MAKING THE CASE

HEALTH ECONOMICS AS APPLIED IN MEXICO

Rafael Santana, MD

1

TALK OVERVIEW

• Some data from Mexico.

• Review of Health Economics.

• Cost Effectiveness Analysis and Cost Utility Analysis

• The role of CEA and CUA in Mexico

• The barriers for implementing Economic Evaluation

• Conclusion

2

SOME DATA FROM MEXICO

Total population (2010) 112,336,538

Life expectancy at birth m/f (years) 72/78

Gross domestic income per capita (2011) $16,588

Probability of dying under five (per 1 000 live births) 16

Probability of dying between 15 and 60 years m/f (per 1 000 population)

177/95

Total expenditure on health per capita (2010) $ 959

Total expenditure on health as % of GDP (2010) 6.3

Population covered by Social Security (2010) 64.5 %

For 2009 unless indicated. Source: Global Health Observatory and INEGI

3

Demographic Transition in Mexico

Men Women

Millions

7 6 5 4 3 2 1 0 1 2 3 4 5 6 77 6 5 4 3 2 1 0 1 2 3 4 5 6 7

1975 2000 2025

Annual growth rate65 years and older: 3.8%Under 5 years old: -1.3%

85 +80-8475-7970-7465-6960-6455-5950-5445-4940-4435-3930-3425-2920-2415-1910-14

5-90-4

4

DISTRIBUTION OF CAUSES OF DEATH IN MEXICO, 1955-2030

0

10

20

30

40

50

60

70

80

90

100

1955 1960 1970 1980 1990 2000 2006 2030

PER

CEN

TAG

E

Communicable diseases, reproductive and malnutrition related diseases.

Non communicable diseasesInjuries

5

Epidemiological Transition in Mexico, 1955-2005

Source: INEGI/Sec Salud. Mortality Database

Ill-defined

Diabetes

Congenital Abnorm..

Maternal Cond.

Neuropsychiatric Cond

Genitourinary Dis.

Chronic Respiratory Dis.

Malignant Neoplasms

Malnutrition

InjuriesCardiovascular Diseases.

Perinatal Dis.

Respiratory Inf.

Diarrheal Dis.

Infectious and Parasitic

35% 25% 15% 5% 5% 15% 25% 35%0%

20051955

Epidemiological backlog

Emerging problems

Ill-defined

6

MEXICAN HEALTH CARE SYSTEM

1. Governmental organizations: providing services for the uninsured population (Ministry of Health, IMSS-Oportunidades and Popular Insurance)

2. Social Security: covering workers in the formal private sector of the economy, state and federal workers, the armed forces and employees of the national oil company (IMSS, ISSSTE, ISSFAM and PEMEX)

3. Private sector: made up of an unorganized hospitals and clinics on a for-profit basis

7

CHALLENGES TO THE HEALTH CARE SYSTEM

Increasing costs to treat older people and chronic diseases (Cancer, diabetes, cardiovascular and mental diseases)

Continue to deal with infectious diseases, emerging and re-emerging diseases (TB, Influenza Pandemic, HIV, etc)

Fragmentation and lack of coordination with inequity in access to care

Low expenditure on health (6% GDP)

High cost of new drugs and technologies

8

TALK OVERVIEW

• Some data from Mexico.

• Review of Health Economics.

• Cost Effectiveness Analysis and Cost Utility Analysis

• The role of CEA and CUA in Mexico

• The barriers for implementing Economic Evaluation

• Conclusion

9

REVIEW OF HEALTH ECONOMICS.• Economics is the science that deals

with the consequences of resources scarcity.

• Economics needs to identify the best way to use of scarce resources to satisfy human wants and needs.

• Economics needs to Choose between which ‘wants’ and which ‘affords’, given our resource ‘budget’

10

ECONOMICS IS ABOUT CHOICE

Budget

Good ‘A’ Good ‘B’

11

HEALTH ECONOMICS

• Production of health care (doctors, nurses, hospitals …).

• Distribution of health care across the country.• How much money should the government spend

on healthcare?• Economic evaluation for new drugs and

technologies

Health economics is the study of how (scarce) resources are allocated to and within the health economy.

12

1. Could it work (efficacy)?

2. Does it work (effectiveness)?

3. Does it work well (efficiency)?

ECONOMIC EVALUATION13

TALK OVERVIEW

• Some data from Mexico.

• Review of Health Economics.

• Cost Effectiveness Analysis and Cost Utility Analysis

• The role of CEA and CUA in Mexico

• The barriers for implementing Economic Evaluation

• Conclusion

14

COST-EFFECTIVENESS ANALYSIS (CEA)

Compare treatments.Measure all costs.Identify all outcomesIn long term treatment, discount cost and outcomes to reflect lower value associated with delay

15

COST EFFECTIVNESS ANALYSIS

DRUG A

DRUG B

BENEFITS

BENEFITS

COST

COST

TIME

16

COST-UTILITY ANALYSIS (CUA)

Compare treatments.Measure all costs.Identify all outcomesDiscount cost and outcomes to reflect lower value

associated with delayMeasure the improvement on health

17

HEALTH BENEFITS

• Quality-adjusted life years (QALYs) and Disability-adjusted life years (DALYs)

• Combine mortality with morbidity in single numerical units.

• Allows to account for mortality and morbidity

• Value given to various states from 0 (worst) to 1 (<healthy>)

18

19

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

0 10 20 30 40 50 60 70 80 90

Life years

Ad

jusm

ent

fact

or

DALY

QALY

QALYs and DALYs20

B

C

A

D

more costly

increase in health effects

decrease in health effects

Intervention is more costly and less effective

Intervention is more effective but more costly

Intervention is less effective but less costly

Intervention is less costlyand more effective

less costly

Cost-effectiveness plane21

NeedsEvaluation

Superior

More costly

Less costly

More effective Less effective

B

D

NeedsEvaluation

D

Inferior

C

Extra benefits compensate additional cost?

