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									   Cost Effectiveness
 Analysis (CEA) and its
Role in the US Healthcare
          System

    Presented by Kenice Frank
          Advised by Peter Neumann, Sc.D
     in completion of the Harvard Health Policy
                 Summer Program
INTRODUCTION
•Harvard Center for Risk Analysis (HCRA)

   The Cost Effectiveness Analysis (CEA)
    Registry provides public electronic
    access to a comprehensive database of
    cost-effectiveness ratios. Its goals are to
    find opportunities for targeting resources
    to save lives and improve health and to
    move towards standardization of cost-
    effectiveness methodology in the field.
Specific Objectives:
1. Create a comprehensive database of CUAs
2. Catalogue the methods used and examine
   whether studies have been improving
3. Construct a league table of cost/QALY ratios
   that adhere to Panel recommendations
4. Expand the above to include CEAs that
   report outcomes in terms of cost per life year
   gained (LY)



                    PHS 398/2590 ( Rev. 05/01)
Importance of the CEA Registry

   Is the quality of reporting   •Are studies adhering to
    in published CUAs             recommended protocols?
    improving?

   Are pharmaceuticals           •Which cancer prevention
    cost-effective?               and treatment interventions
                                  are most cost-effective?
Definitions
   Cost Utility Analysis (CUA)
        -a form of economic analysis used to guide
    procurement decisions, especially health technology
    assessment (HTA)
        - cost is measured in monetary units; the item being
    considered needs to be expressed in a quantitative form

   Sensitivity Analysis (SA)
         -aims to ascertain how the model depends upon the
    information fed into it,   upon its structure and upon the
    framing assumptions made to build it.




                        http://en.wikipedia.org/wiki/Cost-
                                  utility_analysis
Definitions


   Incremental Analysis – a method used to
    analyze the difference between the
    intervention and the alternative treatments

   Discounting – a method used to adjust future
    costs and benefits to their market value;
    people prefer things now instead of later


                   http://en.wikipedia.org/wiki/Cost-
                             utility_analysis
What is CEA?
   CEA is a systematic method of comparing two or more alternative programs by measuring
    the costs and consequences of each.

   The health outcomes of all the programs to be compared must be measured in the same
    common units

   Cost Utility Analysis (CUA)
           -a form of economic analysis used to guide     procurement        decisions,
    especially health technology assessment (HTA)
           - cost is measured in monetary units; the item being considered   needs to be
    expressed in a quantitative form

   Sensitivity Analysis (SA)
           -aims to ascertain how the model depends upon the information     fed into it,
    upon its structure and upon the framing assumptions made to build it.




                                        Berger et al., 2003
  Timeline
  project timeline


                                          Upgrade of            Website
                    Assessment of        Website and        Maintenance and
                    User Needs and      Restructuring of   Integration of New   Outreach and Public
        Month      Website Evaluation      Database               Data            Dissamination




                   Gather user
                   feedback on                             New data
                   beta test of                            acquisition and
22 ( June 2005)    website                                 integration


                                        Revise website
                                        based on beta                           Drafting of
23 ( July 2005)                         test                                    newsletter


                   Evaluate
                   website                                                      Revision of
24 (August 2005)   performance                                                  documentation
Limitations

   The life expectancy alone does not take into
    account the quality of additional time that is
    gained



           This is why we use QALYs
QALYs
   QALY = Quality Adjusted Life Year

   Advantages:
       1. Capture gains from prolongation and
    improved quality of life in a single measure
       2. Incorporate the value or preferences
    people place on different outcomes


     8/9/2011        Drummond et al., 1997
The Impact of a Technology on Costs
and Health

                 Intervention is
 Increases     less effective and
 costs             more costly


             Decrease in QALYS                   Increase in QALYS



 Decreases                                   Intervention is
 costs                                      more effective and
                                               less costly



                                     $
                       Laupacis A. et al., Can Med Assoc
                                J 1992;146:475
Why CEA?

   Despite the United States’ resistance to CEA, it
    has still emerged as the recommended
    technique for conducting economic evaluation
    of health and medical interventions



   CEA’s rising popularity can be easily noticed by
    the rising numbers of CEA publications being
    made in mainstream medical journals.
    Why CEA?
   The mere presence of this type of increase indicates a
    system that is in need of CEA’s services.

           Figure 1:
           Growth in Published Cost-Utility Analyses, 1976-2001

                   100                                                                              90
                                                                                                      85
                    80                                                                       70
                                                                                               64
       # Studies




                    60                                                                      50
                                                                                     4341
                    40
                                                                                    25
                                                                               19
                    20                                              1515
                          1 1 0 0 2 1 1 1 0 4 2 0 3 3                      5
                     0
                         1976   1979     1982     1985      1988     1991       1994     1997     2000

                                                             Year


                    Source: CUA Registry, Harvard School of Public Health, as of February 2003.
METHODS
CEA Registry Process
          MEDLINE Literature
             Searches



              Screening




             Article reading
           & data abstraction




           CUA Registry
Phase III Data Collection

   Screening Out

   Readers fill out a Methods, Ratios
    and Weights form for each article to
    extract the data that will go into the
    database
Phase III Data Collection
Methods Form

