work in progress: not to be cited without permission how much should a health-care system be...
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WORK IN PROGRESS: NOT TO BE CITED WITHOUT PERMISSION
How much should a health-care system be prepared to pay for a QALY?
Martin BuxtonHealth Economics Research Group, Brunel University, UK
Seminar to the Centres for Health Policy and Primary Care Outcomes Research, Stanford University, January 2006
Disclaimer and acknowledgements I have drawn on my experience as a member of the Appraisals
Committee and the Economics Task Group of the National Institute for Clinical Excellence
Some of the ideas presented here have been clarified in preparing a paper around this topic with a group of colleagues involved with NICE, led by Professor Tony Culyer
However, the views expressed in this presentation are my own and should not be taken necessarily to represent the opinion of either my colleagues, the Appraisal Committee, the Task Group or NICE.
Structure
Context
Alternative theoretical bases for determining cost-effectiveness thresholds:
Intrinsic social valueValue for budget constrained QALY maximisation
The explicit NICE position
NICE as a ‘threshold-searcher’
Conclusions
Context
Economic evaluation is increasingly focussed on estimating incremental cost per additional QALY gained – ‘cost per QALY’
For all its limitations, the QALY is probably the most acceptable, and generally applicable measure of health gain currently available to compare cost-effectiveness of different technologies across the health sector
Preferred form of analysis of a number of reimbursement authorities such as NICE
Key question
What is the threshold value of cost per QALY that distinguishes cost-effective interventions from not cost-effective interventions in any particular context?
Economic analysts can opt to (partially) avoid the question by presenting cost-effectiveness acceptability curves
Decision-makers cannot share this convenient side-step
Without a clear idea as to willingness/ability to pay for additional QALYs, cost per QALY analysis can do little to inform a decision and the increasingly sophisticated edifice of cost-effectiveness analysis, is of little value
Bases for establishing a threshold or benchmark value for a QALY
A social judgement about the intrinsic value in a particular society (Approach 1)
OR
The maximum value of a marginal QALY consistent with maximising QALYS gained within a given health service budget (Approach 2)
Approach 1: ‘Intrinsic value’ The value ‘society’ places on a QALY
Appears to be broadly what the public and interest groups would like as the basis
Might be estimated via individual values or those of elected/appointed decision-makers
Considerable conceptual and technical difficulty in establishing ‘social’ WTP from individuals*
Implicit values of past decisions may have no real relationship to decision-makers explicit values
*See for example: Richardson and Smith, AHEHP, 3(3):125-126; and Gyrd-Hansen, Pharmacoecon, 23(5): 423-432
Approach 1: ‘Intrinsic value’ (continued) Implies that the health system should undertake any activity
that generates a QALY for less than that threshold
Therefore, inconsistent with a predetermined and fixed budget
Implies that this ‘social value’, and exogenously controlled stream of medical developments, should determine the health budget
What factors might affect this intrinsic value?
National per capita income:thus value would vary between countries and
increase over time
National differences in ‘demand’ for health relative to other goods and services
Health status of population?
Characteristics of recipients?*
*Subject of current research requested by NICE
Examples of estimated values(in US $ 2002)*: Review of mainly US contingent valuation studies: median
value - $161K per QALY (Hirth et al, MDM, 20(3): 332-42)
Review of UK WTP studies: median value - $52K per LYG (Hutton et al – Conference abstract)
UK: calculation based on value of a statistical life as used for road traffic accidents - $48K per QALY (Loomes, OHE Monograph, 2002)
* For a recent review see Eichler et al, Value in Health, 7: 518-528
Approach 2: Maximum value of a marginal QALY consistent with fixed budget
In an idealistic system, the ICER of the least cost-effective intervention that should be funded within a fixed budget
Implies that: ICERs (and total budget costs) are known for all
technologies
At the beginning of a budget period all technologies are compared, ordered and adopted logically to budget limit
Further new technologies are not considered until repeat of process at beginning of next budget period
Approach 2a: Maximum value of a marginal QALY consistent with budget increment*
Focuses on maximising QALYs from any increase in funding
The ‘threshold’ would emerge as the minimum level of cost-effectiveness of new developments that the health system should adopt from any growth in spending
Threshold will vary depending on what new technologies arrive that year and how much is the growth in spending
Implies an (annual) process aligned to budgetary periods
* Broadly as proposed by Maynard et al, BMJ, 329: 227-229
Approach 2a: Maximum value of a marginal QALY consistent scope for disinvestment
Value that ‘balances’ changes at the margin in what the health system provides
Minimum cost-effectiveness of ‘investments’ and maximum cost-effectiveness of ‘disinvestments’ at the margin
Consistent with a fixed budget at any point of time
Requires that the health system can ‘dis-invest’ existing services that are less cost-effective
Difficulty of establishing this value, which will vary locally and over time
NICE and thresholds
Cost-effectiveness (cost per QALY) is central to the concerns of the Appraisal Committee
Most contentious decisions have rested on disputes about cost-effectiveness
So what is (or was) NICE’s position?
Initially it was in denial!
Probabilistic cost-effectiveness thresholds
From: Devlin & Parkin, Health Economics, 13: 437-452
Pro
bab
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f re
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ion
by
NIC
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Cost –effectiveness ratio
So what does NICE now formally say
Public statement by Rawlins (NICE 2002): ‘appears that there is less chance of being accepted if above
to £30k’
Revised Methodological Guidance (NICE, April 2004): < £20k - likely to be accepted > £20k - needs additional factors to justify > £30k - these factors have to be increasingly strong
Rawlins and Culyer (BMJ, September 2004) Inflexions in the curve
Lower inflexion (A) - £5k-£15k Upper inflexion (B) - £25k-£35k
Other views on what the NICE threshold should be
Alan Williams (OHE Lecture, 2004) suggested that it should reflect GDP per capita (c £18K per QALY in UK)
WHO (2002) proposed generalised threshold based on 3x GDP per capita (c £54K per DALY in UK )
NICE as a ‘threshold searcher’ (1)
It is not constitutionally proper for NICE to determine the threshold:
NICE is required …’to reach a judgement on whether on balance [an] intervention can be recommended as a cost-effective use of NHS and PSS resources’
Parliament sets the constraint on the resources available via the NHS (and PSS) budgets
NICE is not tasked with (nor able to) asses the cost-effectiveness of all technologies used by the NHS
NICE as a ‘threshold searcher’ (2)
The Department of Health (with NICE) identifies ‘priority’ technologies to appraise ( currently mostly, but not exclusively, new drugs)
As a ‘threshold searcher’ NICE needs to consider a selection of likely investment and disinvestment possibilities
It has to ensure that newer technologies always displace technologies with higher cost per QALY – but even when such opportunities have been identified, this may be politically very difficult.
A threshold-searching approach Implies that there will always be uncertainty and
optimisation is unattainable
The threshold will be fuzzy and may depend on the size of the disinvestment necessary
It focuses on the need to assess the potential for disinvestment from high cost per QALY activities
and a political willingness to stop providing cost-ineffective services that have been provided in the past
More general conclusions
An informed debate involving economists, politicians and the public is needed on the principles
Better empirical estimates are needed of threshold values consistent with different approaches (in different countries)
An externally determined social value of a QALY is incompatible with a politically determined health-care budget but could inform the debate about that budget
It is likely, as with NICE, that thresholds will have to be approximate, particularly if they are not to change considerably within and between years
