Economic Analysis In Clinical Research

Martin L. Brown, Ph.D. Applied Research Program Division of Cancer Control and Population Sciences National Cancer Institute mb53o@nih.gov
Introduction to the Principles and Practice of Clinical Research October 31, 2005

Overview
Introduction Concepts Technical

and Statistical Issues

Examples Cost of Illness Cost-Benefit Analysis Marginal Analysis Cost Effectiveness Analysis
Clinical Trials plus Modeling CEA Along Side a Clinical Trial

INTRODUCTION

Purpose of Economic Analysis in Health Care Research

Policy Health

and program evaluation

care resource allocation decisions understanding determinants of technical and organization efficiency of health care delivery understanding determinants of distribution, access and equity issues in health care delivery

For

For

Relationship of Economic Studies to Clinical Trials

Health

Services Research: observational data in community settings or quasicontrolled experimental settings Economics Modeling: economic modeling combined with results of randomized clinical trials through modeling Studies Along-side Clinical Trials: used especially in Pharmacoeconomics

Health

Economic

CONCEPTS

Some Types of Economic Analysis in Health Care Studies

Cost

- efficiency Studies - What should it cost?

Studies (COI) Economic burden of illness Evaluation Studies

Cost-of-illness

Cost

Cost Benefit Analysis (CBA) Cost Effectiveness Analysis (CEA) Cost Utility Analysis (CUA)

Principles of Cost Evaluation Studies

All

relevant costs and benefits should be counted of evaluation is to compare alternative used of resources
is incremental

Purpose

Measurement

Cost Benefit Analysis

All

costs and health effects are expressed in monetary terms (i.e., must put a $ value on a year of life) Benefit -> all benefits minus all costs, sometimes call Social Return on Investment

Cost

Cost

Benefit Ratio -> All benefits divided by all costs, sometimes called Social Rate of Return

Cost Effectiveness Analysis

Costs

terms

are expressed in monetary

Benefits

are expressed in natural units, e.g., life-years Effectiveness Ratio -> Cost divided by life-years (or other measure of benefit)

Cost

Cost Utility Analysis

Costs

terms

are expressed in monetary

Benefits

are expressed in qualityadjusted natural units, e.g., quality adjusted life-years

Cost

Utility Ratio -> Cost divided by Quality Adjusted Life Years

Incremental Cost Effectiveness (or Utility) Ratios

Let

Ca and Cb be the costs of Intervention a and Intervention b;

Ea and Eb be the health effects of Intervention a and Intervention b; a is often defined as status quo or standard treatment.

Let

Intervention

Incremental Cost Effectiveness Ratio (ICER)

ICER = [Eb Ea] / [Cb Ca]

Note: This is the equation for the slope of a line when E is the vertical axis and C is the horizontal axis

The Cost-Effectiveness Plane

150 100

B A
0 50

C
may be costeffective
100 150

lose/lose
Cost
-1 5 0 -1 0 0 -5 0

50

clinically ineffective

-5 0

win/win
-1 0 0 -1 5 0

Health Effects

Dominance
Intervention

A produces more health benefits at lower cost than intervention B: A dominates B. Intervention C produces more health benefits than intervention A, but at higher cost: the ICER of A relative to C can be computed. ICER of A relative to C is the slope of the dotted line

Transformations of ICER
ICER may be transformed to: Net Benefit (NB) = E (C * 1/Vs) Net Monetary Benefit (NMB) = (Vs * E) C

Vs

= the Social Value of health (e.g., $100,000 per life-year, but this can also be varied) transformations are useful when dealing with uncertainty in the estimates of ICER

These

Comparison of Interventions
Micro-analysis

comparison is no treatment or status quo treatment Marginal analysis comparisons are different intensities of the same intervention Macro-analysis
Comprehensive league table, e.g.

Disease Control Priorities Project Vs as determined by rule of thumb, e.g. $100,000 rule Vs as determined by economic analysis as function of wealth, distribution and preferences

Practical Considerations in Cost Evaluation Studies

Sources

of Cost Data

Technical

Economic Considerations Considerations

Statistical

Potential Sources of Economic Data

Clinical

trial forms/medical record abstraction Hospital bills Health system cost-accounting systems (e.g. HMOs) Administrative claims data (e.g. Medicare, Medstat) Patient/provider survey (e.g. MEPS) Cost scenario Time-motion study Engineering study

Some Technical Economic Issues

Adjusting

for price (unit cost) differences

For different years For different settings/locations For different countries (currencies) (e.g. DCPP)

Discounting Pricing

non-market goods

Some Statistical Issues

Economic

data are complex Economic data tend to be highly skewed and censored - special estimation techniques have been developed Trials designed for clinical end-points may be under-powered for economic and/or cost-effectiveness results Cost-effectiveness or Cost-utility ratio estimates pose specific problems for analyzing and presenting confidence intervals (regions)

EXAMPLES

Cost Domains
Cost

domains refers to categories of costs according to whether they are directly or indirectly related to the provision of marketed health care services. cost domain may also determine whether accessible and/or high quality cost data is available to the researcher and what degree of effort is required to obtain data.

