Health economic evaluation for the NHS workshop

Health Economic Evaluation for the NHS
20 June 2018

Who are we?
• David Wonderling, Head of health economics
• Lauren Ramjee, Senior health economist
• National Guideline Centre
– Hosted by Royal College of Physicians
– Commissioned to develop guidelines by National Institute of Health and Care
Excellence (NICE)
• NICE guidance
– Guidelines
» Clinical, public health, social care, service delivery
– Technology Appraisals
– Medical Technologies and Diagnostics
– (Interventional procedures)

Outline
Introduction
Introduction to
health
economics
Principles of
Economic
Evaluation
What makes a
product
efficient?
Specifying the
question
Practical
Data Case Studies
Case study 1
Case study 2
Practical
Measuring
health gain
Measuring
costs

Aims
1. Understand what health economics is about
2. Understand what an Economics Evaluation is
3. Identify different types of economic evaluation

Dispelling Myths
Myth 1: Health economics is about saving the government money
• Economics is the study of how to best allocate scarce resources in order to
maximise benefits to society
• Health economics helps NHS use its limited budget to maximise health
outcomes for the whole population
• Identify interventions which offer the best value for money

Dispelling Myths
Myth 2: A cheap intervention is cost-effective
• Surgery A costs £500 while surgery B costs £800 but…
• More re-operations after Surgery A
• And/or more complications after Surgery A
• Eventually Surgery A generates more costs

Dispelling Myths
Myth 3: Expensive interventions are not cost-effective
• A strategy which is very expensive might generate substantial future
savings and/or improve health substantially
– save more lives
– Fewer adverse events
– Better quality of life

Dispelling Myths
Myth 4: Health economics is only concerned with expensive drugs &
high technology
• Health economics is relevant for any clinical question if there could be a
difference in resource use:
– What should staff use to wash their hands?
– What is the best platform to store patient information/records?
– Should point of care tests be used?
– Should monitoring be conducted remotely (via tele medicine)?
– What sequence should tests be done?
– Should follow-up be conducted in hospital or in primary care?
– What types of rehab should be offered after stroke?

Challenges to the NHS
• Everyone wants better health and healthcare
• But resources are limited
– Staff e.g. doctors and nurses
– Facilities e.g. hospitals
– Equipment e.g. MRI scanners
– Consumables e.g. drugs
• The NHS does not have limitless spending therefore there is an
‘opportunity cost’ to spending i.e. the value of the best alternative use of
resources
• If the NHS spends more on one thing it has to spend less on something
else. But how can we decide?

Treatment A
(usual care)
Treatment B
(new treatment)
Costs
Health outcomes
Costs
Health outcomes
Economic Evaluation
• “... the comparative analysis of alternative courses of action in terms of
both their costs and consequences.” (Drummond et al. 2005)

Types of Economic Evaluation
Type of analysis
Value of
resources
Value of health gain
Cost-utility £ Combined index:
Quality Adjusted Life Years (QALY)
Cost-effectiveness £
Single indicator:
Weight loss (kg),
blood glucose control (HbA1c)
deaths averted,
life years saved…
Cost-consequences £ Multiple indicators
Comparative cost /
Cost minimisation
£ None
Cost-utility analysis is desirable.
Cost-consequences or cost minimisation
might be more pragmatic and sufficient

Cost effectiveness vs. resource/budget impact
Cost-effectiveness Resource/budget Impact
Is it value for money? How much it will cost?
Costs, savings and health outcomes Costs and savings
Inform policy / purchasing For planning & implementation
Time horizon up to lifetime Time horizon of 1 to 5 years
Cost-effectiveness ratio
e.g. Cost per quality-adjusted life-
year (QALY) gained
Cost per patient
Total cost (for Trust/CCG/England)
You might also want to conduct a budget
impact analysis

Conclusions
• Health economics is about the optimal allocation of scarce resources
• There is an opportunity cost for each and every decision
• Different types of economic evaluation can be conducted
• NICE prefers
– Cost-utility analyses for Guidelines and Technology Appraisals
– Cost-consequences analysis (or sometimes comparative cost analysis) for
Medical Technologies

Aims
1. Understand what makes a product efficient for use in the NHS
2. Understand ways that cost-savings can be achieved

What makes a product efficient / value for money for the NHS?
• There are four possibilities that could make a product efficient:
– Cost saving + clinical benefits
– Cost saving + clinical equivalence
– Cost neutral + clinical benefits
– ‘Cost-effective’

Cost Saving
?
Additional
cost (£)
Additional health effect

Cost neutral + Clinical benefits
Additional
cost (£)

Cost-effective


?
?
Additional
cost (£)
In the grey quadrants cost-
effectiveness depends on the
willingness to pay for the
additional effects, or the
acceptable health foregone to
achieve the cost savings!

