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STUDIES IN HEALTH
ECONOMICS
PRESENTER: DR. TANVEER REHMAN
MODERATOR: DR. SUBITHA L
OUTLINE
1. Introduction
2. Principles of Health Economics
3. Economic evaluation
4. Status in India
5. Challenges and ways to address
6. Health Technology Assessment
15-02-2019 2Dr Tanveer Rehman PSM JIPMER
History and Evolution
1. Selma Mushkin: “Toward a Definition of Health Economics” – 1958
2. Kenneth Arrow: “Uncertainty and the Welfare Economics of Medical Care” – 1963
3. Special characteristics of the medical care market :-
Unpredictability and Criticality: Demand
Expected behaviour of the physician: Moral provision
Product uncertainty: Asymmetric information
Moral Hazard
Medical care: Increased cost – imperfect information
15-02-2019 3Dr Tanveer Rehman PSM JIPMER
Introduction
1. The application of the theories, concepts, techniques and principles of
economics to the health sector*
2. The World Development Report 1993 - necessity of providing cost
effective healthcare for the poor and that it can contribute towards
alleviating poverty
3. Scope – productivity, finance, planning, decision making
4
Dr Tanveer Rehman PSM JIPMER
15-02-2019
Rationale
1. Budget for health is and always will be finite
2. All resources have alternative uses within the system
3. New health technologies – compete with the existing
4. Inconsistent triad: comprehensive, quality, everyone
5. “Prioritising” or “Rationing” – by decision makers
15-02-2019 5Dr Tanveer Rehman PSM JIPMER
Different types of costs
15-02-2019 6Dr Tanveer Rehman PSM JIPMER
Different types of costs
15-02-2019 7
Costing Principles
Opportunity cost Marginal costs Social costs
Dr Tanveer Rehman PSM JIPMER
Efficiency
• Knapp (1984): ‘the allocation of scarce
resources that maximizes the
achievement of aims’
1. Pareto / Allocative
2. Technical
3. Economic
4. Social
Equity
• Finance of healthcare
• Distribution of healthcare
• Distribution of health
15-02-2019 8
Principles
Efficiency – equity trade off
Dr Tanveer Rehman PSM JIPMER
Economic Evaluation
According to Drummond et al. (2005): Comparative and Incremental analysis
15-02-2019 9Dr Tanveer Rehman PSM JIPMER
Economic Evaluation
15-02-2019 10Dr Tanveer Rehman PSM JIPMER
I. Cost - Effectiveness Analysis (CEA)
Effectiveness
1. Outcome of an intervention or service measured in natural units: ease of
communication and specificity – e.g. Cases successfully diagnosed
2. Clinical indicators - Intermediate outcome measure: implicate ultimate
health status
15-02-2019 11Dr Tanveer Rehman PSM JIPMER
I. Cost - Effectiveness Analysis (CEA)
1. Benefits measured in same natural units
2. Outcome reported in single unit of measurement, given in natural
units e.g. mmHg for SBP reduction, life years gained by
transplantation
3. Outcome is common to both alternatives: but achieved to a
different degree
4. Incremental cost-effectiveness ratio (ICER)
15-02-2019 12Dr Tanveer Rehman PSM JIPMER
Cost – Effectiveness Plane
15-02-2019 13Dr Tanveer Rehman PSM JIPMER
Example - CEA
15-02-2019 14Dr Tanveer Rehman PSM JIPMER
I. Cost - Effectiveness Analysis (CEA)
Effectiveness
Limitations:
1. More than one outcome reported for a treatment
2. May not reflect overall impact of service on patients Health-Related
Quality of Life
3. Comparisons across different outcomes cannot be done
15-02-2019 15Dr Tanveer Rehman PSM JIPMER
II. Cost – Utility Analysis (CUA)
Utility
1. Value attached by an individual to a specific level of health or a specific
health outcome
2. Allows patients to value their health status based on their own preferences
3. For same health status – different individuals will give different values
4. Comparisons between different illness and interventions
5. Methodologically complex
15-02-2019 16Dr Tanveer Rehman PSM JIPMER
Methods to Derive Utility
1. Visual Analogue Scale (VAS)
2. Standard gamble method
3. Time trade-off method
15-02-2019
Utility scores:
a. QALYs
b. DALYs
Dr Tanveer Rehman PSM JIPMER
a. QALY (Quality – Adjusted Life Years)
1. Quantity of life (survival periods) and Quality of life (health status value) –
standard unit of measuring health gain
2. QALYs are expressed in terms of “years lived in perfect health”: can be applied to
any kind of intervention.
