Health economics: prof. Bilcke
LESSON 1: ECONOMIC EVALUATION: BASIC CONCEPTS WITH FLU EXERCISE
We use SIR models, ABM and network models… to see how an infection spreads in a population &
the impact of different interventions. Interventions mostly aim to reduce infection, but can also
reduce severity of disease, such as hospitalization. This is the input for the economic model: we want
to identify the cost-effect of the intervention: intervention that gives most value for a given amount
of money. Besides disease burden, we also need other info to say something about cost-
effectiveness:
- The cost of the intervention/treatment of the disease
- Willingness to pay value
- Most widely used health outcome in health evaluation: QALYs
Within health economic evaluation we want to measure the cost-effectiveness. This can be done by
the ICER or the INMB. You need this & the willingness to pay to measure cost-effectiveness
WHAT IS ECONOMIC EVALUATION?
“COMPARATIVE ANALYSIS OF ALTERNATIVE COURSES OF ACTION IN TERMS OF BOTH THEIR COSTS AND
CONSEQUENCES .”
Consequences can be measured as QALYs, life years gained…
TYPES OF ECONOMIC EVALUATION DIFFER IN HOW HEALTH GAINS ARE VALUED
1. Cost-effectiveness analysis:
- In one-dimensional natural units
o E.g. infections prevented/hospitalisation/death prevented/life-years gained
o Heart attacks/ cancers/ strokes / deaths prevented
- Incremental cost-effectiveness ratio: ICER = ∆costs/∆effects
o E.g. $10,000 per life-year gained
2. Cost-utility analysis:
2/ - In combined measure of morbidity and mortality
o E.g. Quality-Adjusted Life Years (QALYs) gained
- Incremental cost-utility ratio: ICUR = ∆costs/∆effects
o E.g. $11,250 per QALY gained
- Incremental net monetary / health benefit
o INMB = ∆effects * K - ∆costs
o INHB = ∆effects – (∆costs/K)
E.g. INMB = $19,000 for K = $35,000 per QALY gained
If INMB is -20.000 euros it’s not cost-effective compared to the old one
3.
2/
, Cost-benefit analysis:
- in monetary terms ($)
DECIDING RELATIVE TO SOCIETAL WILLINGNESS TO PAY “K”
The 4 squares are called the 4 cost-effectiveness planes.
See more on this in the lectures of prof. Beutels!
Decision rules:
FLU EXERCISE
What is the cost-effectiveness of influenza vaccination in the elderly? Assume:
1. Elderly = “>65y” , ~ 2,500,000 people
2. Probability of infection = 4% = (here) clinical attack rate
3. Probability of hospitalisation if infected = 10%
4. Probability of death if infected = 3% (applies to all infections)
5. Effectiveness of vaccine = 60%
6. Uptake of the vaccine 80% (compare to no vaccination (uptake=0%))
7. Price of the vaccine per dose = $ 10
8. Administration costs per vaccine dose = $50, and
a. No fixed administration costs
b. No adverse events (i.e. no side effects of vaccination)
9. Costs per hospitalised case = $2000
10. Costs per non-hospitalised case = $100
11. Average life-expectancy > 65y = 12y
12. Costs of follow-up = $0
WHICH COST-EFFECTIVENESS OUTCOMES WILL WE USE?
- Cost per infection prevented
- Cost per death averted
- Cost per life-year gained
LESSON 1: ECONOMIC EVALUATION: BASIC CONCEPTS WITH FLU EXERCISE
We use SIR models, ABM and network models… to see how an infection spreads in a population &
the impact of different interventions. Interventions mostly aim to reduce infection, but can also
reduce severity of disease, such as hospitalization. This is the input for the economic model: we want
to identify the cost-effect of the intervention: intervention that gives most value for a given amount
of money. Besides disease burden, we also need other info to say something about cost-
effectiveness:
- The cost of the intervention/treatment of the disease
- Willingness to pay value
- Most widely used health outcome in health evaluation: QALYs
Within health economic evaluation we want to measure the cost-effectiveness. This can be done by
the ICER or the INMB. You need this & the willingness to pay to measure cost-effectiveness
WHAT IS ECONOMIC EVALUATION?
“COMPARATIVE ANALYSIS OF ALTERNATIVE COURSES OF ACTION IN TERMS OF BOTH THEIR COSTS AND
CONSEQUENCES .”
Consequences can be measured as QALYs, life years gained…
TYPES OF ECONOMIC EVALUATION DIFFER IN HOW HEALTH GAINS ARE VALUED
1. Cost-effectiveness analysis:
- In one-dimensional natural units
o E.g. infections prevented/hospitalisation/death prevented/life-years gained
o Heart attacks/ cancers/ strokes / deaths prevented
- Incremental cost-effectiveness ratio: ICER = ∆costs/∆effects
o E.g. $10,000 per life-year gained
2. Cost-utility analysis:
2/ - In combined measure of morbidity and mortality
o E.g. Quality-Adjusted Life Years (QALYs) gained
- Incremental cost-utility ratio: ICUR = ∆costs/∆effects
o E.g. $11,250 per QALY gained
- Incremental net monetary / health benefit
o INMB = ∆effects * K - ∆costs
o INHB = ∆effects – (∆costs/K)
E.g. INMB = $19,000 for K = $35,000 per QALY gained
If INMB is -20.000 euros it’s not cost-effective compared to the old one
3.
2/
, Cost-benefit analysis:
- in monetary terms ($)
DECIDING RELATIVE TO SOCIETAL WILLINGNESS TO PAY “K”
The 4 squares are called the 4 cost-effectiveness planes.
See more on this in the lectures of prof. Beutels!
Decision rules:
FLU EXERCISE
What is the cost-effectiveness of influenza vaccination in the elderly? Assume:
1. Elderly = “>65y” , ~ 2,500,000 people
2. Probability of infection = 4% = (here) clinical attack rate
3. Probability of hospitalisation if infected = 10%
4. Probability of death if infected = 3% (applies to all infections)
5. Effectiveness of vaccine = 60%
6. Uptake of the vaccine 80% (compare to no vaccination (uptake=0%))
7. Price of the vaccine per dose = $ 10
8. Administration costs per vaccine dose = $50, and
a. No fixed administration costs
b. No adverse events (i.e. no side effects of vaccination)
9. Costs per hospitalised case = $2000
10. Costs per non-hospitalised case = $100
11. Average life-expectancy > 65y = 12y
12. Costs of follow-up = $0
WHICH COST-EFFECTIVENESS OUTCOMES WILL WE USE?
- Cost per infection prevented
- Cost per death averted
- Cost per life-year gained