How can cost savings be achieved?
Cost
saving
Faster
Better
Cheaper
Safer

procedures tests
services equipment
Cheaper

Treatment recovery is faster
= reduction in hospital length of
stay
Filling out patient records is
faster
= reduction in staff time needed
for specific activity
Time to diagnosis is faster
= reduction in costs of treating
complications prior to a diagnosis
Staff training is faster
= reduction in cost of training
staff
Faster

New IT system that centralises
information
= reduction in staff time required
for administrative tasks
More operation are a success
= reduction in long term health
costs
Tele-monitoring
= reduction in cost of monitoring
Less repeat tests required
= reduction in cost of diagnosis
Better

Fewer staff injuries
= reduction in staff costs
Fewer adverse events during
surgery
costs
Fewer adverse events after
surgery
costs
Lower radiation dose during
imaging
costs
Safer

Conclusions
• The most attractive products for the NHS are those that improve clinical
outcomes and reduce costs
– These products DOMINATE current practice
• If your product is not dominant you will need to demonstrate the trade-off
between health gained/lost and costs increased/saved
• Products can be cost saving by being faster, better, cheaper or safer than
current practice

Aims
1. Specify clearly the question you want the Economic Evaluation to answer
2. Choose appropriate comparator(s)

Specifying the question
Population(s)
What specific patient population(s) are we interested in?
This will be our denominator for costs and effects
P
Intervention
What is our investigational intervention?
Specify dose, timing, supportive interventions, etc.
I
Comparison(s)
What are the main alternatives to compare with the product?
a) current usual practice (minimum)
b) alternative interventions that could potentially be as cost-effective as usual practice.
c) no intervention
C
Outcome(s)
What do we intend to accomplish, measure, improve or affect?
a) NHS costs (minimum)
b) patient-relevant health outcomes and/or process/resource impacts
O

Time horizon
• Time horizon
– Time period over which costs and benefits are measured
– Need same horizon for both costs and effects.
• How long?
– Long enough to include all meaningful differences between the comparators
in terms of their costs and benefits
• Long time horizon (e.g. lifetime of patients)
– If there’s a difference in patient survival
– If the impact on patients is far reaching (e.g. hip replacement)
• Short time horizon
– If the impact on patients is short term
– The study follow-up was short?
– If the intervention is already cost-effective in short-term and extending the
time horizon would only make it more so.

Are sound generators cost-saving compared to no treatment for people with
Tinnitus?
Are sound generators cost-saving
for people with Tinnitus?
compared to no treatment
Outcome
Intervention
Comparison
Population

What is the most cost-effective way to deliver rehab for people with stroke?
What is the most cost-effective
for people with stroke?
way to deliver rehab
Outcome Intervention
Comparison
Population

Protocol
Is GP-AF case finding software cost effective in helping to diagnose people with
atrial fibrillation?
Population People (diagnosed and undiagnosed) with Atrial Fibrillation
Intervention GP-AF case finding software platform
Comparison Compared to opportunistic testing at general practice
Outcomes • Additional cases of atrial fibrillation detected
• Additional cases treated with anticoagulation
• Strokes avoided
• Quality adjusted life years gained
• Cost per patient

Conclusions
• For an economic evaluation you need to specify the:
– POPULATION(S)
– INTERVENTION
– COMPARATOR(S)
• Including usual NHS practice
– OUTCOME(S)
• Costs and benefits need to be consistently measured over a time horizon
that captures all important differences between intervention and
comparators

Practical
• Now frame an economic evaluation for your product
• Specifying the essentials
• What are the details of the:
– Population(s)?
– intervention?
– comparator(s)?
• What are the key impacts (Intervention vs comparator)?
• What time horizon is necessary to capture key impacts?