The

Examples of Cost Domains

Direct

health care costs (e.g. Medicare payments) non-health care costs (e.g., paid child care)

Direct

Patient

time costs (e.g., value of time to attend treatment)

costs (e.g., lost productivity due to work disability) costs (e.g., lost productivity due to premature death)

Morbidity

Mortality

NIH Cost of Illness Report

Disease/Condition Alzheimer's Disease Atherosclerosis Cancer Stroke Liver Disease Pulmonary Disease Diabetes Heart Disease HIV/AIDS Homicide Injury Kidney Disease Septicemia Suicide Total Costs $87.9 billion $5 billion $96.1 billion $43.3 billion $3.2 billion $37.3 billion $98.2 billion $175.3 billion NA $33.7 billion $338 billion $40.3 billion $7.2 billion NA Direct Costs $13.3 billion $4.4 billion $27.5 billion $28.3 billion $1.2 billion $21.6 billion $44.1 billion $97.9 billion $10.3 billion $10.4 billion $89 billion $26.2 billion $17.5 billion $4.9 billion NA Indirect Costs $74.6 billion $0.6 billion $68.7 billion $15 billion $2.1 billion $16.2 billion $54.1 billion $77.4 billion NA $23.3 billion $248 billion $14.1 billion $5.4 billion $2.3 billion $10.2 billion

Pneumonia/Influenza $22.9 billion

Source: H. Varmus, Disease Specific Estimates of Direct and Indirect Costs of Illness and NIH Support

National Expenditures for Cancer Treatment - 1996

Esophagus Pancreas Melanoma Leukemia Head/Neck Bladder Lymphoma Colorectal Lung Other Prostate

Initial Continuing Terminal

Billions of Dollars

Brown ML, et al. Medical Care 2002 Aug;40(8 Suppl):104-17.

Time Cost: Initial Treatment for Colorectal Cancer

Category of Service Visits Cases Initial Phase Office visits Emergency room visits Chemotherapy Radiation therapy Hospitalization LOS Out-patient surgery Initial Phase Total** 16.95 0.62 6.61 1.43 17.96 1.17 Controls 5.98 0.35 0.05 0.04 1.89 0.25 Time (hours) Cases 24.62 2.17 22.78 2.34 294.90 6.18 355.02 Controls 8.69 1.22 0.17 0.06 37.82 1.30 49.26

Source: Yabroff et al. Medical Care, 2005.

How do time costs compare to direct costs?

For colorectal cancer, time costs (valued by average wage rates) during initial treatment were $4655, 20% of direct medical expenditures in that period.

Using COI in a Cost-Benefit Analysis

COI

of Neural Tube Defects at Birth

Analysis of Folic Acid Fortifiction

Cost-Benefit

COI of Neural Tube Defects

Cost

Domains Included in COI Estimate:

Medical care Developmental services Special education Morbidity cost

COI per case:

Spina bifida: $349,133 Anencephaly: $485,016

Source: PS Romano, et al. Folic acid fortification of grain: an economic analysis. AJPH 1995:85:667-676.

Cost-Benefit Analysis of Folic Acid Fortification

Cost

of low level folic acid fortification = $27.94 million per yr

folic acid fortification can mask vitamin B12 deficiency of surveillance of those with undiagnosed vitamin B12 deficiency$5 million per year

Note:

Cost

Benefits of Folic Acid Fortification

Proportion

of target population with inadequate folate intake - 66%

Cases

of birth defects averted: 191 spina bifida, 113 anencephaly

Folic Acid Fortification: CostBenefit Analysis

Economic

benefit of birth defects averted: $121.5 million benefit of fortification program = $93.6 million Ratio = 4.3

Net

Benefit/Cost

What

about prevention of Colorectal cancer?

supplementation a better policy?

Is

Supplementation vs. Fortification

Cost-effectiveness analysis of folic acid supplementation vs. fortification Both found to be cost-savings compared to doing nothing Fortification (dominantly) costeffective relative to supplementation

Source: Kelly AE, et al. Appendix B in Gold, et al. Cost-Effectiveness in Health and Medicine. Oxford U. Press, 1996.

Did the Policy Work?

Studies

of NTD prevalence pre- and post-fortification More fortification that anticipated Original estimate did not take doseresponse into account NTDs averted:
520 Spina Bifida 92 Anancephaly

Net

Benefit = $143 million (in 2002$)

Source: Williams et al. Teratology 2002;66:33-39; Waitzman , personal comm.

Marginal Analysis National Cord Blood Bank

How

large should National Cord Blood Bank be (beyond 50,000 inventory initially proposed)? Human leukocyte antigen match rate (and therefore transplant benefit) increases with size Cost increases with size
Source: D. Howard, et al. Institute of Medicine, 2005.

