Economic Evaluation in Health & Medicine
Nermeen Ashoush
Head of Health Economics Unit, (CDRD)
Lecturer in Clinical Pharmacy & Pharmacy Practice Department
The British University in Egypt
Objectives
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Definition of Health Economics & Pharmacoeconomics
Applications of Economic Analysis
The importance and clinical relevancy of pharmacoeconomics
Types of Pharmacoeconomics studies
Health Technology Assessment (HTA)
HTA Concept for Off-patent Pharmaceuticals (OPP) in emerging markets
Differentiated OPP Categories & Multiple Criteria Decision Analysis
Health Economics
Health Economics
Economics is the science of scarcity. It analyses how choices are structured and
prioritized to maximize welfare within constrained resources.
Health economics is a branch of economics concerned with the formal analysis
of costs, benefits, and consequences of health care.
Application of Economic Analyses
Clinical Decision Making
• Making cost-effective choices when
resources are limited (for provider, third
party payer, or patient)
Program Justification
• To justify investment and reimbursement
in a clinical service or program
• Formulary Management
• Drug Policy decisions, treatment
guidelines
• Purchasing negotiation
• Pricing in the Pharmaceutical Industry
Pharmacoeconomics
Pharmacoeconomics
Pharmacoeconomics has been defined as the description and the analysis of
the costs of drug therapy to health care system and the society. It identifies,
measure and compares the costs and consequences of pharmaceutical products
and services.
Cost ($)
Rx
Outcomes
Why is Pharmacoeconomics important?
• To understand how limited resources can be used most efficiently and
effectively.
• Clinicians want their patients to receive the best care and outcomes available,
and payers want to manage rising costs.
Types of Pharmacoeconomics Studies
Table 1: The four basic types of pharmacoeconomics analysis
Methodology
Cost Measurement Unit
Outcome Measurement Unit
Cost-minimization analysis
Dollars or monetary units
Assumed to be equivalent in
comparable groups
Cost-effectiveness analysis
Dollars or monetary units
Natural units (life year gained, mm
Hg blood pressure, mMol/L blood
glucose)
Cost-benefit analysis
Dollars or monetary units
Dollars or monetary units
Cost-utility analysis
Dollars or monetary units
Quality-adjusted life year (QALY)
or other utilities
Health Technology Assessment
(HTA)
Technology Assessment
• The application of scientific or other organized knowledge including any
tool, technique, product, process, method, organization or system to practical
task.
• In healthcare technology includes drugs; diagnostics, indicators and reagents;
devices, equipment and supplies; medical and surgical procedures used in
prevention, screening, diagnosis and treatment.
Health Technology Assessment
• The systematic evaluation of properties, effects, and/or impacts of health
care technology.
• HTA is conducted by interdisciplinary groups using explicit analytical
framework drawing from a variety of methods.
HTA Concept for Off-patent Pharmaceuticals
in Emerging Markets (EM)
Emerging Markets Are on The Move to Universal Coverage
Source: Shen, J., ISPOR Singapore, 2016
81%
58%
• As majority patients are treated by OPP (~60-80%) , a robust HTA for pharmaceuticals can have
critical impact on population health outcome and efficient utilization of health budget.
Source: Shen, J., ISPOR Singapore, 2016
Evidence-based HTA for OPP in EM
• Delivering effective, universal and efficient health care is an important policy
goal in many emerging markets.
• Health Technology assessment (HTA) has been established to evaluate
patent pharmaceuticals in many health care systems, but not yet for Off-
Patent Pharmaceuticals (OPP).
Evidence-based HTA for OPP in EM (Cont.)
• A group of public health and health economics experts have undertaken an initiative to
develop an evidence-based HTA methodology for pharmaceuticals in emerging markets.
The initial concept has been presented at the 2015 ISPOR Conference, 2016 HTA
international conference, & 2016 ISPOR Singapore Conference
Concept 1: Differentiated OPP Categories
Concept 2: MCDA Simple Scoring
Source: Shen, J., ISPOR Singapore, 2016
Differentiated OPP Categories
Concept 1
How This Could Be Applied in Pricing & Reimbursement?
Differentiated OPP Categories
Price
Reimbursement Rate
+++++
+++++
++++
++++
Gx fulfilling PIC/S EU GMP
standard
+++
+++
Gx with BE/BA data
+++
+++
++
++
+
+
Originator
Gx showing real life patient
outcome benefit
Gx with WHO GMP standard
Gx without above
BA: Bioavailability; BE: Bioequivalent; GMP: Good Manufacturing Practices; OPP: Off-Patent
Pharmaceuticals; PIC/S: Pharmaceutical Inspection Convention; WHO: World Health Organization.