Aims
1. Understand which costs you should be considering
2. Understand how to estimate costs
3. Learn where to get information for costs from

Rules for conducting health economic evaluations
• England and Wales - NICE
– Methods of Technology Appraisal
https://www.nice.org.uk/about/what-we-do/our-programmes/nice-
guidance/nice-technology-appraisal-guidance/process
– Developing Guidelines
guidance/nice-guidelines/how-we-develop-nice-guidelines
– Medical technologies evaluation programme methods guide
guidance/medical-technologies-guidance/how-we-develop
• Scottish Medicines Consortium
– https://www.scottishmedicines.org.uk/making-a-submission/
• Other Countries
– https://www.ispor.org/PEguidelines/index.asp

Which costs should you include?
• Possible perspectives
– Trust/Practice
– CCG
– NHS (for most NICE evaluations)
– Public sector
• NHS + local authorities + central government
– Societal
• Public sector + productivity losses/gains + all other impacts
Most likely

NICE methods guidance for economic evaluation of drugs, medical
technologies & clinical guidelines
Non-NHS costs
Cost to other government bodies may be included in exceptional circumstances as a sensitivity
analysis.
Costs borne by patients should not be included unless they are reimbursed by the NHS
Patients productivity gains/losses should not be included, even as a sensitivity analysis, as this
would mean we would be prioritising people in work (over the elderly, chronically ill etc.).
Where a technology extends life
NHS costs related to the condition of interest and incurred in additional years of life gained as a
result of treatment should be included in the reference-case analysis. NHS Costs that are
considered to be unrelated to the condition or technology of interest should be excluded.

Which costs should you include?
Immediate cost of
investment + Recurrent costs
Savings from
reduced resource
use-
COSTS SAVINGS

How to estimate costs
1) Estimate resource use per patient for each intervention
– E.g. numbers of GP visits, outpatient visits, tests, drug use (HES data, activity
data, audit data)
– Sometimes reported in clinical trials or other studies
– May need assumptions from the Committee or other experts
2) Multiply by unit costs for each resource
– Some standard national sources (e.g. BNF for drugs)
– Sometimes available from clinical studies
– May sometimes have to use local estimates

Resource use for Health Economic Evaluations
Cost Type Examples
Technology costs • Medication
• Medical devices
• Diagnostic tests
• IT software
Costs of healthcare service use • Days in hospital
• Medical procedures
• Outpatient visits
• Appointments / staff time
• GP, Nurse, physio
• Emergency services
• Days in intensive care
Other costs • Healthcare consumables
• Training
• Administration
• Overheads

Data – How to find and use freely available national unit costs
Type of cost Source for the cost
Drugs NHS Drug tariff
http://www.nhsbsa.nhs.uk/prescriptions
British National Formulary
http://www.bnf.org
Other technologies NHS Supply Chain Catalogue
http://my.supplychain.nhs.uk/catalogue
Staff time ‘Unit costs of health and social care’
http://www.pssru.ac.uk/project-pages/unit-costs/
Hospital
procedures/stays,
outpatient visits, tests
Department of Health
Tariff and NHS reference costs
https://www.gov.uk/government/publications/payment-by-results-pbr-
operational-guidance-and-tariffs
https://www.gov.uk/government/collections/nhs-reference-costs

Using NHS Reference costs
https://www.gov.uk/government/collections/nhs-reference-costs
• Cost of Admission
• Cost per Excess Bed day
– Example: Total knee replacement with no comorbidities or complications
• Converting from OPCS/ICD10 to HRG
• See ‘Code to group’ Workbook for relevant year, e.g.
https://digital.nhs.uk/services/national-casemix-office/downloads-groupers-and-tools/costing-
hrg4-2017-18-reference-costs-grouper
Currency
Description
Cost Unit cost
Very Major Knee
Procedures for Non-
Trauma with CC
Score 0-1
Non Elective long
stay £5692
Excess bed day
£315

Using ‘Unit costs of health and social care’
http://www.pssru.ac.uk/project-pages/unit-costs/
Cost Value Source
GP appointment £37 (£31 without
qualifications)
PSSRU (Curtis 2017)
(p172)
Example

Unit costs – other sources
• Published studies
– HEED (health economics evaluation database up to 2014), HTAs
• https://www.crd.york.ac.uk/CRDWeb/
– Medline/Embase
• Manufacturers
• Trusts

Discounting
• Different interventions give rise to costs and benefits incurred at different
time points
• People prefer benefits today and costs in the future
– Costs and benefits incurred today are therefore valued higher than those in
the future
• We “discount” costs and benefits to account for this time preference
– we can calculate the ‘present value’ of future costs and benefits
• NICE discounts both costs and health benefits at 3.5% per annum
– For example, a cost of £1,035 incurred in one years time would be valued at
£1,000 today (£1,000 is therefore the present value)