3. It can be applied to compare different interventions
4. Limitations: validity, reliability, perspectives, quantity and quality in same metric
5. Should be discounted if they are to be added together
15-02-2019 18Dr Tanveer Rehman PSM JIPMER
b. DALY (Disability – Adjusted Life Years)
15-02-2019 19Dr Tanveer Rehman PSM JIPMER
b. DALY (Disability – Adjusted Life Years)
1. DALYs = “Years Lived with Disability” (YLDs) + “Years of Life Lost due to
premature mortality” (YLLs)
2. Health gap
3. Global Burden of Diseases (GBD) study: comparing disease burdens
across all regions of the world (Murray and Lopez 1996)
15-02-2019 20Dr Tanveer Rehman PSM JIPMER
II. Cost – Utility Analysis (CUA)
1. Outcome measured through effect on quantity & quality of life
2. To overcome limitations associated with effectiveness measures
3. Common metric that allows comparisons across: allocate resources to
different services
4. Form of CEA but outcomes measured using utility values
5. ICER presented as Cost per additional QALY Gained (CQG)
15-02-2019 21Dr Tanveer Rehman PSM JIPMER
Example - CUA
15-02-2019 22Dr Tanveer Rehman PSM JIPMER
Example - CUA
15-02-2019 23Dr Tanveer Rehman PSM JIPMER
III. Cost – Benefit Analysis (CBA)
Monetary terms
1. How much an individual would be willing to pay to avoid an illness or obtain the benefits
of a treatment
2. Contingent valuation or ‘willingness to pay’ (WTP) method
3. Possible to attach value to both health & non-health effects
4. Practical difficulty of monetary valuation of benefits and human life
5. Income closely related to WTP values
15-02-2019 24Dr Tanveer Rehman PSM JIPMER
III. Cost – Benefit Analysis (CBA)
1. Most comprehensive method of economic evaluation: returns in health investment
can be compared with other areas of economy
2. Both cost & benefit measured in monetary units
3. An activity should be undertaken if the sum of the benefits is greater than the sum
of the costs: Allocative efficiency
4. ICER need not be generated: Societal viewpoint taken
5. Can be used to allocate resources to different interventions like CUA
15-02-2019 25Dr Tanveer Rehman PSM JIPMER
Example - CBA
15-02-2019 26Dr Tanveer Rehman PSM JIPMER
IV. Cost-Minimization Analysis (CMA)
1. No difference in outcome measure
2. Outcomes being compared is same or assumed to be equal
3. Consideration of costs of each option – preferred option is cheapest
4. Simple and easy to interpret
15-02-2019 27Dr Tanveer Rehman PSM JIPMER
Example - CMA
15-02-2019 28Dr Tanveer Rehman PSM JIPMER
Status of economic evaluation studies in India
1. 104 full economic evaluations: 1980 - 2014
2. CEA – 64%, CUA – 30%, CBA – 6%
3. 70% - affiliated to a foreign institution
4. Lead authors: clinicians (36%) or public-health professional (41%)
5. Half of the studies - provider or payer perspective (48%)
6. 30% - pharmaceuticals, 26% - programme,19% vaccines, 12% screening
7. 14% Southern India, 7% Delhi, 6% Gujarat,5% Maharashtra
8. 74% authors reported the intervention as cost effective
15-02-2019 29Dr Tanveer Rehman PSM JIPMER
EXAMPLES IN INDIAN CONTEXT
15-02-2019 30Dr Tanveer Rehman PSM JIPMER
Challenges
1. Dearth of economic evaluation evidence for health-care interventions
2. No specialty courses in the field of health economics for those who
undertake mainstream economics courses or in medical or public health
3. General lack of awareness in terms of its value or potential application in
clinical or public-health research
4. Lack of government funding for economic evaluation studies in India
15-02-2019 31Dr Tanveer Rehman PSM JIPMER
Way forward
1. Capacity building: quality economic evaluations
2. Creation of Schools of Public Health
3. Demand for such studies as well as a scope for its use in policy making
4. Associations for health economics— the Indian Health Economics and Policy
Association (IHEPA) and the Health Economics Association of India (HEAI)
5. Institutional mechanisms - MTAB
15-02-2019 32Dr Tanveer Rehman PSM JIPMER
Health Technology Assessment
1. Health Technology: any method used to promote health, prevent and treat
disease and improve rehabilitation or long-term care
2. Health Technology Assessment (HTA) - evaluation of effectiveness and resource
use associated with new medical technologies for the purpose of providing input
to a policy decision.
