The Panel on Cost-Effectiveness in Health and Medicine

1. The Panel on Cost-Effectiveness in Health and Medicine Marthe Gold City University of London 30 October, 2003

2. U.S. Department of Health and Human Services

3. Context:Federal Initiatives • Office of Technology Assessment (Congress) • Cost-effectiveness analyses of preventive services • Health Care Financing Administration • Oregon Medicaid Waiver • Coverage decision regs • Agency for Health Care Policy and Research • Guidelines • Technology assessments

4. Context:Federal Initiatives • National Institutes of Health • Clinical trials • Centers for Disease Control and Prevention • CEAs of preventive strategies • State requests for local decision making • Food and Drug Administration • Regulatory review of drug marketing claims

5. Disarray in the Field….. • Cost-effectiveness methods incomplete/non standardized. Udvarhelyi S, et al, 1992 • Breast cancer screening ratios range from cost saving to $84k/YLS. Brown ML and L Fintor, 1993 • Oregon’s priority list a failure due to technical problems in CEA. Eddy, D.1991

6. Source of Problems • Flaws in methods • Perspective not identified • Inappropriate choice of comparator • Inadequate or non-generalizable cost/effectiveness data • No “discounting” • Uncertainty unaccounted for

7. Source of Problems • Differences in investigator approach • Perspective differs • Non-comparable outcome measures • Differences in how future costs of health care unrelated to the intervention are handled

8. The Panel On Cost-Effectiveness in Health and Medicine: Charge • Assess the current practice of CEA • Provide recommendations to improve quality, comparability and utility of studies in the service of decision making • Identify unresolved methodological issues

9. PCEHM:Reference Case Analysis • “Base case” analysis for analyses designed to inform resource allocation decisions • Defined by a standard set of methods and assumptions • Recommendations for methods drawn from consistent and theoretically grounded series of considerations • A CEA may be valid without following RC methodology.

10. Recommendation Rationales • Theoretical • theoretical considerations drawn from welfare economics and expected utility theory • Ethical • ethical considerations justifying deviation from strictly interpreted welfare economic theory • Accounting consistency • logical consistency/avoidance of double counts

11. Recommendation Rationales • Pragmatic • best empirical evidence and consideration of the practical limitations of current techniques • Conventional • conformance to, or establishment of, a convention to produce standardized procedure • User needs • responds to particular needs of decision makers

12. PCEHM Recommendation: Perspective • The Reference Case should be based on the societal perspective • Everything counts - (costs and benefits) • “The public interest” viewed ex ante • Provides a benchmark against which to assess results from other perspectives

13. PCEHM Recommendations:Outcomes • Morbidity and mortality consequences incorporated into a single measure using QALYs • Preferences (values) should be drawn from a representative sample of the community • Consistent with the societal perspective

14. HALYs for 5 Conditions using HALex, QWB, and DALY weights Gold MR and P Muennig. Med Care, 2002

15. PCEHM Recommendations: Costs • Costs reflected in the numerator should include: health care services; time patients expend receiving care; care giving; other related associated with the illness; non-health impacts of the intervention • Include or exclude costs associated with diseases other than those affected in added years of life

16. PCEHM Recommendations: Comparators • The reference case should compare the health intervention of interest to existing practice (status quo)

17. Cost-effectiveness in decision making for resource allocation • CEA not an “answer” to a resource allocation decision • Other values must enter in, including: • Fairness in distribution of resources, priority to disadvantaged (e.g., sick, poor, aged) • These values can not easily be embedded in the CEA methodology • Decisions must represent the convergence of many views

18. Seven years pass….What’s new? • In the medical literature, evidence that quality of CEA studies has improved • AHRQ and CDC include information about CE in their assessments of community-based and clinical preventive services • No impact on Congressional decision-making • No (explicit) change in the policies of CMS

19. On the horizon….Office of Management and Budget “BCA is an evolving discipline, but one which the administration believes provides important insight into the design of smart regulations……OMB’s final guidance will also promote CEA…it’s advantage is it does not require analysts to determine the monetary cost of life-saving: it reserves that judgment for accountable policy officials.” (Federal Register, March 2003)

20. On the horizon….?Centers for Medicare and Medicaid • Huge growth in program costs • Huge budget deficit • Addition of pharmaceutical benefits • How will the U.S. pay for this?

21. Health Care Spending per CapitaAdjusted for Cost-of-Living Differences, 2001 • 2000 OECD estimate OECD Data

22. U.S. Health Expenditures, 1965-2000Trillions of Dollars Source: National Expenditure Accounts