Annuitizing costs
• Products have an upfront costs and expected lifetimes
• As we are interested in cost per patient we need to
– annuitize the upfront costs – calculate the implicit rental value
– divide by the expected caseload / output
• Example
– GP-AF case finding software platform costs £1,000 upfront
– Expected lifetime = 5 years (after which a new licence needs to be purchased)
– Software can help identify 10 people with AF per year
• Annuitize, accounting for the discount rate (3.5%)
– Cost of software per year = £221
• Divide by the outcome
– Cost per case detected = £22

Formulae for discounting / annuitizing
• Net present value of cost occurring in future
– 𝑁𝑃𝑉 = 𝐶
1
(1+r) 𝑡
– Where C=cost incurred at time t; r=discount rate (time preference, e.g. 3.5%)
• Annual equivalent cost of up-front expenditure
– Annuity factor: 𝐴 =
1−(1+r)−𝑡
r
• Where t=life expectancy of equipment; r=discount rate
– Annual equivalent cost= 𝐴𝐸𝐶 =
K−(S/(1+r) 𝑡)
A
• Where t=life expectancy of equipment, K=cost at time of purchase;
S=resale value at time t; r=discount rate; A= annuity factor

Conclusions
• Costs include both resource use (number of times used) and the cost itself
• Costs included should reflect the perspective of the target audience
• There are available sources for many NHS unit costs
• Costs that occur in the future need to be discounted
• Up-front costs need to be annuitized

Aims
• Understand what health outcomes you should be measuring
• Understand whether you can calculate quality adjusted life years
• Understand the decision rules of economic evaluations

Measuring health gain
Type of analysis
Value of
resources
Single indicator:
Weight loss (kg),
deaths averted,
life years saved…
Comparative cost /
Cost minimisation
£ None

Quality Adjusted Life Years
QALYs =
Life expectancy
(life years)
x Quality of life
(utility)
• A measure of overall effectiveness (overall health)
– Length of life
– Quality of life (utility): 0 (death) to 1 (full heath) scale
• 2 years in full quality of life = 2 x 1.0 = 2 QALYs
• 2 years at 50% quality of life = 2 x 0.5 = 1 QALY
• Life-years can be calculated using life tables or Markov models

Utility weights for QALYs
• A common measure used in Economic Evaluations and NICE’s preferred
measure is the EQ-5D health state valuation tool
• 5 dimensions of health
– MOBILITY
– SELF-CARE
– USUAL ACTIVITIES
– PAIN / DISCOMFORT
– ANXIETY / DEPRESSION

Sources for utility weights
• EQ-5D is NICE’s preferred method of health related quality of life in adults
– https://euroqol.org/
• You can sometimes source utility weights from published literature
– http://healtheconomics.tuftsmedicalcenter.org/cear4/SearchingtheCEARegistry/SearchtheCEARegist
ry.aspx
– https://www.scharrhud.org/
• When EQ-5D data is not available the data can sometimes be estimated by
mapping from other health-related quality of life measures

Decision rules of cost effectiveness analysis
• An intervention is considered to be cost-effective compared to the best
alternative if:
– It improves health and costs less (is dominant)
– The incremental cost effectiveness ratio (ICER) is less than the threshold
• ICER = the difference in mean costs / the difference in mean QALYs
If an intervention requires additional resources these rules
ensure too much health will not be displaced elsewhere in
the health system in order to fund the intervention
Thresholds
-NICE uses £20,00-£30,000 per QALY for most treatments
-DHSC uses £15,000 per QALY for Impact assessments

Assessing cost-effectiveness
Treatment cost-effective
in shaded region
Threshold £20,000
per QALY gained
Cost (£)
Effect (QALYs)
Low extra cost
High QALY gain
High extra cost
Low QALY gain
QALY = quality adjusted life year

Cost-consequences / cost-effectiveness analyses
• The intervention /product improves all clinical outcomes and reduces
costs compared to current practice
– Then it DOMINATES current practice and should be recommended for use in
the NHS
• The intervention/product improves some clinical outcomes but not others
and reduces costs OR
• The intervention/product improves all/some clinical outcomes but
increases costs
– Then an informal judgement needs to be made about the ‘cost-effectiveness’
and whether it is considered ‘value for money’
E.g. £100 per stroke avoided vs. £1,000,000 per stroke avoided

Measuring health gain
Type of analysis
Value of
resources
Single indicator:
Weight loss (kg),
deaths averted,
life years saved…
Comparative cost /
Cost minimisation
£ None
Sometimes it is not possible or necessary to
estimate health gain and then a costing
analysis might be the most appropriate!