3. Medical Technology Assessment Board (MTAB) - landmark development towards
evidence-based health policy making - essential step towards India’s path to UHC
15-02-2019 33Dr Tanveer Rehman PSM JIPMER
Goal of MTAB
After evaluating HT on their efficacy, appropriateness and cost effectiveness
Reduce the cost and variations in patient care, expenditure on medical
equipment in directly affecting the cost of patient care, overall cost of medical
treatment, reduction in out of pocket expenditure of patients and streamline
the medical reimbursement procedures for effective implementation of the
Universal Coverage Programme
15-02-2019 34Dr Tanveer Rehman PSM JIPMER
15-02-2019 35Dr Tanveer Rehman PSM JIPMER
SUMMARY
1. History and evolution
2. Costs, costing principles, efficiency - equity
3. Four types of economic evaluation
4. Status in India
5. Challenges and ways to address
6. Health Technology Assessment
15-02-2019 37Dr Tanveer Rehman PSM JIPMER
THANK YOU
NEXT WEEK
NATIONAL POPULATION POLICY – REVIEW
Presenter: DR DINESH
Moderator: DR MAHALAKSHMY
15-02-2019 39Dr Tanveer Rehman PSM JIPMER

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Studies in health economics

  • 1. STUDIES IN HEALTH ECONOMICS PRESENTER: DR. TANVEER REHMAN MODERATOR: DR. SUBITHA L
  • 2. OUTLINE 1. Introduction 2. Principles of Health Economics 3. Economic evaluation 4. Status in India 5. Challenges and ways to address 6. Health Technology Assessment 15-02-2019 2Dr Tanveer Rehman PSM JIPMER
  • 3. History and Evolution 1. Selma Mushkin: “Toward a Definition of Health Economics” – 1958 2. Kenneth Arrow: “Uncertainty and the Welfare Economics of Medical Care” – 1963 3. Special characteristics of the medical care market :- Unpredictability and Criticality: Demand Expected behaviour of the physician: Moral provision Product uncertainty: Asymmetric information Moral Hazard Medical care: Increased cost – imperfect information 15-02-2019 3Dr Tanveer Rehman PSM JIPMER
  • 4. Introduction 1. The application of the theories, concepts, techniques and principles of economics to the health sector* 2. The World Development Report 1993 - necessity of providing cost effective healthcare for the poor and that it can contribute towards alleviating poverty 3. Scope – productivity, finance, planning, decision making 4 Dr Tanveer Rehman PSM JIPMER 15-02-2019
  • 5. Rationale 1. Budget for health is and always will be finite 2. All resources have alternative uses within the system 3. New health technologies – compete with the existing 4. Inconsistent triad: comprehensive, quality, everyone 5. “Prioritising” or “Rationing” – by decision makers 15-02-2019 5Dr Tanveer Rehman PSM JIPMER
  • 6. Different types of costs 15-02-2019 6Dr Tanveer Rehman PSM JIPMER
  • 7. Different types of costs 15-02-2019 7 Costing Principles Opportunity cost Marginal costs Social costs Dr Tanveer Rehman PSM JIPMER
  • 8. Efficiency • Knapp (1984): ‘the allocation of scarce resources that maximizes the achievement of aims’ 1. Pareto / Allocative 2. Technical 3. Economic 4. Social Equity • Finance of healthcare • Distribution of healthcare • Distribution of health 15-02-2019 8 Principles Efficiency – equity trade off Dr Tanveer Rehman PSM JIPMER
  • 9. Economic Evaluation According to Drummond et al. (2005): Comparative and Incremental analysis 15-02-2019 9Dr Tanveer Rehman PSM JIPMER
  • 10. Economic Evaluation 15-02-2019 10Dr Tanveer Rehman PSM JIPMER
  • 11. I. Cost - Effectiveness Analysis (CEA) Effectiveness 1. Outcome of an intervention or service measured in natural units: ease of communication and specificity – e.g. Cases successfully diagnosed 2. Clinical indicators - Intermediate outcome measure: implicate ultimate health status 15-02-2019 11Dr Tanveer Rehman PSM JIPMER
  • 12. I. Cost - Effectiveness Analysis (CEA) 1. Benefits measured in same natural units 2. Outcome reported in single unit of measurement, given in natural units e.g. mmHg for SBP reduction, life years gained by transplantation 3. Outcome is common to both alternatives: but achieved to a different degree 4. Incremental cost-effectiveness ratio (ICER) 15-02-2019 12Dr Tanveer Rehman PSM JIPMER
  • 13. Cost – Effectiveness Plane 15-02-2019 13Dr Tanveer Rehman PSM JIPMER
  • 14. Example - CEA 15-02-2019 14Dr Tanveer Rehman PSM JIPMER
  • 15. I. Cost - Effectiveness Analysis (CEA) Effectiveness Limitations: 1. More than one outcome reported for a treatment 2. May not reflect overall impact of service on patients Health-Related Quality of Life 3. Comparisons across different outcomes cannot be done 15-02-2019 15Dr Tanveer Rehman PSM JIPMER
