This presentation was delivered by Professor Mark Sculpher from the University of York, UK on 6th September 2011, as part of the HERG Seminar Series. The speaker is a Professor of Health Economics

HERG Seminar Series

Sculpher, M

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Brunel University Research Archive

Methods to Estimate the Cost Effectiveness Threshold for the NHSMark Sculpher, PhDProfessor of Health EconomicsUniversity of York, UKHERG Seminar, September 6th 2011Acknowledgements• Co-investigators:– Karl Claxton– Nancy Devlin– Steve Martin– Nigel Rice– Peter C Smith• Funding: National Institute for Health and Clinical Excellence/Medical Research Council Methodology Research ProgrammeOutline• Two concepts of the threshold• The importance of opportunity cost• Changes in the threshold • NICE’s current position• Estimating NICE threshold• Ongoing workTwo concepts of the value of a QALY (or the cost-effectiveness threshold)Budget constrained systemsFreely funded systemsOpportunity cost value of a QALY (k)What health is forgone as new (more costly) technologies displace existing services?Consumption value of a QALY (v)What value to individuals place on health in terms of their consumption of other good and services?£20,000 per QALY£40,000Price = P*Cost-effectiveness Threshold £20,000 per QALYQALYs gainedCost£60,000£30,000 per QALYPrice > P*3Cost-effectiveness and opportunity cost?£20,0002£10,000 per QALYPrice < P*1Net Health Benefit1 QALYNet Health Benefit-1 QALY£20,000 per QALY£40,000Price = P2Threshold  £20,000 per QALYHealth gainedCost£60,000Price = P33Why does k matter?2£20,000Price = P11Net Health Benefit2/3 QALY4Net Health Benefit-2 QALYThreshold  £10,000 per QALYThreshold  £30,000 per QALYHealthBudget What it is and what its notH1B11/k1Current NHSAn efficient NHS1/k1Underestimate health effect of ∆B (i.e., k1 is too high)Average productivity would overestimate health effect of ∆B(i.e., H1/B1 < k1)How does it change?• Need k what ever view of social value• What it’s not– Consumption value of health (v)– Marginal productivity of ideal NHS• No simple relationship to changes in budget and prices– Discretionary expenditure– Changes in productivity• Stop doing things the NHS shouldn't do (increase k)• Improve those things it should do (reduce k)• Health production outside NHS– Complement, e.g., longer life expectancy (reduce k)– Substitute, e.g., reduced base line risk (increase k)What NICE currently says (1)Below a most plausible ICER of £20,000 per QALY gained, the decision to recommend the use of a technology is normally based on the cost-effectiveness estimate and the acceptability of a technology as an effective use of NHS resources.  Above a most plausible ICER of £20,000 per QALY gained, judgements about the acceptability of the technology as an effective use of NHS resources will specifically take account of the following factors.• The degree of certainty around the ICER...• Whether there are strong reasons to indicate that the assessment of the change in HRQL has been inadequately captured...• The innovative nature of the technology...What NICE currently says (2)Above a most plausible ICER of £30,000 per QALY gained, the Committee will need to identify an increasingly stronger case for supporting the technology as an effective use of NHS resources, with regard to the factors listed above.Source:  National Institute for Health and Clinical Excellence (NICE). Guide to the Methods of Technology Appraisal. London: NICE; 2008.Prioritising NICE’s methodological requirements Review recent key policy papersEmail surveyFocussed review of journal articlesInterviewsWorkshopFeedback via webReportLongworth et al. MRC-NICE scoping project: identifying the national institute for health and clinical excellence’s methodological research priorities and an initial set of priorities.  CHE Research Report 51, 2009. http://www.york.ac.uk/che/publications/in-house/ How can we estimate it?• Informed judgement of the cost-effectiveness of things the NHS does and doesn’t do• Infer a threshold from past decisions• Find out what gets displaced and estimate its value• Estimate the relationship between changes in expenditure and outcomes Informed judgementRawlins and Culyer, The National Institute for Clinical Excellence and its value judgments.  