Evidencing the impact of a product
• For the main effects (health and resource use) you will need good
evidence (ideally from comparative studies):
– E.g. reduction in major adverse events
• Other effects may be modelled using case series or national statistics
– E.g. length of stay associated with the adverse event
– E.g. proportion of the adverse events that are fatal
• Economic evaluation best practice
– Baseline event rates from large case series
– Relative treatment effects from pragmatic randomised controlled trials
• Where you use observational data for relative treatment effects, you
should attempt to control for differences in baseline confounding variables
using regression analysis

Hierarchy of evidence for relative treatment effectiveness
Meta-analysis of RCTs
RCTs
Cohort studies
Case series
Expert opinion
Lower risk of bias
Sometimes better
- Larger studies
- More generalisable
- Longer time horizon
Might be the best we can do

Sensitivity analysis
• Threshold analyses
– How much of a change in a key outcomes is needed in order to make the
intervention cost saving/cost-effective
• One-way and n-way sensitivity analyses
– Vary individual parameters within plausible ranges
– Or to extremes
• Probabilistic sensitivity analyses
– Vary all parameters simultaneously within plausible ranges

Conclusions
• Cost-utility analyses are the preferred method of economic evaluation for
NICE but are not always feasible
– EQ-5D is the preferred health state valuation tool
• The results of cost-effectiveness analyses and cost-consequences analyses
require informal judgements to be made to determine whether the
product/intervention is considered ‘value for money’
• Comparative cost analyses do not estimate a value of health gain
• Observational evidence typically has a higher risk of bias but might be the
best we can do
• Sensitivity analysis should be conducted to deal with parameter
uncertainly

3. Case Studies
NICE Medical Technologies guidance
• A technology is likely to be selected if:
– relevant* technology with a CE marks (or equivalent regulatory approval) or is expected to get
one within 12 months
– substantial benefits to patients or the health and care system compared with current practice
• easily understood, clearly described, plausible, supported by evidence.
– developing guidance would mean faster and more consistent adoption of the technology.
• Relevance
– Detailed and transparent
– Lower threshold of evidence than medicines or guidelines
• QALYs not necessary
• Less sophisticated modelling
– Approved by a national committee
* a medical device (under EC directive 2007/47/EC or 93/42/EEC)
an active medical device (under EC directive 90/385/EEC)
an active implantable medical device, (under EC directive 90/385/EEC)
an in vitro diagnostic medical device (under EC directive 98/79/EC).

Case study 1 – SecurAcath for securing percutaneous catheters
https://www.nice.org.uk/guidance/mtg34
Published June 2017

PICO
• Population: Patients requiring peripherally inserted central
catheters (PICC)
• Intervention: SecurAcath – a single-use device used to secure
percutaneous catheters in position on the skin
• Comparator: StatLock – standard care
• Outcomes:
• NHS costs
• Catheter-related complications

Model essentials
• Economic evaluation type: Comparative cost analysis
• Model type: Simple decision tree
• Time horizon: 25 days
• Discounting: Not necessary - short time horizon
• Perspective: NHS hospital costs (England)

Technology costs
• StatLock – standard care
– Unit cost £3.47
– Needs replacing weekly
– Nurse time for placement 40.8 minutes x£0.60=£24.48
– Cost over 25 days=£3.47x4+£24.48=£38.36
• SecurAcath
– Unit cost £16
– Does not need replacing
– Nurse time 20.5 minutes x£0.60=£12.30
– Cost over 25 days =£16+£12.30=£28.30
Faster
Better

Benefits
• Reduced need for PICC replacement
• Slightly reduced risk of catheter-related infection
Probability of
complication over 25
days Cost of
treating
complicationSecurAcath StatLock
PICC migration 0.0040 0.0593 £250
PICC malposition 0.0166 0.1097 £250
PICC occlusion 0.1435 0.1200 £250
Thrombosis 0.0369 0.0369 £250
Infection 0.0036 0.0037 £9,900
Sources
Effects
1xRCT (n=105)
2x cohort studies
4x case series
Unit costs
3x published studies
Safer