Source: Brixner, D., ISPOR Singapore, 2016
Multiple Criteria Decision Analysis (MCDA)
Concept 2
Multiple Criteria Decision Analysis
Multiple Criteria Decision Analysis (MCDA) is a set of methods and
approaches to aid-decision making, where decisions are based on more than
one criterion, which make explicit the impact on the decision of all the criteria
applied and the relative importance attached to them.
Source: Brixner, D., ISPOR Singapore, 2016
MCDA Simple Scoring: (Applicable for all countries)
• Adapt MCDA Simple Scoring to reflect HCS development status and priorities.
• Involve key stakeholders in defining criteria and scoring to achieve policy
acceptance and long-term sustainability.
• A set of criteria were developed based on interactive workshop (electronic voting
system) with 57 experts from 15 emerging markets.
The criteria are further grouped and specified as below
Product
• Pharmaceutical
equivalence vs
originator
• Bio-equivalence vs
originator
• Specify SKU
Source: Brixner, D., ISPOR Singapore, 2016
Manufacturer
• Manufacturing site
qualification
• Supply track
record
Service
• Pharmacovigilance
• Continued Medical
Education Program
Cost Effectiveness
• Real life patient
outcomes
• Direct and
indirect costs
Table 2: Steps in a value measurement MCDA process
Steps
Description
Defining the decision problem
Identify objectives, alternatives, stakeholders, and output
required
Selecting and Structuring criteria
Identify criteria relevant for evaluating alternatives
Measuring performance
Gather data about the alternatives’ performance on the criteria
Scoring alternatives
Elicit stakeholders’ preferences for changes within criteria
Weighting criteria
Elicit stakeholders’ preferences between criteria
Calculating aggregate scores
Use the alternatives’ scores on the criteria and the weights for
the criteria to get total value by which the alternatives are ranked
Dealing with uncertainty
Perform uncertainty analysis to understand the level of
robustness of the MCDA results
Reporting and examination of findings
Interpret the MCDA outputs, including uncertainty analysis, to
support decision making
Source: Kalo, K., ISPOR Singapore, 2016
Example of MCDA Process
Criteria
Criteria Weight
Drug A
Drug B
Drug C
Improve
clinical
outcomes
0.2
Aclin
Score= 1
Bclin
Score= 0
Cclin
Score= 0
0.4
AQOL
Score= 0.2
BQOL
Score= 0
CQOL
Score= 0.5
0.2
Aprod
Score= 1
Bprod
Score= 0.5
Cprod
Score= 0.5
0.2
Acost
Score= 1
Bcost
Score= 0
Ccost
Score= 1
0.7
0.1
0.5
Improve quality
Promote
of life
optimal Health
Outcome
Improve
productivity
Reduce total
cost of care
Expected Value
Drug A total value = (0.2)(1) + (0.4) (0.2) + (0.2)(1) + (0.2) (1) = 0.7
Drug B total value = (0.2) (0)+ (0.4) (0)+ (0.2) (0.5) + (0.2) (0) = 0.1
Drug C total value = (0.2) (0) + (0.4) (0.5) + (0.2) (0.5) + (0.2) (1) = 0.5
Source: Maniadakis, M, ISPOR Milan, 2015
MCDA
VACSERA Egypt
No
Criteria
Criteria Weight
1
Prequalification (WHO, EMA, FDA, TGA, MHLW)
[1=3, 2=6, 3=9, >3= 12]
12
2
Country of origin is one of reference country
[each country = 3]
12
3
Strain used/registered in 3 reference country
[each country=3]
9
4
History of previous delivery within the last 5 yrs
[1 year=2, 2 years=4, 3 years=6, 4 years=8, >5 years=10]
10
5
Compliance with all technical aspects in previous delivery
[50 to <60%=3, 60 to <80%=5, >80%=8]
8
6
Timeliness in previous delivery
[50 to <60%=3, 60 to <80%=7, >80%=11]
11
7
Lengthy Shelf-life
6
8
# of doses/vial (single dose/vial preferred)
[6 doses=10]
10
9
Vaccine is composed of best strain available [best strain= 10]
10
10
No change in vaccine physical appearance (become unusable) in previous delivery [change= 0, No change = 8]
8
11
Availability of Vaccine Vial Monitor (heat sensor) [Available= 4, unavailable= 0]
4
Total
100
Advantages of MCDA Process
• It is open and explicit.
• The choice of objectives and criteria that any decision making group may make
are open to analysis and to change if they are felt to be inappropriate.
• Scores and weights are also explicit and amended if necessary.
• Performance measurement can be sub-contracted to experts, so need not
necessarily be left in the hands of the decision making body itself.
Conclusion
• MCDA can support decision making in healthcare.
• It improves transparency and consistency in decisions and potentially the
accountability of public sector decision makers.
• It doesn’t replace judgment but rather identifies, collects, and structures the
information required by those making judgment to support the deliberative process.
Thank You