BMJ 2009; BMJ 2004;329:224-227 doi:10.1136/bmj.329.7459.224 (Published 22 July 2004)Problems with informed judgement• Lacks transparency• May have no link with real opportunity costsInferring the threshold from past decisionsSource: Devlin N, Parkin D. Health Economics 2004;13:437-52.Issues with inference from past decisions• More recent results confirm general findings• Important use of formal methods• As other criteria are used in decisions, threshold is not revealed– Decisions reflect (informal) weighting of QALYs gained– NICE may consider technologies for ‘high priority’ patientsStudying local decisions• Opportunity costs fall on local decision makers• Can we estimate the threshold by measuring:– What is displaced locally by new technologies?– The value (cost per QALY gained) of what is displaced?• Few data collected routinely on displaced services• Major research activity needing frequent review• Poor data on cost effectiveness of services• How relevant to NICE’s decision?A sample of 6 NHS commissioners and 16 providersSource: Appleby J, et al. Searching for cost effectiveness thresholds in the NHS. Health Policy (2009),doi:10.1016/j.healthpol.2008.12.010Estimating relationship between expenditure and outcomes• Variations in expenditure and outcomes within programmes• Reflects what actually happens in the NHS• Estimates the marginal productivity (on average) across the NHS • Earlier work has provided initial estimatesRelationship between expenditure and outcomes• Earlier work has generated some initial estimates– Martin et al. The link between health spending and health outcomes for the new English primary care trusts. London: The Health Foundation; 2009.– Martin et al. The Link Between Health Care Spending and Health Outcomes for the New English Primary Care Trusts.  Centre for Health Economics (CHE) Research Paper No. 42. York: CHE, University of York; 2008.– Martin et al. Does health care spending improve health outcomes?  Evidence from English programme budgeting data. Journal of Health Economics. 2008;27:826–42.Cancer Circulation Respiratory Gastro-int Diabetes04/05   per LYper QALY£13,137(£19,070)£7,979(£11,960)05/06   per LY £13,931 £8,426 £7,397 £18,999 £26,453Future work going forward• More programmes• How changes in overall expenditure gets allocated across all the programmes• How changes in mortality might translate into QALYs gained• How uncertain any overall estimate will be• How it changes with scale of expenditure change• How it changes over time (panel data)• Workshop May 2011• Completion June 2012• http://www.york.ac.uk/che/research/teams/teehta/projects/methodological-research/ΔE Programme 23ICD.. ICD.. ICD..Residual?Prior or scenariosHow can we estimate it?ΔB, variation in overall expenditureExpenditure equations,  elasticity of programme expenditure (%ΔE/%ΔB)ΔE Programme ..ICD.. ICD.. ICD..ΔMortalityICD.. ICD.. ICD..ΔE Programme 1ICD.. ICD.. ICD..ΔE Programme 2ICD.. ICD.. ICD..ΔMortalityICD.. ICD.. ICD..ΔMortalityICD.. ICD.. ICD..Outcome equations,  elasticity of outcome (%ΔM/%ΔE)kLife years gainedQALYs gainedQALY/LYs lossLife years gainedQALYs gainedQALY/LYs lossLife years gainedQALYs gainedQALY/LYs lossIllustrative resultsShare of change in totalexpenditureCost per life year gainedCost per QALY gained (proportion of patients in ICD)Cost per QALY gained (contribution to variancein PBC expenditureBig 4 PBCs 14.93% £12,82411 PBCs (with mortality) 29.12% £23,924All 23 PBCs * 100% £27,0392006 expenditure and mortality data for 2006-08 (2MFFs)*Assumes same health effects per £ as the 11 PBCs with outcome data for the remaining 11 PBCs.  ‘Other’ (GMS) is assumed to have no health effects.   Any health effects of GMS expenditure is through other PBCs£8,773£13,621£15,395£9,613£14,904£16,844What we still need to do?• How do changes in mortality translate into QALYs gained?– DALY ratio overestimates QALYs gained• What about PBCs with no mortality?– Which PBCs and ICDs matter most (effect on overall threshold)– Estimates of CE greater or less than overall estimate?– How might we use future routine data• How uncertain is any overall estimate?– Estimated parameters, model identification and correlation– Certainty equivalent for the threshold• How it changes with scale of expenditure change?• How it changes over time– 7 years of expenditure and outcome data– Panel  with more complex lag structure Representing uncertainty in the estimates?ProbabilityThreshold10£20,000£10,000 £30,00070% of ΔE90% of ΔE

Methods to estimate the cost effectiveness threshold for the NHS

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