Erik Nord

Cost-value analysis in health care : making sense out of QALYs

Preface Readers guide Summary 1. Maximizing value in health care 2. Three basic issues in economic evaluation 3. The QALY approach 4. Concerns for fairness 5. The limitations of utility measurement 6. Ways to go Annex.

Maximizing health benefits vs egalitarianism: An Australian survey of health issues

Economists have often treated the objective of health services as being the maximization of the QALYs gained, irrespective of how the gains are distributed. In a cross section of Australians such a policy of distributive neutrality received: (a) very little support when health benefits to young people compete with health benefits to the elderly; (b) only moderate support when those who can become a little better compete with those who can become much better; (c) only moderate support when smokers compete with non smokers; (d) some support when young children compete with newborns; and (e) wide spread support when parents of dependent children compete with people without children. Overall, the views of the study population were strongly egalitarian. A policy of health benefit maximization received very limited support when the consequence is a loss of equity and access to services for the elderly and for people with a limited potential for improving their health.

The Person-trade-off Approach to Valuing Health Care Programs

The person-trade-off technique is a way of estimating the social values of different health care interventions. Basically it consists in asking people how many outcomes of one kind they consider equivalent in social value to X outcomes of another kind. The paper outlines a number of the authors previous studies using the technique. The studies suggest that while the technique is theoretically appealing for resource-allocation purposes, it is in practice quite demanding. It needs to be applied in fairly large groups of subjects to keep random measurement error at an acceptable level. Possible framing effects include the effects of argument presentation and the choice of start points in numerical exercises. To control for these effects, it seems important to take subjects through a multistep procedure, in which they are induced to carefully consider the various arguments that might be relevant in each exercise and to reconsider initial responses in the light of their implications. The investigator must also think through which decision context he or she wishes to study and make his or her choice of context very clear when reporting the results. In spite of these problems, the person-trade-off technique deserves greater attention in the field of cost-utility analysis. Key words: quality-adjusted life years; saved-young-life equivalent (SAVE); person trade-off; equivalence of numbers; health program evaluation. (Med Decis Making 1995;15:201-208)

EuroQol? health-related quality of life measurement. Valuations of health states by the general public in Norway

The EuroQol instrument consists of a self administered questionnaire where subjects are asked to value health states on a visual analogue scale. The instrument is playing a role of linking cross-national data in the field of health status measurement. An experiment in Norway with an alternative lay out added little to the feasibility of the instrument. On the other hand, reducing the number of states to be valued did increase the response rate significantly. Valuations in a random sample of Norwegian subjects were quite similar to valuations made by subjects in England, Holland and Sweden. EuroQol valuations may have to undergo a radical transformation before being used as utility weights for life years, but the similarity in valuations across countries is a promising finding in itself. To the extent that these similarities are validated in later studies, authorities in any one of these four countries wishing to use health status indices in medical decision making, may in the future allow themselves to draw on results obtained in any of the other three countries. Particularly for a small country like Norway there is an obvious advantage in this.

QALYs: Some Challenges

In the preceding article, Weinstein et al. [1] explain the QALYconcept, its methods, and their underlying assumptions. Anumber of interesting themes for discussion arise from thisfactual presentation. We restrict ourselves to addressing fourissues that we deem particularly challenging.As a general background for our selection of issues, we reit-erate a basic point about valuation perspectives: StandardQALYs are meant to express the personal utility of health out-comes as judged ex ante and “on average” by the general publicfrom behind a veil of ignorance about future health (so-called“decision utility”). Standard QALYs thus express value in termsof ex ante self-interest. There are, however, possible alternatives.First, health state utilities may in principle be elicited ex postrather than ex ante, i.e., from people who have or have had directexperience with the health states that are the object of the valu-ation (so-called “experienced utility”). Second, QALYs may beconstructed to express society’s valuation of health outcomeswhen not only self-interest but also concerns for fairness aretaken into account. The choice of approach depends on thequestion one wishes to answer, and the choice of health statevaluation techniques depends on the choice of perspective.The issues we address in the following reflect the aboveplurality in possible valuation perspectives and are in part inde-pendent of each other. One issue is intermethod variation in theestimation of ex ante health state utilities. A second is the exist-ence of unwillingness to trade lifetime in elicitations of experi-enced utility. A third is the discrepancy between aggregateindividual utility of health programs on the one hand and, on theother hand, societal valuations that include concerns for fairness.A fourth is a hitherto much overlooked distinction betweenhealthy individuals’ valuations of states of illness (which

Social evaluation of health care versus personal evaluation of health states. Evidence on the validity of four health-state scaling instruments using Norwegian and Australian surveys.

