2021 S2 ECON8039/3004 HEALTH ECONOMICS TUTORIAL WEEK 12 CH14 _HEALTH TECHNOLOGY ASSESSMENT Health technology assessment (HTA) is comprised of two parts: IEA - Cost effectiveness analysis (the science of comparing the costs and benefits of different medical treatments) Measuring o Incremental cost-effectiveness ratio (ICER) o Cost-effectiveness frontier (CEF) slope of the segment in CEF b. t A + B = ILER . ( BA - Cost-benefit analysis (the process of choosing an optimal treatment by creating a trade-off between money and health) 2 ICERT o When we place a monetary value on each QALY, we implicitly create a set of indifference curves that can be plotted with the CEF. as this value T the i. L. flatter Example: Suppose there is 1 treatment vs. no treatment: ( Effect) Pain reduction units Cost treatment 10 100 no treatment 0 0 Effect - utility increasing indifference curves 4 opt 10 LEF 0 100 Cost 200 => flatter If the patient values each unit of pain reduction at $20, then she is indifferent between (0, 0) and (200, 10) (10,200), and her utility increases in the way as represented by the indifference curve on the graph. We can see that, since the benefit $20/unit > ICER=10/unit, the patient will choose the treatment, which is at the point where the indifference curve is "tangent" to the cost effectiveness frontier (CEF).
Q1: TB CH14, Q15 15 Suppose Jay has been experiencing back pain, and has four options for treatment (Table 14.6). a Plot these four treatments on cost-pain reduction axes. Create a cost-effectiveness frontier by connecting potentially cost-effective treatments. Table 14.6. Potential therapies for back pain. Treatment regimen Total cost Do nothing $0 0 units Chair cushion $100 Cortisone injections $700 25 units Acupuncture $1,000 Pain reduction 20 units 50 units Effectiveness (Pain Reduction Units) 5 > cost effectiveness frontier. 50 A 25 20 CC DN 0 100 700 1000 >cost Notice that none of the treatment is dominated by another treatement ! ! ! ! ! ! ! ! (being less effective & more expensive) b Calculate the ICER between cortisone injections and a chair cushion, and between acupuncture and cortisone injections. Table 14.6. Potential therapies for back pain. DN CC CI A Acupuncture $1,000 Treatment regimen Total cost Do nothing $0 Chair cushion $100 Cortisone injections $700 25 units Pain reduction 0 units 20 units 50 units
ILERca. c : Ecs - Ecc Ccz - Ccc ILERA,CI " 1000 - 700 50 - 25 700 - 100 = 25 - 20 = $ 120 / pain reduction unit = $ 12 / pain reduction unit c Assume that indifference curves in this space are linear. Interpret this assumption. ! Linear indifference curve means the consumer values per unit pain reduction at a constant rate. d Find the range of valuations for a pain reduction unit that Jay would need in order to pick cortisone injections as the cost-effective treatment. Explain your answer. e Under this assumption of linearity, is it possible to draw