Cost Effectiveness Evaluation in Decision Making?

The current Health Technology Assessment (HTA) means the Government is willing to pay €45,000 for one year of perfect health, writes Ms. Sandra Redmond, Health Outcomes Manager, GSK.

Headlines and statements such as ‘Health Service Executive rejects MS drug again’ and ‘the manufacturer has been unable to demonstrate the cost-effectiveness in the Irish healthcare setting’ are becoming more and more common in the press. But what role does cost effectiveness play in making decisions and is it a useful tool for health managers?

The HSE has a limited budget. Cost effectiveness evaluation or Health Technology Assessment (HTA) allows the HSE to choose between new drugs given its finite resources.

Generally, only medicines that are more expensive than existing treatments for similar patients undergo a HTA, because these will increase the medicines budget. The more expensive medicines are usually associated with a health gain. A HTA evaluates whether this health gain is worth the higher price. It does this by comparing the total costs and health gain of the new medicine with existing medicines. Costs not only include the acquisition cost of the medicine but other costs such as hospital visits and treatment of adverse events.

Health is usually quantified by a composite measure called the Quality Adjusted Life Year (QALY) which takes into account extra years of life and the quality of those years. Quality of life is measured by asking patients to complete a quality of life questionnaire such as the SF-36 or the EQ-5D. These answers are converted to weights which are measured on a scale from 0 to 1 where 0 is death and 1 is perfect health and then applied to life years. For example, if a medicine produced two additional years of life but it produced some side effects that were weighted at 0.8: the QALY would be 1.6.

If a new medicine generates a ratio over €45,000/QALY then it is deemed not cost effective and the HSE can reject the drug.

The difference in cost and QALY is expressed as a ratio and compared to the cost effectiveness threshold of €45,000/QALY. This means that the Government is willing to pay €45,000 for one year of perfect health. If a new medicine generates a ratio over €45,000/QALY then it is deemed not cost effective and the HSE can reject the drug.

The cost effectiveness results from the HTA supporting Ambrisentan for pulmonary arterial hypertension is presented below by way of illustration. Ambrisentan is found to be equally as efficacious as the existing treatment but is associated with less liver abnormalities over a fiveyear period. This translates into similar life years but an overall health gain of 0.146 QALYs for Ambrisentan. Totals costs are lower for Ambrisentan driven by the lower cost of treating liver abnormalities. Overall, Ambrisentan produces a health gain at no extra cost to the HSE and was subsequently reimbursed.

Ambrisentan Existing treatment Difference
Life years 4.275 4.271 0.004
QALY 3.277 3.131 0.146
Drug costs €118,183 €97,167 €21,016
Other costs €78,823 €128,405 -€49,583
Total costs €197,006 €225,572 -€28,567
Cost per QALY Ambrisentan less costly and more effective

The HTA process consists of pharmaceutical companies submitting the HTA, which comply with guidelines set out by HIQA, to the National Centre for Pharmacoeconomics (NCPE) which evaluates it. The NCPE’s evaluation ends with a recommendation to reimburse or not which is posted on their website (www.ncpe.ie).

We as a pharmaceutical company find the HTA process constructive because firstly there is a clear and transparent process that we can follow, secondly the reasons for rejection are clear and finally it focuses on health outcomes and not just on unit costs. As such, a variation of the cost effectiveness evaluation described above could be a useful tool to aid decision making for health managers. One variation could be to express the difference in costs in terms of hospital bed days because the QALY can be difficult to quantify at community or hospital level.