Shining Steel or Illegitimate Science?

Transcription

1 Shining Steel or Illegitimate Science? Economics and Health Care Decisions Karl Claxton Department of Economics and Related Studies, Centre for Health Economics, University of York.

2 Outline Policy context Principles of social choice? Which health technologies At what price? How much evidence? What role for economists?

3 Policy context NICE s role Issues guidance on use of technologies (mandatory) Increasing coverage and closer to launch Other functions, procedures, public health, clinical guidelines Judicial Review Core method and principles sustained House of Commons Select Committee Methods and principles sustained and strengthened Radical reorganisation of research funding Cooksey report Pharmaceutical pricing OFT report and current negotiations over value based pricing CEA at the heart of the debate New role for NICE?

4 Social choice in health Which health technologies, at what price and how much evidence? Who will live a little longer Who will die a little sooner

5 Economics and social choice Definition of social welfare Society viewed ed as a collection of individuals id Only individual preferences count Criteria for improvement Improve social welfare if gainers could compensate losers Means of measurement Market prices represent social values (compensation required) Non marketed goods can be valued as if a market exists Make claims of what is efficient Strength and legitimacy of the prescription rest on the strength and the legitimacy of the assumptions

6 Some implications Heath care programmes should be judged in the same way as any other proposed change. The only question is do they represent a potential Pareto improvement not do they improve health outcomes. It is possible that a programme may increase the health of some but reduce the health of others. If those that gain health outcome can compensate those that lose health (measured by individual willingness to pay) then the programme may be a potential Pareto improvement even if the health outcomes overall are lower. Mark Pauly.

7 But? And he looked up and saw the rich putting their gifts into the treasury and He saw a poor widow putting in two small copper coins [mites]. And he said, Truly I say to you, this poor widow put in more than all of them: for they all out of their surplus put into the offering but she out of her poverty put in all that she had to live on. Luke 21, v1-4, NAS.

8 Mark or Luke? Perfectly disgusting.a g state can be Pareto optimal with some people in extreme misery and others rolling in luxury, so long as the miserable cannot be made better off without cutting into the luxury of the rich. Pareto can, like Ceasar s s spirit, come hot from hell Sen Those that object to the market object to freedom itself Friedman

9 If not the invisible fist? Specify explicit social welfare function What and who counts? What weights should be used? How can any social welfare e function claim legitimacy Who should decide? What process should be used? Maybe Friedman s got a point after all? Paternalism at best Lack of accountability and danger of dictatorship Liberty or leviathan?

10 Legitimate institutions and process Accountable higher authority (principal) Task of balancing competing claims, liberty and social justice Devolves responsibility and resources to meet specific objectives Devolved authority y( (agent) Asked to meet explicit (necessarily narrow) objectives Given the resources to do the job Agent doesn t meet all the objectives of the principal Impossibility of expressing an explicit social welfare function Observe the implications of some latent but legitimate welfare function Modest claims based on implied social values Legitimacy of any claim rest on the legitimacy of institutional arrangements

11 Which technologies, at what price? Cost Cost-effectiveness Threshold 20,000 per QALY Pi Price > P* 60, ,000 per QALY Price = P* 40,000 20,000 per QALY Price < P* 20,000 10,000 per QALY QALYs gained Net Health Benefit 1 QALY Net Health Benefit -1 QALY

12 Price Price and value? P* Value of the technology = P*.Q* All value goes to the private sector No net health benefits to the NHS Q* Quantity

13 Will the NHS ever benefit? at T 200,000, ,000, ,000, ,000,000 Generic entry at year 15 p < p* Total value Private share Present valu ue of innovation 120,000, ,000,000 80,000,000 60,000,000 NHS share 40,000,000 20,000, Years from launch (T)

14 Have your cake but never eat it!? 300,000, ,000, ,000,000 Accept p>p* during patent because p<p* when generics enter Private share Total value at T Present valu ue of innovation 150,000, ,000,000 50,000, ,000,000 NHS share - 100,000, ,000,000 Years from Launch (T)

15 How should we share value? Should the private sector get all the value? We don t care who gets it No subsidies or publicly funded research and development But it is legitimate to care NHS should get some of the value Some incentives for early uptake How to share? Explicit rules that mirror other markets A free choice of price but with associated guidance Preserve monopoly rights during patent period Avoid games (commitment, hold up and politicisation)

16 Price and guidance? Price P1 A Choose Guidance Revenue Net Benefit P1 S1 P1.Q1 0 P2 S1+S2 P2.Q2 A P3 S1+S2+S3 P3.Q* A+B P2 B C P3 S1 S2 S3 Q1 Q2 Q* Quantity