Decision tree - SecurAcath
£28
SecurAcath
PICC migration
PICC malposition
PICC occlusion
Thrombosis
Infection
0.0040
0.0166
0.1435
0.0369
0.0036
No complication
0.7954
£278
£278
£278
£278
£9,928
£114
Multiply the cost of each endpoint with the probability of getting there
(0.7954x28)+(0.0040x278)+(…….. =

Decision tree - StatLock
StatLock
PICC migration
PICC malposition
PICC occlusion
Thrombosis
Infection
0.0593
0.1097
0.1200
0.0369
0.0037
No complication
0.6704
£38
£288
£288
£288
£288
£9,938
£156

Results
Patients requiring
PICC
Cost savings=
£42 per patient

Other Analyses
• Sensitivity analyses did not change outcome
– Device cost +/-20%
– Complications +/-20% and no difference
– Shorter SecurAcath placement time
• Other population - alternative time horizons
– 5 days and 25 days
– Threshold analysis – SecurAcath is cost saving for PICC use over 15 days
• Other population - CVC instead of PICC
– Alternative comparator – sutures
– SecurAcath was not cost saving

Recommendations
• “SecurAcath should be considered for any PICC with an anticipated
medium- to long-term dwell time (15 days or more).”
• “Estimated cost savings range from £9 to £95 per patient for dwell times
of 25 days and 120 days, respectively.”
• “Annual savings across the NHS in England from using SecurAcath are
estimated to be a minimum of £4.2 million.”

Case study 2
• PleurX peritoneal catheter drainage system for vacuum-assisted drainage
of treatment-resistant, recurrent malignant ascites
Published March 2012
Model updated February 2018
https://www.nice.org.uk/guidance/mtg9

PICO
• Population: People with treatment resistant, recurrent malignant
ascites (accumulation of fluid in the peritoneal cavity)
• Intervention: PleurX peritoneal catheter drainage system for
vacuum-assisted drainage
• Comparator: Repeated large-volume paracentesis (needle drainage
of fluid) inpatient procedures
• Outcomes: Technical success, resolution of symptoms, perception
of body image, quality of life, adverse events, drainage
frequency, resource use, cost per patient

Model essentials
• Economic evaluation type: Comparative cost analysis
• Model type: Simple decision tree
• Time horizon: 26 weeks
• Discounting: Not necessary - short time horizon
• Perspective: NHS hospital costs (England)

Claimed Benefits
• Greater patient independence
• Better symptom control
• Reduced need for repeated large-volume
paracentesis procedures
• Resource savings through a reduced need for hospital
physician and nurse time, outpatient visits and
hospital bed days
Cheaper
Better

Clinical variables
Parameter LVP PleurX Source
Mean survival
(weeks)
8.45 8.45 Mullan et al
(2011a)
Parameter LVP PleurX Source
Probability of
infection (LVP)
4.5% 2.5% Rosenberg
(2004)
Probability of
catheter
failure (LVP)
3.0% 5.0% Rosenberg
(2004)
Survival
Complications

Healthcare recourse use
Parameter Value Source
Bed days for LVP per session 2.8 Mullan (2011a)
Frequency of repeated LVP (per month) 1.22 Mullan (2011a)
Large volume paracentesis
PleurX
Bed days for catheter placement 1.0 Assumed based on Mullan
(2011a)
Probability of re-intervention 4.0% Rosenberg (2004)
Proportion who are self-managed 73.0% Courtney (2008)
Length of nurse visit (hours) 0.25 Assumed
Nurse visits for catheter use training 2 Questionnaire
Nurse visits per week 3.5 Assumed
Number of drainage kits used (per week) 3.5 6.4.5

Healthcare Costs
Hospital bed day £355.00 NHS reference cost 2015-
16
Infection £198.97 NHS reference cost 2015-
16; BNF*
Catheter failure £405.73 NHS reference cost 2015-
16, BNF**
Catheter re-intervention £790.96 Assumed***
Cost per home visit (assisted) £67.89 PSSRU 2016
Cost of travel per visit (assisted) £1.58 Assumed
*Includes: A medical oncology consultant led first attendance visit:
£197; 7 day course of antibiotics (Ciprofloxacin) £1.97
**Includes: A medical oncology consultant led first attendance visit:
£197; vial of Streptokinase: £16.73; Ultrasound lasting <20 minutes:
£51.00; contrast fluoroscopy lasting <20 minutes: £141.00
*** Assumed to be cost of 1st catheter procedure + 1 hospital bed day

