The Core Problem in Healthcare

• Scarcity of Resources: Healthcare systems have limited budgets, personnel, and infrastructure.
• Unlimited Needs: There are countless potential treatments, services, and programs we could fund.
• The Need for Choice: This scarcity forces us to make difficult choices about which healthcare interventions to fund.
• The Goal: We need a rational way to make these choices to maximize the health benefits we get from our limited resources.

What is Economic Evaluation?

• A systematic way to compare the costs and consequences of at least two different healthcare alternatives.
• It’s not just about finding the cheapest option or the most effective one; it’s about assessing value for money.
• Key types include:
  • Cost-Effectiveness Analysis (CEA)
  • Cost-Utility Analysis (CUA)
  • Cost-Benefit Analysis (CBA)

Introducing the Case Study

• Paper: Cost-Effectiveness Analysis of Idursulfase for the Long-Term Treatment of Hunter Syndrome.
• Condition: Hunter Syndrome (MPS-II) is a rare, debilitating genetic disease that is progressive and life-limiting.
• Intervention: Idursulfase, an enzyme replacement therapy (ERT) that can prolong survival and improve some symptoms.
• The Dilemma: The treatment is effective but extremely expensive, costing over $650,000 per patient annually in some countries.

The Steps of Economic Evaluation

1. Define the Research Question (Objective, Perspective, Comparators)
2. Plan the Study Design (Model vs. Trial-based)
3. Identify, Measure & Value Costs
4. Identify, Measure & Value Outcomes
5. Analyze Costs & Outcomes (Discounting, ICER)
6. Handle Uncertainty (Sensitivity Analysis)

Step 1: Defining the Research Question

The Theory: A Clear Question is Crucial

• The question must clearly state the alternatives being compared and the perspective of the analysis.
• Comparator: What is the new intervention being compared against? This should be the current standard of care or the most relevant alternative.
• Perspective: Whose costs and benefits are being counted?
  • Payer/Provider: (e.g., a hospital, Ministry of Health) Focuses on direct medical costs.
  • Societal: Broader view including patient out-of-pocket costs, productivity losses, and informal care.

Case Study: The Research Question

• Objective: To estimate the cost-effectiveness of long-term enzyme replacement therapy with idursulfase versus the standard of care (SoC) for Hunter Syndrome.
• Comparator: The Standard of Care (SoC), which included physiotherapy, surgical procedures, and cardiopulmonary support, but no enzyme therapy.
• Perspective: A Malaysian societal perspective was adopted.
• Implication: By choosing a societal perspective, the researchers included both direct healthcare costs and out-of-pocket costs borne by patients and their families.

Step 2: Planning the Study Design

The Theory: Trial vs. Model

• Economic evaluations can be designed in two main ways.
• Alongside a Trial (EAT): Cost and outcome data are collected directly during a Randomized Controlled Trial (RCT).
  • Pros: High internal validity, lower risk of bias.
  • Cons: Often short time horizons, may only measure intermediate outcomes.
• Decision Analytic Model: A simulation that synthesizes evidence from various sources (trials, literature, databases) to project long-term costs and outcomes.
  • Pros: Can model lifetime costs/outcomes, compare multiple alternatives, and explore uncertainty.
  • Cons: Relies on assumptions and data from different sources.

Case Study: A Modeling Approach

• The study developed a de novo 4-state partitioned survival model.
• Why a model?
  • Hunter Syndrome is a lifelong condition; a short-term trial would not capture the full picture.
  • The model allowed researchers to project costs and benefits over a lifetime horizon (75 years).
• Evidence Synthesis: The model integrated data from multiple sources:
  • Efficacy data from multinational registries and published studies.
  • Cost data from local medical chart reviews and patient surveys in Malaysia.
  • Utility (quality of life) data from a new study conducted with the general public.

Step 3 & 4: Identifying, Measuring & Valuing Costs and Outcomes

The Theory: What are the Costs?

• Costs are the value of all resources consumed by an intervention.
• Key categories depend on the perspective:
  • Direct Medical Costs: Drugs, hospital stays, physician visits, lab tests.
  • Direct Non-Medical Costs: Patient transportation, special diets.
  • Indirect Costs: Productivity losses due to inability to work (often in societal perspective).
• Measurement: Identify each resource (e.g., a hospital day), measure the quantity used (q), and multiply by its unit price (p).

Case Study: Costs of Treating Hunter Syndrome

• The analysis included costs from two main sectors, consistent with its societal perspective:
  1. Healthcare Sector Costs:
     • The drug itself (Idursulfase acquisition cost).
     • Infusion-related costs.
     • Consultations with healthcare professionals.
  2. Patient & Family Costs:
     • Out-of-pocket expenditures.
• The overwhelming majority of the cost was the drug itself, accounting for 99% of the incremental cost.

The Theory: Measuring Health Outcomes

• Outcomes are the changes in health resulting from an intervention.
• Can be measured in different ways:
  • Natural Units (for CEA): Life-years gained, cases avoided. Limited to comparing programs with the same type of outcome.
  • Quality-Adjusted Life Year (QALY) (for CUA): A generic measure that combines length of life and quality of life into a single metric.
    • 1 QALY = 1 year in perfect health.
    • Calculated as: Years of Life × Utility Value.
    • Utility is a score from 0 (death) to 1 (perfect health).

