Advisory Committee (MSAC)

– Provide recommendations to the Minister for Health on the value of new pharmaceuticals and medical services to the Australian taxpayer

– No explicit threshold, but ‘value for money’



• Defining value for money:

• PBAC– Public Summary Documents refer to conditional acceptance if

ICERs reduced to $45,000 to $75,000 (£26,000-£43,000)

– Point estimate provided to companies (commercial in confidence)

• MSAC– Cost-effectiveness “remained acceptable [at an] ICER of

~$43,000 per QALY” (£25,000)

• Do these thresholds represent value for money?


Improvement in HRQoL from 2011-12 health

spending

Method: overall approach

22

Elasticity of quality-adjusted

YLL to public health spending in

2011/12

Mortality-relatedQALYs

Morbidity-relatedQALYs

+

Reference ICER

Increased expenditure 2011-12 / Mortality + Morbidity QALY

gains


spending

Method: mortality-related QALYs (1)

23



2011/12



+

Reference ICER


gains

Method: mortality-related QALYs

• Statistical Local Areas (SLAs) of usual residence

• Common unit of analysis to link data (n=1028)

• Smallest geographical unit of the Australian Standard Geographical Classification

• Based on bodies of local government, suburbs, areas of economic significance, specific localities or non-urban areas

• Vary in size with an average estimated resident population of 20,000

• Health funds are not allocated to SLAs



• Health spending is endogenous to health outcomes

• First stage:– log ℎ𝑒𝑎𝑙𝑡ℎ 𝑠𝑝𝑒𝑛𝑑𝑖𝑛𝑔 = 𝛼 + 𝑐𝑜𝑣𝑎𝑟𝑖𝑎𝑡𝑒𝑠 + 𝑖𝑛𝑠𝑡𝑟𝑢𝑚𝑒𝑛𝑡 + 𝜀

• Second stage:– log 𝑄𝐴𝐿𝑌𝑠𝑚𝑜𝑟𝑡𝑎𝑙𝑖𝑡𝑦−𝑟𝑒𝑙𝑎𝑡𝑒𝑑 = 𝛼 + log ℎ𝑒𝑎𝑙𝑡ℎ 𝑠𝑝𝑒𝑛𝑑𝑖𝑛𝑔 + 𝑐𝑜𝑣𝑎𝑟𝑖𝑎𝑡𝑒𝑠 + 𝜀




Health spending = Sum of spending across• Public hospitals• MBS• PBS

$67b

YLLLE = LE – age at death • Where LE=80 for males & 84 for females• +1 YLL for persons dying beyond life expectancy• Age and gender standardised• YLL weighted by age- and gender-specific utility scores (SF-6D)

Generates QALYs lost per SLA

Instrument = unpaid care• +ive relationship

• ↑ unpaid care = ↑ health spending (needs adjusted)Rationale:

• ↑ identification of need for services by carers, &• ↑ access to health services through removal of physical barriers to access



Healthcare need= Census-based variables (n=18)• Demographics• Socioeconomics• Health status Population density

FemalesMales 15-24 years

ATSIBorn overseas

Lone pensionerConcession card

Government housingVolunteeringCost of living

State/territory dummiesRemoteness dummies

Covariates

Results: mortality-related QALYs

Diagnostic tests

• Endogeneity

– Hausman test (26.138, p<0.01)

– Durbin-Wu-Hausman test (F(1,1004)=25.94, p<0.001)

• Relevant instrument

– Strong predictor of health spending in the first stage (β1=0.193, p<0.001)

• Valid instrument

– Appropriately excluded from vector of covariates in second stage – i.e. impact of instrument on QALYs lost occurs solely through health spending



• Elasticity of mortality-related QALYs to health spending = 1.6

• 0.01 ∆ health spending = 0.016 ∆ mortality-related QALYs



University of Adelaide

Incremental cost per mortality-related QALY

= 0.01.∑(health spending) / 0.016.∑(mortality-related QALYs)

= $670M / 9,588

= $69,870

Annual per capita mortality-related QALY gain

= ∆(per capita health spending) / incremental cost per mortality-related QALY

= $90 / $69,870

= 0.0013 (95%CI= 0.0003, 0.0023)

31


spending

Method: morbidity-related QALYs

32



2011/12



+ Increased expenditure 2011-12 / Mortality + Morbidity QALY

gains

Reference ICER


• Household, Income & Labour Dynamics in Australia (HILDA)

– Longitudinal nationally representative survey of Australian adults, 2002—2013

– N=68,873



• Temporal change in HRQoL (SF-6D)

– Fixed effects regression

• Extensive range of covariates used to interpret coefficient on time trend as due to change in health spending

– Demographics: marital status, 21 binary life events

– Social: satisfaction with personal safety, local community, neighbourhood, free time, life in general

– Economic: income, employment status, satisfaction with financial situation, perceived difficulty raising money for an emergency, etc.



