Economics of Health
for Non-Economists
Amirhossein Hajimiri
Pharmacoeconomics and Pharmaceutical Administration Department
Tehran University of Medical Sciences
Why Startups Fail
• Lack of Market Need (42%)
• Insufficient Funds (29%)
• Disharmony in the Team (23%)
• …
Forbes, 2019
Types of Need
Stated •What the customer asks for
Real
Unstated
Delight
Secret
•What the stated needs actually mean
•What the customer also expects but does not ask for
•Needs that are not essential but would delight if met
•Needs that the customer does not
express, often intangible in nature
It is all about Health
Also it is about Money
Reduction of Tobacco Use
Programs in School
Banners and
Advertisement
TV Programs
Medicines
Campaigns
…
Total Number of
Smokers
Reduced incidence
Reduction in cancers
Amount of cigarettes
Rate of COPD
…
Initiatives Outcomes
How do we Decide?!
How much to invest in Health?
Health Spending as a Share of GDP (%)
2015
2030
OECD, What Future for Health Spending. Economic Department Policy Note No. 19, 2015
Do we need to
increase investment on Health?
YES NO
WHY?
Life expectancy vs. Health expenditure
For each $ we invest, we have to gain max health for population
€ €€
Reeves from Oxford. Health Policy, March 2014
WHAT IS THE VALUE OF HEALTH?!
Hurdles in Evaluation
Perspective of the Studies
Perspective is an economic term that describes whose costs are
relevant based on the purpose of the study
• Institutional
• Third party
• Patient (out of-pocket expenses, such as copayments, deductibles, lost wages, and transportation costs)
• Governmental
• Societal (costs to the insurance company, patient, other sector costs, and indirect costs because of the loss of productivity)
• How much money for one year of perfect health?
• 1500 EU citizens: 40,000 €
• 1002 Iranian (Tehran) : ~ 1000-2650 $ (0.22–0.56 of Iran’s
GDP/capita)
References:
Expert Review of Pharmacoeconomics & Outcomes Research, Volume 8, 6 (2008)
Cost Effectiveness and Resource Allocation, volume 17, 4 (2019)
QALY
A year of life lived in perfect health is worth 1 QALY (1 year of life × 1 Utility value).
Gaining QALYs
But at What Cost?
Value for Money
Incremental Cost-X Ratio (ICXR)
Where is the Threshold?
• Benchmarking
• WHO
Highly Cost-effective < 1 GDP per Capita
Cost-effective 1 GDP per Capita < ICER < 3 GDP per Capita
Not Cost-effective > 3 GDP per Capita
Reference: Bulletin of the World Health Organization 2015;93:118–124
Imagine a new TECHNOLOGY …
60,000 €
for a 2-year period of therapy
?
But …
• Economic evaluation should be used alongside
other considerations in a transparent decision-
making process, rather than isolation based on a
single threshold value.
Reference: Bull World Health Organ. 2016 Dec 1;94(12):925-930.
Affordability
Budget Impact Analysis
Where to Draw the Line
Intervention $/QALY
GCSF in elderly with leukaemia 235,958
EPO in dialysis patients 139,623
Lung transplantation 100,957
ESRD management 53,513
Heart transplantation 46,775
Didronel in osteoporosis 32,047
PTA with stent 17,677
Short term inpatient psychotherapy 7,677
Breast cancer screening 5,147
Viagra 5,097
Treatment of congenital anorectal malformation 2,778
No. of patients Total Budget
400 94,383,200
800 111,698,400
30 3,028,710
450 24,080,850
50 2,338,750
1000 32,047,000
600 10,606,200
450 3,454,650
5000 25,735,000
5000 25,485,000
30 83,340
Treatment of congenital anorectal malformation 2,778 30 83,340
Heart transplantation 46,775 50 2,338,750
Lung transplantation 100,957 30 3,028,710
Short term inpatient psychotherapy 7,677 450 3,454,650
PTA with stent 17,677 600 10,606,200
ESRD management 53,513 450 24,080,850
Viagra 5,097 5000 25,485,000
Breast cancer screening 5,147 5000 25,735,000
Didronel in osteoporosis 32,047 1000 32,047,000
GCSF in elderly with leukaemia 235,958 400 94,383,200
EPO in dialysis patients 139,623 800 111,698,400
Multi-Criteria Decision Analysis
It is all about Health
Also it is about Money
Entrepreneurship?!
With an Economic Approach
A Step by Step Pathway
اقتصاد سلامت برای غیر اقتصاد دانان
اقتصاد سلامت برای غیر اقتصاد دانان
اقتصاد سلامت برای غیر اقتصاد دانان

اقتصاد سلامت برای غیر اقتصاد دانان

  • 1.