Case Study: Outcomes for Hunter Syndrome

• The study measured outcomes in two ways:
  1. Life Years (LYs) Gained.
  2. Quality-Adjusted Life Years (QALYs) Gained.
• Deriving Utility Values: Since no specific quality of life data for this disease existed in Malaysia, the researchers conducted a time trade-off vignette study.
  • They created descriptions (vignettes) of different health states associated with Hunter Syndrome.
  • Members of the general public were asked to value these health states, providing the utility scores needed for the QALY calculation.

Step 5: Analyzing the Costs & Outcomes

The Theory: Discounting & The ICER

• Discounting: Costs and benefits that occur in the future are valued less than those that occur today.
  • We apply a discount rate (e.g., 3-5%) to future costs and QALYs to calculate their “present value”.
  • This is standard practice for any evaluation with a time horizon longer than one year.
• Incremental Cost-Effectiveness Ratio (ICER): This is the final result. It tells you the extra cost for each extra unit of health outcome gained.
  • \(ICER = \frac{(Cost_{New} - Cost_{Old})}{(Effect_{New} - Effect_{Old})}\)

Case Study: Base Case Results

• Discount Rate: The study applied a 3% discount rate to both costs and outcomes.
• Lifetime Results: | Treatment | Total QALYs | Total Costs (USD) | | :— | :— | :— | | Standard of Care (SoC) | 5.47 | $86,276 | | Idursulfase (ERTI) | 9.52 | $9,605,043 | | Incremental | +4.05 | +$9,518,767 | *

  Table adapted from Table 2 in Mustaffa et al.
• The ICER: \(ICER = \frac{\$9,518,767}{4.05 QALYs} = \mathbf{\$} \textbf{<span style='color:#E69F00;'>2,351,093</span>}\) per QALY Gained.

The Theory: Interpreting the ICER

• The ICER is compared to a willingness-to-pay (WTP) threshold.
• The WTP threshold represents the maximum amount a healthcare system or society is willing to pay for a unit of health gain (e.g., one QALY).
• Decision Rule:
  • If ICER < WTP Threshold: The intervention is considered cost-effective.
  • If ICER > WTP Threshold: The intervention is not considered cost-effective.
• WTP thresholds vary by country. A common benchmark is 1-3 times the country’s GDP per capita.

The Cost-Effectiveness Plane

• This visual tool helps categorize the results of an economic evaluation.

• Y-axis: Incremental Cost (New - Old)

• X-axis: Incremental Effect (New - Old)

• Dominant (Southeast Quadrant): Cheaper and more effective. Easy decision: Adopt.

• Dominated (Northwest Quadrant): More expensive and less effective. Easy decision: Reject.

• Trade-off (Northeast Quadrant): More expensive but also more effective. This is where the ICER and WTP threshold are needed.

Case Study: Interpreting the Result

• ICER: $2.4 million per QALY gained.
• WTP Threshold: The study used a standard threshold of 1x GDP per capita for Malaysia. In 2023, this is approximately $13,000 USD.
• Conclusion:
  • $2,400,000 >> $13,000
  • The ICER was “beyond any conventionally used cost-effectiveness threshold”.
  • At its current price, Idursulfase is not cost-effective in Malaysia.

Step 6: Handling Uncertainty

The Theory: Sensitivity Analysis

• Economic models are built on assumptions and estimates, so there is always uncertainty in the results.
• Sensitivity Analysis is used to test how robust the conclusion is to changes in these inputs.
• Types of Sensitivity Analysis:
  • One-Way (Deterministic): Change one parameter at a time and see how the ICER changes. Often displayed in a Tornado Diagram.
  • Probabilistic (PSA): Change all parameters simultaneously over thousands of simulations to understand the overall uncertainty. Displayed in a Cost-Effectiveness Acceptability Curve (CEAC).

Case Study: Handling Uncertainty

• The study performed extensive sensitivity analyses.
• One-Way Results (Tornado Diagram):
  • The ICER was most sensitive to:
    1. Drug Cost: A massive price discount (82%) would be needed to make it potentially cost-effective.
    2. Utility values for patients.
    3. The discount rate used.
• Probabilistic Results: Even in all 10,000 simulations, the ICER remained far above conventional thresholds, reinforcing the base case conclusion.
• [See Figure 3B from Mustaffa et al. for the Tornado Diagram]

Conclusion

• Summary of Steps: We’ve walked through the key steps from framing a research question to handling uncertainty.
• Theory vs. Practice: The case study showed how these theoretical steps are applied to a complex real-world problem.
• Key Finding: The economic evaluation provided a clear, evidence-based conclusion: while Idursulfase offers significant health benefits (4 extra QALYs), its high price means it does not represent good value for money under conventional standards.
• Policy Implication: This type of analysis gives policymakers objective evidence to use when making difficult funding decisions for high-cost technologies.

Questions?