• Not all change in HRQoL will be maintained across lifetime

• HRQoL improvements either:

– Require ongoing spending to be maintained (e.g. chronic conditions), or

– Are maintained without additional spending in subsequent years (e.g. elective surgery)



• Reference ICER should capture all HRQoL improvement from a single year of healthcare spending

• Therefore:

1. exclude ongoing effects of spending in years prior to 2011, &

2. incorporate ongoing effects of spending in 2011 on subsequent years


Results: morbidity-related QALYs

• Annual per capita change in HRQoL = 0.0026 (95% CI= 0.0019, 0.0033)

• Aggregated weighted duration of HRQoL effects 2 – 4.1 years across 3 scenarios

• Corresponding estimates of proportion of total health services that provide a lifetime HRQoL effect of 10.2% to 23.5%

• Base case = central estimates of– Duration effects (from 1 year of health spending)= 2.5 years– Proportion of lifetime HRQoL effects = 11.7%

• Annual per capita improvement in morbidity-related QALYs = 0.0066



spending

Reference ICER

38



2011/12



+

Reference ICER


gains

Reference ICER


= ∆ per capita health spending / (mortality + morbidity-related QALYs)

= $219.9 / 0.0013 + 0.0066

= $28,033 per QALY (95% CI $20,758, $37,667)

= £16,280 per QALY (95% CI £12,055, £21,875)

Deterministic Sensitivity Analysis• 2 key input parameters

– Elasticity of mortality-related QALYs to health spending

– Year trend representing per capita change in morbidity-related QALYs


• ↑probability the reference ICER is <$35,000 per QALY


0.71

0.94

0

0.5

1

$20,000 $30,000 $40,000

Pro

ba

bil

ity

Reference ICER: Cost per QALY

Key assumptions

• 2 assumptions underestimate reference ICER

• (1) Mortality-related QALY gains assume that averted YLL are lived in same utility as general population (age and gender matched)

– Overestimate QALYs lost as YLL more likely in clinical populations with lower HRQoL

• Sensitivity analysis using EQ-5D-3L Australian population norms that were 6% higher than our base case values had minimal impact on the reference ICER (reduction of $237)


Key assumptions

• 2 assumptions underestimate reference ICER

• (2) Morbidity-related QALY gains assume that the time trend coefficient represents the effects of health spending on pop-level change in HRQoL

• Socioeconomic covariates assumed to control for the effects of PHI, individual health spending, non-government spending, social determinants of health


International comparisons

• Accepted ICERs are higher than the estimated opportunity cost of decisions to fund new technologies


Empirically estimated cost per QALY (£)

Current threshold

employed (£)

Percentage reduction

required for threshold to equal

the empirically estimated threshold

English National Health Service 12,936 20,000 35.3

Spanish National Health Service 18,507 26,409 29.9

Australian Health Care System 16,580 26,615 37.7

Implications for Australia

• F1 drug costs in 2015-16 = $ 4.3b (£2.5b; $176 per capita)

• Price reduction of 37.7% could have saved = $1.6b

• Or, an additional 57,225 QALYs

• Conclusion: To maximise QALYs, we should only fund new technologies with an ICER < $28,033 per QALY


Use of the reference ICER in practice?

• Advisory group

• HTA decision-making committees – MSAC & PBAC


Why might we not use the reference ICER?

• Other health-related goals

– Reducing inequity in health

• Other non-health-related goals

– Economic

– Political


Non-health-related goals

• Economic

– Reduced investment in R&D

– Reduced production of pharmaceuticals

• Human pharmaceutical and medicinal product manufacturing R&D in Australia = $380m

– 8.5% of total Aust. manufacturing ($4.5b)

– 2.1% of total Aust. business R&D spending ($18.3b)

• Political

– Impact on trade deal negotiations

– Perceived community response (access)


Economic impact

• Economic considerations = difficult to quantify

• Fiscal multiplier = Δ national income / Δ govt spending

• Δ $2 / Δ $1 = multiplier of 2

• Multiplier < 1 = govt spending reduces the size of the economy


Fiscal multiplier, example

• MS&D from spending in 2000 = $280m to the Australian economy

• Average annual cost of PBS subscriptions supplied by MS&D = $347m

• Multiplier effect = $280m / $347m = 0.81 = < 1

• Pharmaceutical spending has a lower multiplier effect than other types of health spending


Trade negotiations

• Impact on international trade

– Reduction in price paid may reduce bargaining power in trade negotiations

• Reference ICER can inform of the net loss in population health

– This can provide strong rationale to support change in pricing


Community response

• Community view price reductions unfavourably

• (as a result) politicians are more likely to pay high prices


Herceptin fund in Australia

• HTA committees are independent from govt, but there is a political context to decisions made

• Herceptin for late stage cancer patients rejected by PBAC based on cost-effectiveness 3 times, late 1990s

• In response to patients and patient advocacy groups, Herceptin funded under a special programme independent of the PBS

• Media analysis of TV coverage prior to decision:• 54% of all reported statements framed as ‘desperate, sick

women in double jeopardy because of callous government/incompetent bureaucracy’– Due to government financial constraint & mean-spiritedness– Drug industry pricing not mentioned at all


Herceptin fund in Australia

• Conclusions:

– Clinicians, patients, their families and patient advocacy groups invoking the rule of rescue increase likelihood of gaining access to expensive healthcare

– Rational, criteria-base public health policy will find it hard to resist the rule of rescue imperative (MacKenzie et al. 2008)

• But, the cumulative effect of repeatedly applying the rule of rescue will lower the average level of population benefit


Stakeholders

Patient family

Carers

Clinicians

Decision-

makers

Govern-

ment

Tech

developers

Tech manu-

facturers

Payers

Consumer groups

Patients


Community perceptions

• What do the community think about using the reference ICER

– How to elicit informed responses?

– Do community understand the trade-offs between new high cost interventions versus additional benefits elsewhere in the healthcare system?


Community perceptions

• Online survey

• Informed responses ~5 min video

• Research questions/

– Can the concept of opportunity cost be accurately (& relatively easily) communicated to the public

– Do informed community members think we should pay more for some new technologies than their opportunity cost?

• Pilot responses


Summary

• Reference ICER = $28,033 per QALY

– Suggests reductions of almost 40% required to current funding thresholds

~similar to estimates from the UK and Spain

• Anticipated barriers to use

– Economic

• R&D

• Manufacturing

– Political

• Trade negotiations

• Popularity of decisions


[email protected]

the reference icer for the australian health system: estimation and barriers to use

Health & Medicine