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Session 2.1 Introduction to Cost-Effectiveness Analysis

David Evans Global Programme on Evidence for Health Policy (GPE) Choosing Interventions: Effectiveness, Quality, Costs, Gender and Ethics (EQC). Session 2.1 Introduction to Cost-Effectiveness Analysis. Burden of Disease Analysis. LE: 49 years

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Session 2.1 Introduction to Cost-Effectiveness Analysis

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  1. David EvansGlobal Programme on Evidence for Health Policy (GPE)Choosing Interventions: Effectiveness, Quality, Costs, Gender and Ethics (EQC) Global Programme on Evidence for Health Policy

  2. Session 2.1Introduction to Cost-Effectiveness Analysis Global Programme on Evidence for Health Policy

  3. Burden of Disease Analysis • LE: 49 years • wide range - 33.2 Sierra Leone males; 84.3 Japanese females • DALE: 40 years • from 25.9 to 74.5 years • DALYs - communicable diseases most important cause - malaria, HIV, respiratory, perinatal, vaccine preventable, diarrhoeal diseases Global Programme on Evidence for Health Policy

  4. You are Minister of Health • Priority for resource allocation? • Why not most to malaria, then some to HIV, then some to others on list? • Future burden - so cumulative burden over next x years, or at least 2020 burden • do effective interventions exist? • at what cost? Setting priorities according to what you can do about it is different to burden if resources are scarce Global Programme on Evidence for Health Policy

  5. Resource scarcity • Resources - capital, labour, other inputs • summarised in terms of money values • clear that high burden is in very poor countries - low incomes • also low health expenditures per capita Global Programme on Evidence for Health Policy

  6. Global health care expenditures 1994 COUNTRIES HEALTH CARE EXPENDITURE % of Global % of GDP* Population Global Absolute* % of total % of Global Burden of GDP Disease All 2,330 100% 9% 25,889 100% 100% Industrialized 2,080 89% 8% 23,041 16% 7% Low and 250 11% 1% 2,848 84% 93% middle- income *In billions of US dollars Global Programme on Evidence for Health Policy

  7. Rationale for Cost-Effectiveness Analysis • Resources are scarce in relation to demand (related to needs) • Even in richer countries true • interesting that health as % of GDP increases as income rises - demands for health care rise with increasing income Global Programme on Evidence for Health Policy

  8. Share of GDP spent on health Global Programme on Evidence for Health Policy

  9. Will never be enough resources to provide everyone with all the interventions that might reduce risks of death and poor health or reduce disabilityassociated with poor health • some form of rationing (priority setting) is necessary • e.g. waiting lists, essential drug lists, uninsured Global Programme on Evidence for Health Policy

  10. Mechanism needed to decide: • who should receive intervention; • what interventions - week 2 largely on this topic Week 1: Burden of Disease - Describes the problem This Week: what can be done to improve population health - choice of interventions Week 3: what to do at system level (and how to measure attainment and performance of system) Global Programme on Evidence for Health Policy

  11. Leave Rationing to the Market? Problems with markets in health • “new market failures” - information • Public goods • Externalities • inequalities Market failures - Need some government involvement Global Programme on Evidence for Health Policy

  12. Health System Goals LEVEL DISTRIBUTION 1) Health X X 2) Responsiveness X X 3) Fair Financing X Goodness Fairness Efficiency Global Programme on Evidence for Health Policy

  13. Life expectancy and income for females,1965 and 1995 Global Programme on Evidence for Health Policy

  14. Move up the curve Shift the curve Close the gap around the curve Reduce poverty Increase income and expend. Create new knowledge leading to: better technologies health-promoting behaviours Improve efficiency Three strategies for health gain Global Programme on Evidence for Health Policy

  15. Health System Goals LEVEL DISTRIBUTION 1) Health X X 2) Responsiveness X X 3) Fair Financing X Goodness Fairness Efficiency Global Programme on Evidence for Health Policy