In most of the cost-utility literature, quality-adjusted life-year (QALY) gains are interpreted as a measure of social value. Given this interpretation, the validity of different multi-attribute health-state scaling instruments may be tested by comparing the values they provide on the 0-1 QALY scale with directly elicited preferences for person trade-offs between different treatments (equivalence of numbers of different patients treated). Norwegian and Australian public preferences as measured by the person trade-off suggest that the EuroQol Instrument assigns excessively low values to health states. This seems to be even more true of the McMaster Health Classification System. The Quality of Well-being Scale appears to compress states toward the middle of the 0-1 scale. By contrast, the Rosser/Kind index fits reasonably well with directly measured person trade-off data.

Who cares about cost? Does economic analysis impose or reflect social values?

In a two-stage survey, a cross-section of Australians were questioned about the importance of costs in setting priorities in health care. Generally, respondents felt that it is unfair to discriminate against patients who happen to have a high cost illness and that costs should therefore not be a major factor in prioritising. The majority maintained this view even when confronted with its implications in terms of the total number of people who could be treated and their own chance of receiving treatment if they fall ill. Their position cannot be discarded as irrational, as it is consistent with a defensible view of utility. However, the results suggest that the concern with allocative efficiency, as usually envisaged by the economists, is not shared by the general public and that the cost-effectiveness approach to assigning priorities in health care may be imposing an excessively simple value system upon resource allocation decision-making.

Toward a Consensus on the QALY

Earlier versions of the other articles in this Value in Health Special Issue, Moving the QALY Forward: Building a Pragmatic Road (articles 2–6) were presented at an ISPOR Development Workshop on “Moving the QALY Forward: Building a Pragmatic Road” held in Philadelphia from November 6–8, 2007. After the discussion of the articles, a workshop consensus group was formed, including representation from the groups producing the other articles. It fell to the consensus group to identify common ground on key issues. Given the diversity of views expressed at this workshop, as evidenced in the articles presented, it was clear that it would not be possible to reach agreement on specifics, such as how QALYs should be measured, or which instrument(s) should be used. Rather, the group felt that the best way forward was to reach agreement on several high-level principles and to express disagreements as a set of issues for further research. In all, eight general statements were agreed upon, which were then put to all the workshop participants for discussion. These statements are outlined as follows, along with the main points arising in the discussion.

The Significance of Age and Duration of Effect in Social Evaluation of Health Care

To give priority to the young over the elderly has been labelled ‘ageism’. People who express ‘ageist’ preferences may feel that, all else equal, an individual has greater right to enjoy additional life years the fewer life years he or she has already had. We shall refer to this asegalitarian ageism. They may also emphasise the greater expected duration of health benefits in young people that derives from their greater life expectancy. We may call thisutilitarian ageism. Both these forms of ageism were observed in an empirical study of social preferences in Australia. The study lends some support to the assumptions in the QALY approach that duration of benefits, and hence old age, should count in prioritising at the budget level in health care.

The efficiency frontier approach to economic evaluation of health-care interventions

BACKGROUND IQWiG commissioned an international panel of experts to develop methods for the assessment of the relation of benefits to costs in the German statutory health-care system. PROPOSED METHODS The panel recommended that IQWiG inform German decision makers of the net costs and value of additional benefits of an intervention in the context of relevant other interventions in that indication. To facilitate guidance regarding maximum reimbursement, this information is presented in an efficiency plot with costs on the horizontal axis and value of benefits on the vertical. The efficiency frontier links the interventions that are not dominated and provides guidance. A technology that places on the frontier or to the left is reasonably efficient, while one falling to the right requires further justification for reimbursement at that price. This information does not automatically give the maximum reimbursement, as other considerations may be relevant. Given that the estimates are for a specific indication, they do not address priority setting across the health-care system. CONCLUSION This approach informs decision makers about efficiency of interventions, conforms to the mandate and is consistent with basic economic principles. Empirical testing of its feasibility and usefulness is required.