•   intervention types          •form completion
•   prevention stage            •cost measurements
•   primary affiliation of      •reporting of results
    author(s)
                                •sensitivity analysis
•   study sponsorship/funding
                                •discussion section
•   perspective
•   discounting
Phase III Data Collection
Ratios Form
         target population
         intervention
         comparator $/QALY from article
         population size
         impact in $
         ratio uncertainty
         direct medical costs
         non-health care costs
         $/QALY
         intervention comparator
Phase III Data Collection
Preference Weights Form


              secondary data usage
              population sample
              sample size
              elicitation method(s)
              health state
              weight range
              total # of weights
RESULTS
      Cost-Utility Analyses Of Pharmaceuticals Published,
                      Phase II (1998-2001)


                               Phase I                      Phase II
Type of Intervention    Number Percent                   Number Percent
1   Pharmaceutical         73        32.00%                460   48.40%
2   Surgical               41        18.00%                138   14.50%
3   Diagnostic             26        11.40%                157   16.50%
4   Screening              24        10.50%                143   15.00%
5   Medical Procedure      16        7.00%                 154   16.20%
6   Care Delivery          13        5.70%                 81    8.50%
7   Health Education       12        5.30%                 76    8.00%
8   Immunization           9         3.90%                 35    3.70%


                         Updated by Kenice Frank using
                                 Phase II data
           Interventions Type Frequencies
                                  Change in Intervention Type Frequencies

                    500


                    450


                    400
Number of Studies




                    350


                    300

                                                                                            Phase I
                    250

                                                                                            Phase II
                    200


                    150


                    100

                     50


                      0
                          1   2      3     4         5       6       7         8   9   10


                                                Intervention Type


                                               Updated by Kenice Frank using
                                                       Phase II data
                Cost-Utility Analyses Of Pharmaceuticals Published,
                                Phase II (1998-2001)
                                                                                    Drug as percent of
        Study characteristics                    Total        Nondrug        Drug          total
All studies                                       949           489          460          48.5%
Country of study
 United States                                    620           348          272          43.8%
 Other                                            329           141          188          57.1%
Condition
 Circulatory system                               205           114           91          44.4%
 Neoplasm                                         148            80           69          46.3%
 Infectious and parasitic                         224            83          141          62.9%
 Genitourinary system                              91            82            9           9.9%
 Digestive system                                  22             3           19          86.4%
 Musculoskeletal system                            62            20           42          67.7%
 Endocrine, nutritional, and metabolic             81            55           26          32.1%
 Nervous system and sense organs                   27            12           15          55.6%
 Mental disorders                                  38            27           11          30.0%
Source of study funding
 Government                                       375           235          140          37.3%
 Foundation                                       166           134           32          19.3%
 Pharmaceutical company                           161            33          128          79.5%
 Medical device company                           161            33          128          79.5%
 Health care organization                          37            36            1           2.7%
 Other                                             27            20            7          26.0%
 Not disclosed                                    349           152          197          56.4%
 None                                               4             1            3          75.0%
  *Some studies had more than one sponsor.



                                             Updated by Kenice Frank using
                                                     Phase II data
                 Drug as % of total
                   (Worldwide)


                                  % Drug




Drug as % of total              Drug as % of total
(Other) - Phase II               (U.S)- Phase II

                     % Drug
                                                     % Drug
          Median Cost-Effectiveness Ratios, By Type Of Intervention

   Intervention Type           Number of Ratios        Median Cost Effectiveness
Immunization                           28                         24,169
Care delivery                          56                         21,478
Surgical                               91                         16,338
Pharmaceutical                        286                         23,900
Screening                             123                         25,700
Other Public Health                     6                         509,721
Health education/ counseling           45                         31,000
Diagnostic                             88                         39,211
Device                                 42                         41,950
Medical Procedure                     105                         38,000
All Interventions                     870                         28,350


     Average acceptable median CE ratio is $50,000/QALY
     •incremental cost of more than $50,000/QALY gained = rejected
     •incremental cost of less than or equal to $50,000/QALY gained = accepted



                                 Updated by Kenice Frank, using
                                      Phase 2 information
DISCUSSION
Problems in CEA
References
   Neumann, P. J. (2005). using cost-effectiveness analysis
    to improve health care. New York, Oxford Press.
   ISPOR (2003). Health care, cost, quality and outcomes.
    Lawrenceville, ISPOR.
   Neumann, P. J., E. A. Sandberg, et al. (2000). "Are
    Pharmaceuticals Cost-Effective? A Review of the
    Evidence." Health Affairs 19(2).
   Neumann, P. J. (2002). "The Quality and Usefulness of
    Pharmacoeconomic Studies for Drug Coverage
    Decisions." Pharmaceutical News 9(1): 15-20.
   Neumann, P. J. (2004). "Why Don't Americans Use Cost-
    Effectiveness Analysis." The American Journal of
    Managed Care 10(5): 308-312.
Acknowledgements
           HCRA
  •   Peter Neumann, Sc.D.
                                                 HMS
                                        – Joan Reede, M.D., M.PH,
  •   Jenny Palmer, M.S.                  M.S.
  •   James Fraumeni, A.B.              – Binta Beard, M.S.
  •   Joshua Cohen, Ph.D.               – Xue Fen Su, M.S.
  •   Adi Eldar-Lissai, MBA
                                        – Jo Cole

                              AND


                  National Library of Medicine
Questions or Comments??
 Thank You!!



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