Costs of consumables
Large Volume Paracentesis
Catheter and pack £33.64 Uplifted from Mullan et al
Connector £7.22 Uplifted from Mullan et al
Drain £5.19 Uplifted from Mullan et al
2L Drainage Bag £0.67 Uplifted from Mullan et al
Procedure costs/sundries £127.21 Uplifted from Mullan et al
Catheter and pack £245.00 Provided by manufacturer
2L Drainage Bag and 1L drainage
kit
£63.75 Provided by manufacturer
Procedure costs/sundries £127.21 Uplifted from Mullan et al
Drainage kit box (10 units) £637.50 Provided by manufacturer
PleurX

Key Model Assumptions
• Effects
– No change in survival rate in both arms of the model
– Drainage volume of 9.2 litres per procedure in patients who have large-
volume paracentesis
– Average drainage volume of 3.5 litres per week using PleurX
• Resource use
– Need for 2 nurse visits to train patients to self-manage drainage at home using
PleurX
– Nurse visit length of 15 minutes for PleurX help with drainage
– One nurse visit per litre of fluid drained using PleurX
– Similar levels of treatment monitoring needs in both arms

Results
Intervention/Comparator Cost per patient
Inpatient large-volume paracentesis £3,146
PleurX peritoneal catheter drainage system £2,466
Savings = £680 per patient when PleurX catheter
drainage system is used

Sensitivity Analysis
• One-way deterministic sensitivity analysis
• All variables were tested except population size
• Variables were analysed using 20% variance regardless of level of
confidence in an input
• Six key drivers were identified and subjected to further deterministic
threshold analysis to identify point at which PleurX became more costly or
cost saving

Key drivers
• Cost of a hospital bed day
• Number of bed days per LVP procedure per month
• Number of bed days for PleurX catheter placement
• Cost of drainage kit box (10 units)
• Number of drainage kits used per week per patient

PleurX became more costly compared to inpatient LVP when:
• the cost of an excess bed day is reduced to less than £220 per day
• the frequency of an inpatient large-volume paracentesis procedure is
reduced to fewer than one per month
• the average length of inpatient stay after the LVP is decreased to 2.1
days
• the number of inpatient bed days following the PleurX catheter
insertion is increased to more than 3.1 days
• the cost of the PleurX drainage kit is increased to more than £915
(per 10 units)
• more than 5.1 drainage kit units are needed per week
Findings of the Threshold Analyses

Recommendations
• “The PleurX peritoneal catheter drainage system should be considered for
use in patients with treatment-resistant, recurrent malignant ascites.”

More complicated decision tree

Conclusion: Key things to remember
• Appropriate comparators should include usual care
• NHS cost perspective should not cover patient costs or productivity
gains/losses
• Find evidence for impact on health care resource use
• Unit costs from standard sources
• Appropriate time horizon to capture costs and benefits
• Accounting for time preference, through discounting/annuitizing
• Types of economic analysis, e.g. cost-consequences analysis
• Health outcomes to include
• Simple models, e.g. decision trees, can help
• Deal with uncertainty through sensitivity analysis
• Parameter estimates, sources, pathways and assumptions should be
transparent

Health economic evaluation resources
• Textbooks
– Drummond et al Methods for the Economic Evaluation of Health Care Programmes
(4th edition) 2015
– Briggs et al Decision Modelling for Health Economic Evaluation 2006
• Short courses
– Oxford University – one day
• https://www.herc.ox.ac.uk/herc-short-courses/introduction-to-health-
economic-evaluation
– Brunel University – 3 day
• https://www.brunel.ac.uk/research/Institutes/Institute-of-Environment-
Health-and-Societies/Health-Economics/Short-Courses
– York University
• https://www.york.ac.uk/che/news/news-2018/che-short-courses/
• Good practice guides
– https://www.ispor.org/workpaper/practices_index.asp

Practical
• Costs
• What are the technology costs?
• Are there upfront costs? Can you calculate cost per patient?
• Cost savings? (Faster, better, cheaper, safer)
– What is the evidence?
• What cost perspective? Who is the evaluation for?
• What unit costs?
• Health gain
• Does it improve health?
– What is the evidence?
• What kind of health economic analysis is required? (e.g. cost-
consequences analysis)

Supplementary material if time allows:
Markov models (State transition models)

Markov Models: design the model
State 1
State 3
State 2Well
Dead
Sick

Markov models: Add data
Well
Dead
5% pa
94% pa
1% pa
100% pa
20% pa
75% pa
5% pa
£1,000 pa
QoL=0.6
£100 pa
QoL=1
£0 pa
QoL=0
pa= per annum