Cost-effectiveness plane

A

22

The more effective, less costly treatment dominates or if they are equal cost, the more effective or if they are equally effective, the less costly.

• In the absence of dominance, find the Incremental Cost-Effectiveness Ratio (ICER)

ECONOMIC EVALUATION23

INCREMENTAL COST – EFFECTIVENESS RATE (ICER)

A

B

Effectiveness

Cost

EA EB

CA

CB

Costs B Effects B

Costs A Effects A

Costs B - Costs A Effects B - Effects

A

Incremental Cost Effectiveness Ratio:

Cost Effectiveness Ratios:

24

EconomicEvaluation

B

We reject

Cost +

Cost -

Effectiveness +Effectiveness -

A

D

EconomicEvaluation We accept

C

Uncertainty Zone

Uncertainty Zone

Acce

ptat

ion

Zone

Acceptation

Zone

Cost-effectiveness plane25

Cost +

Cost -

Effectiveness +Effectiveness -

Uncertainty Zone

Uncertainty Zone

Cost-effectiveness plane25

3 GDP

1 GDP

1 QALY/DALY

TALK OVERVIEW

• Some data from Mexico.

• Review of Health Economics.

• Cost Effectiveness Analysis and Cost Utility Analysis

• The role of CEA and CUA in Mexico

• The barriers for implementing Economic Evaluation

• Conclusion

26

In 2008 was published the first GUIDE FOR ECONOMIC EVALUATION of new drugs and technologies. It was modified in 2011. http://www.csg.salud.gob.mx/descargas/pdfs/cuadro_basico/guia_eval_insumos11052011.pdf

Clear standards

Transparency

Step 1: Check and value the applicationsStep 2: Evaluation of evidence.Step 3: Decision

ECONOMIC EVALUATION IN MEXICO27

WHAT IS IMPORTANT FOR THE GENERAL HEALTH COUNCIL?

• Who paid for the study?• What actually went into the study?• How does the context of the study resemble and differ from our

context?• What is driving the model?• What is likely to change• Uncertainty… sensitivity of results to input parameters in model

28

REQUIREMENTS OF CEA IN MEXICO

• Provide cost and outcomes disaggregated.

• Provide key assumption, data sources, table with ingredients for model, clinical pathways explicit.

• Sensitivity analysis: impact of variation of input parameters on results.

• Describe relevant population and its size.

• Budget impact analysis (BIA) applied to health care.

• 5% discount in cost and benefits

• Only 1 GDP per capita

29

Theoretical values (in US$/DALY) for cost-effectiveness based on the “three times Gross Domestic Product per capita” approach proposed in the World Health Organization Report 2002 (WHO 2002).

**DALY, Disability-Adjusted Life-Year.

* 1 GDP

Country 3 GDP threshold

(US$/DALY) **

Luxembourg 266,391

U.S.A. 144,336

Australia 125,992

Canada 121,260

Germany 118,368

UK 106,794

France 105,714

Japan 101,004

Italy 98,016

Spain 96,261

New Zealand 93,246

MEXICO* 16,588 Source: World Bank 2011

30

‘DRUMMOND’ CHECKLIST

1. Was a well-defined question posed in answerable form?

2. Was a comprehensive description of alternatives given?

3. Was there evidence that effectiveness had been established?

4. Were all the important and relevant costs and consequences for each alternative identified?

5. Were costs and consequences measured accurately/appropriately?

31

‘DRUMMOND’ CHECKLIST

6. Were costs and consequences valued credibly?

7. Were costs and consequences adjusted for differential timing?

8. Was an incremental analysis performed?

9. Was allowance made for uncertainty?

10.Did presentation/discussion of results include all issues of concern?

32

TALK OVERVIEW

• Some data from Mexico.

• Review of Health Economics.

• Cost Effectiveness Analysis and Cost Utility Analysis

• The role of CEA and CUA in Mexico

• The barriers for implementing Economic Evaluation

• Conclusion

33

BARRIERS

• Lack of understanding of Economic Evaluation

• Lack of trust in cost effectiveness analysis methods

• There are no QALYs or DALYs in Mexico

• Lack of confidence in extrapolation (modeling)

• Weakness of evidence

34.-

BARRIERS

• Short-term horizon.

• Long-term horizon.

• Industry perspective, not societal perspective

• Concern about sponsorship bias

35

BARRIERSIS THE EVIDENCE SUFFICIENT?

• We might need more evidence

• Costs of getting more evidence

36

IS THE EVIDENCE SUFFICIENT?

• Value of evidence (information)

• How uncertain is the decision?

• Consequences of getting the decision wrong

• Number of patients who could benefit

37

TALK OVERVIEW

• Some data Mexico from.

• Review of Health Economics.

• Cost Effectiveness Analysis and Cost Utility Analysis

• The role of CEA and CUA in Mexico

• The barriers for implementing Economic Evaluation

• Conclusion

38

PRESSURE ON HEALTH SYSTEM

• Demographic pressure:

• Epidemiological

• Financial

39

ECONOMIC EVALUATION

• Economic Evaluation for new drugs and technologies is required but needs to be carefully conducted.

• Actual use of Economic Evaluation is quite limited in relation to potentials

• Not possible to undertake economic evaluation for all decisions.

40

ECONOMIC EVALUATION

• Efficacy vs. effectiveness.

• Prevention vs. cure

• Other factors such as social, political, ethical, feasibility, human resources, context , etc.

41

THANKS

42