  16. Efficiency • Efficiency: getting the best possible outcomes for the available resources • Technical Efficiency: avoiding waste for a particular intervention or activity • Allocative Efficiency: choosing the best mix of interventions to achieve goals Global Programme on Evidence for Health Policy

  17. How to improve efficiency - 1 • Government can improve technical and allocative efficiency of the services it provides itself Global Programme on Evidence for Health Policy

  18. Private share of total health spending Global Programme on Evidence for Health Policy

  19. How to improve efficiency - 2 • Four key functions in a health system: • financing • creating resources (capital, trained staff etc) • delivery • stewardship So not just interested in efficiency of government expenditure - through stewardship can influence entire sector Global Programme on Evidence for Health Policy

  20. Tools for Efficiency Analysis Global Programme on Evidence for Health Policy

  21. Cost-Effectiveness • Comparing different ways of doing the same thing (e.g. delivering drugs to rural areas) - largely technical efficiency • Comparing different ways of improving health - allocative efficiency NOTE: comparing investment in health with investment in other sectors - difficult Global Programme on Evidence for Health Policy

  22. Types of CEA • Traditional orincremental analysis: compares new with current practice - e.g. short course vs. standard Rx TB in a particular setting • Decision: is new more efficient than old? • Does not show if old is worth doing • Constraints: budget, current mix of interventions, all other local factors Global Programme on Evidence for Health Policy

  23. Intervention Mix-Constrained (IMC) CEA Strength: shows efficiency of small changes over current practice given local constraints Weaknesses: • does not allow review of existing resource allocation decisions (mix of current “interventions”) • is not generalizable across settings Global Programme on Evidence for Health Policy

  24. Need for Generalizability • no country can do all the necessary studies to review existing interventions and new possibilities • must be able to learn from studies done in other settings • trade-off between situation specific and generalizability • type of analysis and level of analysis Global Programme on Evidence for Health Policy

  25. Generalized CEA To provide policy makers with the evidence necessary to: • review existing resource allocation decisions (mix of current “interventions”) • choose appropriate new or expanded interventions should more resources become available • Maximise ability to generalize across settings Global Programme on Evidence for Health Policy

  26. Murray C.J.L, D.B. Evans, A. Acharya & R.M.P.M. Baltussen. “Development of WHO Guidelines on Generalized Cost-Effectiveness Analysis”, Health Economics 9(3): 235-51, 2000 How? Compares interventions to the “null” of doing nothing - stopping what is currently done Global Programme on Evidence for Health Policy

  27. Global Programme on Evidence for Health Policy

  28. Use of Generalized CEA • Provides policy makers with menu of interventions which are very cost-effective at particular budget levels, and those which are not. • Information enters the policy debate to be weighed against other goals of health system. • Not formulaic use of CEA Global Programme on Evidence for Health Policy

  29. Key Issues - 1 Types of costs: • provider • patient • social • cost offsets • future health care costs • benefits as negative costs Viewpoint Global Programme on Evidence for Health Policy

  30. Key Issues - 2 Benefits or Effectiveness • changes in disease, disability incidence, duration or severity • changes in mortality • Intermediate outcome indicators - highly correlated with change in health • Final outcome - DALY or QALY (quality adjusted life years) Global Programme on Evidence for Health Policy

  31. Key Issues - 3 Cost-Effectiveness Ratios • in general - the lower the better • might change with scale - a cost-effectiveness function • subsequent sessions - technical detail, but also how C/E can be used in practice Global Programme on Evidence for Health Policy

  32. Recognise that current resource allocation not perfect: • inertia • past capital investments • donors • political voice • more evidence available on CE, less easy to make “bad” decisions Global Programme on Evidence for Health Policy

  33. Interest and Use of CEA increasing • Oregon - Medicare • World Development Report 1993 - basic packages in many countries since then • explosion of academic literature and individual studies from donor agencies • WHO and GPE - BIG plans Global Programme on Evidence for Health Policy

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