Question

The aim of this case study is to illustrate the sometimes competing demands of effectiveness, efficiency and equity. In particular, it should help you to:

Explain what is meant by key terms such as ‘LYG’, ‘QALY’ and ‘ICER’

Use these terms and the information they represent in a decision-making scenario

Compare and contrast the demands of effectiveness from different perspectives

Scenario You are a member of an area prescribing committee (APC) which is reviewing the treatment options for a cancer which is universally rapidly fatal (usually within months) if not treated. For the purposes of this cases study, please assume the following:

 There is good evidence supporting the effectiveness of three medicines (A, B and C) in improving health outcomes.

 The treatments are mutually exclusive: there is no evidence that patients are better off switching from one to another.

 Effectiveness does not depend on patient or disease characteristics.

 All costs fall within the first year of treatment.

 Costs vary only according to the drug selected, since staff time, etc. are fixed and are the same requirements for each treatment.

 The annual budget available for commissioning treatment is US$500,000.

 The incidence of this cancer in the area covered by your APC is 1,000 new cases each year.

The health economic data are summarized below:

Treatment

A

B

C

Life-Year Gained

A. 0.3

B. 0.6

C. 0.5

Health Utility Index (in each year)

A. 0.8

B. 0.6

C. 0.5

Cost (per patient) A (current practice)

A. $500

B. $1000

C. $800

Question 1: Given the available budget of $500,000 per year, how many people could be treated with each option? Please show your calculation and explain briefly about why the current practice is Treatment A. (20%)

Question 2: Measuring the cost-effectiveness by the incremental cost-effectiveness ratio (ICER), compared with the current practice, which treatment (B or C) is more cost-effective for a hospital use? Please show your calculation and explain briefly. (20%)

Question 3: From a patient perspective, which treatment is the most effective by considering the quality of life? Please show your calculation and explain briefly. (20%)

Question 4: From a society perspective, which treatment generates the greatest health gains given the funds available? Please show your calculation and explain briefly. (20%)

Question 5: Which treatment would you recommend to the area prescribing committee (APC): A, B or C? Please discuss your choice from perspectives of equity, efficiency and effectiveness. (20%)

Answer 1

Answer to Q.1

Annual Budget US$ 500,000

Treatment A : - Cost per patient = $ 500

No. of. people that can be treated = $500,000/ $500 = 1000 people

Treatment B :- Cost per patient = $ 1000

No.of. people that can be treated = $500,000/$1000 = 500 people

Treatment C :- Cost per patient = $ 800

No.of. people that can be treated = $500,000/$800 = 625 people.

The current practice is treatment A for the following reasons

(a) It covers all the patients within the budget available.

(b) Treatment A has the lowest cost/QALY per patient. QALY is the quality-adjusted life- year.QALY is arrived at by multiplying the Life Years gained (LGY) and the Health utility Index (HUI). For Treatment A QALY = 0.3 x 0.8=0.24.Therefore COST/QALY per patient = $500/0.24 which is the least among the 3 treatments.

Answer to Q.2

Incremental Cost Effectiveness Ratio (ICER) = (C1-C0)/(E1-E0) where C1 are the costs for the group which requires the new treatment or intervention and CO is costs for the group which is given the existing treatment or the control group. E1 and E0 are the health effects or the QALY for the respective groups

QALY for Treatment B is LYG x HUI = 0.6 x 0.6 =0.36

QALY for Treatment B = 0.5 x 0.5 = 0.25

ICER for Treatment B compared to A = (1000-500)/(0.36-0.24) = $ 4166.67

ICER for Treatment C compared to A = (800-500)/(0.25-0.24) = $ 30,000

Hence Treatment B is more effective when compared to Treatment C from a cost effective perspective.

Answer to Q.3

Considering the quality of life from a patient perpective as measured by QALY, Treatment B is the most effective, which scores 0.36 as compared to 0.24 for Treatment B and 0.25 for Treatment C

Answer to Q.4

From a society perspective Treatment A generates the greatest health gains.

No.of people treated multiplied by the QALY index

Treatment A = 1000 x 0.24 = 240

Treatment B = 500 x 0.36 = 180

Treatment C = 625 x 0.25 =156.25

Answer to Q.5

I would recommend Treatment A to the Area Prescribing committee (APC) , as it is the best option available given the budget constraints and is the best option from the perspective of equity, efficiency and effectiveness given the constraints.