Cord transplants by match level for patients age <20 as a function of inventory
250 5/6 match 200 150 100 50 0 50,000

Number of transplants

6/6 match

4/6 match

150,000

250,000 Inventory size

350,000

Patient life years as a function of inventory

80,000

79,500
Life years

79,000

Gain of 114 life years

78,500

78,000 50,000

150,000

250,000

350,000

Inventory size

Total bank costs as a function of inventory

$250 $225

Costs in millions

$200 $175 $150 $125 $100 50,000

Costs increase by $12 million

150,000

250,000

350,000

Inventory size

Incremental cost-effectiveness ratios (ICER) $250,000

$200,000

Cost per life year gained

Cost per life year gained of increasing inventory from 150,000 to 200,000 units is $105,000 = $12,000,000 114
ICER

$150,000

$100,000

ICER ICER

$50,000

ICER

$0 100,000 v. 50,000 150,000 v. 100,000 200,000 v. 150,000 300,000 v. 200,000

Cord blood inventory level comparison

Cost Evaluation Studies and Clinical Trials

Economic

Modeling Combined with Clinical Trial Results

to HMO Computerized Data on Patient Care Costs the Confidence Region for the Cost-Effectiveness Ratio

Linking

Analyzing

When Should Economic Data be Collected in a RCT?

Are

differences in economic resource utilization meaningful from a societal perspective? Will adding economic component to the analysis influence clinical practice or health policy? Is collection of good economic data feasible and affordable within context of overall trial design? Does trial design have external validity from an economic perspective?

Economic Modeling Combined With Clinical Trial Results

Berthelot

JM et al. Decision framework for chemotherapeutic interventions for metastatic nonsmall-cell lung cancer. Journal of the National Cancer Institute, 2000 Aug 16;92(16):1321-9 trial data with a modeling approach to costs and longer term outcomes

Combining

CEA of Lung Cancer Treatment

CEA

of chemotherapy vs. best supportive care for advanced stage lung cancer benefits of treatment based on survival curves modeled (out to 48 months using Weibull survival function) from RCT results and community survival data based on Canadian cost scenarios (POHEM model)

Survival

Costs

Results for stage IV NSCLC

Total

cost of best supportive care = $25,904 cost of chemotherapy = $25,105 $41,576 depending on regimen

Total

Hospital/Clinic

costs are higher for best supportive care compared to chemotherapy e.g. intervention results in down-stream cost savings
of chemotherapy ranges from costsavings to $37,800 / quality adjusted life year

ICER

CEA From Patient Level Data in a Clinical Trial

Statistical modeling of longterm outcomes and costs

Accounting for stochastic uncertainty in the measurment of health outcomes and costs Bootstrap Confidence Interval Assessing CEA as a function of the Social Value of health the Cost Effective Acceptability Curve

Example CEA of hormonal treatment for prostate cancer

Cost-effectiveness analysis of adding early hormonal therapy to radiotherapy for locally advanced prostate cancer Clinical Trial EORTC 22863

Source: Neymark et al, Health Economics 2002;11:233-248.

CEA of Hormonal Treatment Methods

Direct medical resource use obtained of 90 subjects for up to 11 years of follow-up Unit costs based on based on standard national French tarrifs Method of Lin et al. used to adjust for censoring in longitudinal cost data Mean survival estimated using the restricted means method

CEA of Hormonal Treatment Construction of 95% Confidence Region Using standard Monte Carlo simulation methods, (sampling with replacement) 5000 replications of the Incremental Cost Effectiveness Ratio, were calculated

CEA of Hormonal Treatment Confidence Region

4000

Cost (French Franks)

2000 0 -1 -2000 -4000 -6000 -8000 Life Years 0 1 2 3

Cost Effectiveness Acceptability Curves

Conduct

bootstrap simulation Examine all results that fall within 95% confidence intervals for the cost effectiveness ratio Compare to reference values for social value of health (Vs) Calculate probability that: CER < Vs

Cost-Effectiveness Acceptability Curve for Hormonal Treatment of Prostate Cancer

Probability cost-effective

92% 90% 88% 86% 84% 82%

0 10,000 20,000 30,000 40,000

Social Value of Health (F.F.)

What is the meaning of Vs?

It represents the value that a society or an individual places on one extra unit of health It reflects the a societys level of economic wealth and the relative distribution of that wealth to the health sector Example: consider approaches to cervical cancer control in poor and rich societies.

Costs and Benefits of Cervical Cancer Screening United States Every 3 yr Pap @ $60,000/YLS United States Every 2 yr Pap @ $174,000/YLS

United States Annual Pap @ $795,000/YLS

100% 90%
Reduction in Lifetime Cancer Incidence

80% 70% 60% 50% 40% 30% 20% 10% 0% $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 $2,200 $2,400 $2,600 $2,800 $3,000 Lifetime Costs ($U.S.) South Africa Screening 2x Lifetime $50 - $250/ YLS South Africa Screening 1x Lifetime cost saving to <$50/YLS South Africa Screening 3x Lifetime $250 - $500/YLS

Question: How much health is gained in the U.S. per $50,000 invested in this strategy? Answer: 23 days of life-expectancy

Question: How much health is gained in South Africa per $50,000 invested in this strategy? Answer: 1000 years of life-expectancy

Source: Goldie et al. NEJM 2005, in press.