  • 16. II. Cost – Utility Analysis (CUA) Utility 1. Value attached by an individual to a specific level of health or a specific health outcome 2. Allows patients to value their health status based on their own preferences 3. For same health status – different individuals will give different values 4. Comparisons between different illness and interventions 5. Methodologically complex 15-02-2019 16Dr Tanveer Rehman PSM JIPMER
  • 17. Methods to Derive Utility 1. Visual Analogue Scale (VAS) 2. Standard gamble method 3. Time trade-off method 15-02-2019 Utility scores: a. QALYs b. DALYs Dr Tanveer Rehman PSM JIPMER
  • 18. a. QALY (Quality – Adjusted Life Years) 1. Quantity of life (survival periods) and Quality of life (health status value) – standard unit of measuring health gain 2. QALYs are expressed in terms of “years lived in perfect health”: can be applied to any kind of intervention. 3. It can be applied to compare different interventions 4. Limitations: validity, reliability, perspectives, quantity and quality in same metric 5. Should be discounted if they are to be added together 15-02-2019 18Dr Tanveer Rehman PSM JIPMER
  • 19. b. DALY (Disability – Adjusted Life Years) 15-02-2019 19Dr Tanveer Rehman PSM JIPMER
  • 20. b. DALY (Disability – Adjusted Life Years) 1. DALYs = “Years Lived with Disability” (YLDs) + “Years of Life Lost due to premature mortality” (YLLs) 2. Health gap 3. Global Burden of Diseases (GBD) study: comparing disease burdens across all regions of the world (Murray and Lopez 1996) 15-02-2019 20Dr Tanveer Rehman PSM JIPMER
  • 21. II. Cost – Utility Analysis (CUA) 1. Outcome measured through effect on quantity & quality of life 2. To overcome limitations associated with effectiveness measures 3. Common metric that allows comparisons across: allocate resources to different services 4. Form of CEA but outcomes measured using utility values 5. ICER presented as Cost per additional QALY Gained (CQG) 15-02-2019 21Dr Tanveer Rehman PSM JIPMER
  • 22. Example - CUA 15-02-2019 22Dr Tanveer Rehman PSM JIPMER
  • 23. Example - CUA 15-02-2019 23Dr Tanveer Rehman PSM JIPMER
  • 24. III. Cost – Benefit Analysis (CBA) Monetary terms 1. How much an individual would be willing to pay to avoid an illness or obtain the benefits of a treatment 2. Contingent valuation or ‘willingness to pay’ (WTP) method 3. Possible to attach value to both health & non-health effects 4. Practical difficulty of monetary valuation of benefits and human life 5. Income closely related to WTP values 15-02-2019 24Dr Tanveer Rehman PSM JIPMER
  • 25. III. Cost – Benefit Analysis (CBA) 1. Most comprehensive method of economic evaluation: returns in health investment can be compared with other areas of economy 2. Both cost & benefit measured in monetary units 3. An activity should be undertaken if the sum of the benefits is greater than the sum of the costs: Allocative efficiency 4. ICER need not be generated: Societal viewpoint taken 5. Can be used to allocate resources to different interventions like CUA 15-02-2019 25Dr Tanveer Rehman PSM JIPMER
  • 26. Example - CBA 15-02-2019 26Dr Tanveer Rehman PSM JIPMER
  • 27. IV. Cost-Minimization Analysis (CMA) 1. No difference in outcome measure 2. Outcomes being compared is same or assumed to be equal 3. Consideration of costs of each option – preferred option is cheapest 4. Simple and easy to interpret 15-02-2019 27Dr Tanveer Rehman PSM JIPMER
  • 28. Example - CMA 15-02-2019 28Dr Tanveer Rehman PSM JIPMER
  • 29. Status of economic evaluation studies in India 1. 104 full economic evaluations: 1980 - 2014 2. CEA – 64%, CUA – 30%, CBA – 6% 3. 70% - affiliated to a foreign institution 4. Lead authors: clinicians (36%) or public-health professional (41%) 5. Half of the studies - provider or payer perspective (48%) 6. 30% - pharmaceuticals, 26% - programme,19% vaccines, 12% screening 7. 14% Southern India, 7% Delhi, 6% Gujarat,5% Maharashtra 8. 74% authors reported the intervention as cost effective 15-02-2019 29Dr Tanveer Rehman PSM JIPMER
  • 30. EXAMPLES IN INDIAN CONTEXT 15-02-2019 30Dr Tanveer Rehman PSM JIPMER
  • 31. Challenges 1. Dearth of economic evaluation evidence for health-care interventions 2. No specialty courses in the field of health economics for those who undertake mainstream economics courses or in medical or public health 3. General lack of awareness in terms of its value or potential application in clinical or public-health research 4. Lack of government funding for economic evaluation studies in India 15-02-2019 31Dr Tanveer Rehman PSM JIPMER