Example
Well
Dead
Sick
5% pa
94% pa
1% pa
100% pa
20% pa
75% pa
5% pa
1000
0
0
pa= per annum

Example
0
0
5% pa
94% pa
1% pa
100% pa
1000950 20% pa
75% pa
5% pa
940
10
50
pa= per annum
50 people
10 people

Calculate Results
Year Well Sick Dead Cost QALYs
1 1,000 0 0 £100,000 1,000
2 940 50 10 £144,000 970
3 921 57 22 £149,110 955
4 909 57 34 £148,313 943
5 897 57 46 £146,636 931
6 886 56 58 £144,844 920
7 875 56 69 £143,054 908
8 864 55 81 £141,282 897
9 853 54 92 £139,532 886
10 843 54 104 £137,803 875
Total £1,394,575 9,286
Intervention A:
E.g:
(940*£100)+
(50*£1,000)+
(10*£0)

Repeat for each intervention and calculate ICER
A B Difference
Expected cost £1,394,575 £2,250,404 £855,830
Expected QALYs 9,286 9,345 59
ICER (£ per QALY) = £14,466
5%
1%
75%
5%
£100 pa
QoL=1
£0 pa
QoL=0
£1,000 pa
QoL=0.6
Intervention A
4%
1%
78%
5%
£200 pa
QoL=1
£0 pa
QoL=0
£1,100 pa
QoL=0.6
Intervention B

Limitations
• Must assume that each ‘state’ is mutually exclusive, i.e. For one person,
they cannot be in both states at once
• Models usually have no ‘memory’:
– Feasible that one person in the model could have multiple events i.e. 6 heart
attacks
– Assumes that transition values, costs and QALYs are the same (so if you have
the 1st heart attack, same costs and QALYs as 7th)
– There are ways to solve this issue

More complicated Markov Structures….

Cirrhosismodelsstructure F3-TN F3-FP
Comp-
TP*
Comp-
FN*
Var-
Un*
VarTP-
Pr*
Var-
FN*
Decomp
*
Bleed
Trans
2
dcVar
Un*
dcVar
Pr*
Post -
Trans
Dead
i) Shaded states relate to test results
ii) States with an asterisk have a corresponding hepatocellular carcinoma (HCC) 5
year state attached to them (not shown)
iii) From an HCC state patients can either die or get a transplant Non-transplant HCC
survivors either return to their state of origin or if that was a FN to the
corresponding TP state (not shown)
iv) All states transit to death
v) Dashed arrows represent the additional transitions during a cirrhosis retest cycle

Steatosis model structure
<F3–<F3
<F3 TN*
<F3 – F3
<F3 FP
F3 - F3
F3 TN*
F3 - <F3
F3 FN
F4 – F3
Comp FN
F4 – F4
Comp TP
F3 – F4
F3 FP
<F3 – F4
<F3 FPc
Cirr test
Cirr test +
Progress
Fib test
i) The first component of the first name depicts the true health state
whereas the second is the fib/cirr test results
e.g. F3 – <F3 = patients with advanced fibrosis identified by the test
as not having advanced fibrosis. (The second name underneath is as it
appears in the spreadsheet).
ii) All states transit to dead
iii) F4 states transit to cancer and decompensated cirrhosis; Varices
states transit to bleed. See NAFLD cirrhosis model
<F3 as true state F3 as true state F4 as true state Retesting for advanced fibrosis
F4 – <F3
Comp FN+
Cirr test
Cirr test +
Progress
F4V – F3
Var FN
F4V– F4 pr
Var TPpr
Cirr test +
Progress
F4V– <F3
Var FN+
Cirr test F4V – F4
VarTPun
Var test + progress
Fib test +
Progress
Fib test +
Progress
Fib test +
Progress
Fib test
Fib test
Fib test
Cirr test
Fib test +
regress
Var test
Non-<F3
Non-FP
<F3-Non
<F3-FN
F3-Non
F3FN+
F4-Non
CompFN++
Non-Non
Non-TN
F4V – Non
Var FN++
Steat test
Non-F3
Non-FPf3
Steat test
Steat test
Steat test
Steat test
Steat test +
Progress
Steat test +
Progress
Steat test +
Progress
Steat test +
Progress
Fib test +
Progress
Fib test
No NAFLDas true state
Steat test +
regress
Cirr test +
regress
Cirr test +
Progress

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