    Economics of Health forNon-Economists Amirhossein Hajimiri Pharmacoeconomics and Pharmaceutical Administration Department Tehran University of Medical Sciences
  • 2.
    Why Startups Fail •Lack of Market Need (42%) • Insufficient Funds (29%) • Disharmony in the Team (23%) • … Forbes, 2019
  • 4.
    Types of Need Stated•What the customer asks for Real Unstated Delight Secret •What the stated needs actually mean •What the customer also expects but does not ask for •Needs that are not essential but would delight if met •Needs that the customer does not express, often intangible in nature
  • 8.
    It is allabout Health Also it is about Money
  • 10.
    Reduction of TobaccoUse Programs in School Banners and Advertisement TV Programs Medicines Campaigns … Total Number of Smokers Reduced incidence Reduction in cancers Amount of cigarettes Rate of COPD … Initiatives Outcomes
  • 11.
    How do weDecide?! How much to invest in Health?
  • 12.
    Health Spending asa Share of GDP (%) 2015 2030
  • 13.
    OECD, What Futurefor Health Spending. Economic Department Policy Note No. 19, 2015
  • 14.
    Do we needto increase investment on Health? YES NO WHY?
  • 15.
    Life expectancy vs.Health expenditure
  • 16.
    For each $we invest, we have to gain max health for population € €€ Reeves from Oxford. Health Policy, March 2014
  • 17.
    WHAT IS THEVALUE OF HEALTH?!
  • 18.
  • 19.
    Perspective of theStudies Perspective is an economic term that describes whose costs are relevant based on the purpose of the study • Institutional • Third party • Patient (out of-pocket expenses, such as copayments, deductibles, lost wages, and transportation costs) • Governmental • Societal (costs to the insurance company, patient, other sector costs, and indirect costs because of the loss of productivity)
  • 20.
    • How muchmoney for one year of perfect health? • 1500 EU citizens: 40,000 € • 1002 Iranian (Tehran) : ~ 1000-2650 $ (0.22–0.56 of Iran’s GDP/capita) References: Expert Review of Pharmacoeconomics & Outcomes Research, Volume 8, 6 (2008) Cost Effectiveness and Resource Allocation, volume 17, 4 (2019)
  • 21.
    QALY A year oflife lived in perfect health is worth 1 QALY (1 year of life × 1 Utility value).
  • 24.
  • 25.
  • 27.
  • 28.
    Where is theThreshold? • Benchmarking • WHO Highly Cost-effective < 1 GDP per Capita Cost-effective 1 GDP per Capita < ICER < 3 GDP per Capita Not Cost-effective > 3 GDP per Capita Reference: Bulletin of the World Health Organization 2015;93:118–124
  • 29.
    Imagine a newTECHNOLOGY … 60,000 € for a 2-year period of therapy ?
  • 31.
    But … • Economicevaluation should be used alongside other considerations in a transparent decision- making process, rather than isolation based on a single threshold value. Reference: Bull World Health Organ. 2016 Dec 1;94(12):925-930.
  • 33.
  • 34.
    Intervention $/QALY GCSF inelderly with leukaemia 235,958 EPO in dialysis patients 139,623 Lung transplantation 100,957 ESRD management 53,513 Heart transplantation 46,775 Didronel in osteoporosis 32,047 PTA with stent 17,677 Short term inpatient psychotherapy 7,677 Breast cancer screening 5,147 Viagra 5,097 Treatment of congenital anorectal malformation 2,778 No. of patients Total Budget 400 94,383,200 800 111,698,400 30 3,028,710 450 24,080,850 50 2,338,750 1000 32,047,000 600 10,606,200 450 3,454,650 5000 25,735,000 5000 25,485,000 30 83,340 Treatment of congenital anorectal malformation 2,778 30 83,340 Heart transplantation 46,775 50 2,338,750 Lung transplantation 100,957 30 3,028,710 Short term inpatient psychotherapy 7,677 450 3,454,650 PTA with stent 17,677 600 10,606,200 ESRD management 53,513 450 24,080,850 Viagra 5,097 5000 25,485,000 Breast cancer screening 5,147 5000 25,735,000 Didronel in osteoporosis 32,047 1000 32,047,000 GCSF in elderly with leukaemia 235,958 400 94,383,200 EPO in dialysis patients 139,623 800 111,698,400
  • 35.
  • 37.
    It is allabout Health Also it is about Money
  • 38.
  • 43.
    A Step byStep Pathway