  • 32. Way forward 1. Capacity building: quality economic evaluations 2. Creation of Schools of Public Health 3. Demand for such studies as well as a scope for its use in policy making 4. Associations for health economics— the Indian Health Economics and Policy Association (IHEPA) and the Health Economics Association of India (HEAI) 5. Institutional mechanisms - MTAB 15-02-2019 32Dr Tanveer Rehman PSM JIPMER
  • 33. Health Technology Assessment 1. Health Technology: any method used to promote health, prevent and treat disease and improve rehabilitation or long-term care 2. Health Technology Assessment (HTA) - evaluation of effectiveness and resource use associated with new medical technologies for the purpose of providing input to a policy decision. 3. Medical Technology Assessment Board (MTAB) - landmark development towards evidence-based health policy making - essential step towards India’s path to UHC 15-02-2019 33Dr Tanveer Rehman PSM JIPMER
  • 34. Goal of MTAB After evaluating HT on their efficacy, appropriateness and cost effectiveness Reduce the cost and variations in patient care, expenditure on medical equipment in directly affecting the cost of patient care, overall cost of medical treatment, reduction in out of pocket expenditure of patients and streamline the medical reimbursement procedures for effective implementation of the Universal Coverage Programme 15-02-2019 34Dr Tanveer Rehman PSM JIPMER
  • 35. 15-02-2019 35Dr Tanveer Rehman PSM JIPMER
  • 36. SUMMARY 1. History and evolution 2. Costs, costing principles, efficiency - equity 3. Four types of economic evaluation 4. Status in India 5. Challenges and ways to address 6. Health Technology Assessment 15-02-2019 37Dr Tanveer Rehman PSM JIPMER
  • 37. THANK YOU NEXT WEEK NATIONAL POPULATION POLICY – REVIEW Presenter: DR DINESH Moderator: DR MAHALAKSHMY
  • 38. 15-02-2019 39Dr Tanveer Rehman PSM JIPMER

Editor's Notes

  1. cost of one more unit of output/ consumption; benefit from one more unit of output/ consumption
  2. Efficiency: Obtaining the greatest output for a given set of resourcesFair distribution of that output amongst the population,
  3. When one alternative is more effective but requires more resources ICER calculate; Expresses the cost required to achieve each extra unit of outcome (cost per unit of outcome); MCER ACER
  4. ICERs generated can be plotted on to a graph ; value judgements to be made
  5. Functional, social, psychological, cognitive, subjective factors; general population perspective is best
  6. Mark your health status when in pneumonia, post antibiotic new health state: difference is health gain obtained by drugs; gold standard is gamble
  7. All the above give utility measures 0 – 1. higher means better HRQoL.
  8. QALY – most commonly used measure in CUA
  9. Contingent means subject to change; Elicit monetary values for health; METHOD used affects the WTP value; Elicitation methods: discrete choices where you give options, Dichotomous choice (DC) or take it or leave it (TIOLI) or open ended.
  10. Balance sheet in which costs and benefits are weighed up against each other.; Although in principle any common unit could be used, in practice money is the obvious and natural choice, as it is the measure of value most used in modern economies. answering questions about whether or not a healthcare programme should be implemented, rather than which of a number of alternative programmes or interventions is the most efficient.; how they feel about the process of care/service
  11. quality of economic evaluation studies for health care in India needs improvement; of a health-care intervention or programme pertaining to India
  12. EE studies Guiding policy decisions
  13. quality of economic evaluation studies for health care in India needs improvement. Only 6 % of the total studies were funded by the national or state government. Almost 30 % of the economic evaluation research in India was funded by international agencies or the UN/bilateral aid agencies.
  14. quality of economic evaluation studies for health care in India needs improvement; Using the evidence-based and transparent HTA processes advocated by the MTAB – efficient and equitable health care provision
  15. HTA undertaken; Department of Health Research (DHR), part of the MoHFW National Institute for Health and Clinical Excellence (NICE) – UK