17 Are other deals possible? P<P* for Q* exists which is mutually beneficial But how would negotiations turn out? Public sector accountable and transparent Public, political and interest scrutiny What is the credible threat? Clear predictable signals and explicit it rules Interested in the consumption value of health (v)? V>λ, budget does not match individual preferences Cost still fall on health not consumption Same P, Q (guidance) menu available Simply rescale any surplus

18 How much evidence? Why is evidence valuable? How things could turn out Net Health Benefit Treatment A Treatment B Best choice Best we could do if we knew Possibility B 12 Possibility A 16 Possibility B 14 Possibility A 12 Possibility B 16 Average What s the best we can do now? Could we do better? Choose B If we knew Expect 12 QALYs, gain 1 QALY Expect 14 QALYs But uncertain Wrong decision 2/5 times (error probability = 0.4) Maximum value of more evidence is 2 QALYs per patient

19 Adopt the new technology? 50,000 Reject the technology Adopt new technology ts (QALYs) 45,000 Health Benefi Po opulation Net 40,000 35,000 30,000 Additional benefit 25,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 Cost-effectiveness threshold ( per QALY gained)

20 Value of additional evidence 50,000 Reject the technology Adopt new technology ts (QALYs) 45,000 Value of evidence Health Benefi Po opulation Net 40,000 35,000 30,000 Additional benefit 25,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 Cost-effectiveness threshold ( per QALY gained)

21 Value of additional evidence 4,000 3,500 Reject the technology Adopt new technology Health Benefits (QALYs) Po opulation Net 3,000 2,500 2,000 1,500 1, ,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 Cost-effectiveness threshold ( per QALY gained)

22 Coverage (guidance) with evidence? Questions to ask Is additional evidence needed? What type of evidence is needed? d? Can this evidence be provided once approved? What type of research is possible? Observational/registry (limited variability in the UK) Experimental research generally not possible How and who should pay? Sponsor Promises to provide the evidence? Public sector Other more valuable priorities (without a sponsor) Should account for research costs (price discount) Price so additional research not needed

23 Coverage without evidence? Coverage with evidence not possible Sponsor unwilling or unlikely to provide it Type of research needed is not possible Early approval? Net benefits of early access Evidence base is least mature Impact on future research Incentives for manufacturers Ethics of experimental research Compare costs and benefits to all patients? Net benefit of access to the technology Value of the evidence forgone

24 Benefits of early access 10,000 9,000 Reject the technology Adopt the technology 8,000 (QALYs) t Health Benefits Additional Net 7,000 6,000 5,000 4,000 3,000 2,000 1,000 Additional benefit 0 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 Cost-effectiveness threshold ( per QALY gained)

25 Value of evidence forgone 10,000 9,000 Reject the technology Adopt the technology 8,000 (QALYs) 7,000 t Health Benefits 6,000 5,000 Additional Net 4,000 3,000 2,000 1,000 Evidence forgone Additional benefit 0 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 Cost-effectiveness threshold ( per QALY gained)

26 Reduce the price 10,000 9,000 Reject the technology Adopt the technology 8,000 (QALYs) 7,000 t Health Benefits Population Net 6,000 5,000 4,000 3,000 Evidence forgone Additional benefit 2,000 1, ,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 Cost-effectiveness threshold ( per QALY gained)

27 Is this only about cost-effectiveness? 4,500 Adopt new technology Reject the technology 4,000 Value of additional evid dence 3,500 3,000 2,500 2,000 1,500 1, ,000 40,000 27,000 20,000 16,000 13, % 10% 20% 30% 40% 50% 60% Clinicaly significant improvement (effect size %)

28 Role of cost-effectiveness analysis? Cost-effectiveness analysis (and NICE) has nothing what so ever to do with cost containment!! Expresses legitimate collective demand for health technologies Does not prescribe social welfare Individual compensation Simple sum of consumer and producer surplus Reflects values implied by legitimate social process Accountability, debate and progressive change

29 The role of economists? Those that object to the market object to freedom itself Friedman If economists could manage to get themselves thought of as humble, competent people, on a level with dentists, that would be splendid! Keynes

30 Son, be a dentist (Orin,( little shop of horrors) Observe implied social values Capture more than can be imagined in all our philosophyp Critically reflect back the implications Bourgeois apologists? Explicit it social and scientific value judgments Accountability, democratic debate and progressive social change Social legitimacy rests with the institutions and processes Are they legitimate not are they perfect Contribute to progressive change Not legitimate and progressive change is not possible? You ve no business being a dentist By any means necessary