Allocating Public Spending Efficiently: Is There a Need for a Better Mechanism to Inform Decisions in the UK and Elsewhere?

Examining how well economic evaluations capture the value of mental health

Health economics evidence informs health-care decision making, but the field has historically paid insufficient attention to mental health. Economic evaluations in health should define an appropriate scope for benefits and costs and how to value them. This Health Policy provides an overview of these processes and considers to what extent they capture the value of mental health. We suggest that although current practices are both transparent and justifiable, they have distinct limitations from the perspective of mental health. Most social value judgements, such as the exclusion of interindividual outcomes and intersectoral costs, diminish the value of improving mental health, and this reduction in value might be disproportionate compared with other types of health. Economic analyses might have disadvantaged interventions that improve mental health compared with physical health, but research is required to test the size of such differential effects and any subsequent effect on decision-making systems such as health technology assessment systems. Collaboration between health economics and the mental health sciences is crucial for achieving mental-physical health parity in evaluative frameworks and, ultimately, improving population mental health.

Resource allocation in public sector programmes: does the value of a life differ between governmental departments?

BACKGROUND

The value of a life is regularly monetised by government departments for informing resource allocation. Guidance documents indicate how economic evaluation should be conducted, often specifying precise values for different impacts. However, we find different values of life and health are used in analyses by departments within the same government despite commonality in desired outcomes. This creates potential inconsistencies in considering trade-offs within a broader public sector spending budget. We provide evidence to better inform the political process and to raise important issues in assessing the value of public expenditure across different sectors.

METHODS

Our document analysis identifies thresholds, explicitly or implicitly, as observed in government-related publications in the following public sectors: health, social care, transport, and environment. We include both demand-side and supply-side thresholds, understood as societies' and governments' willingness to pay for health gains. We look at key countries that introduced formal economic evaluation processes early on and have impacted other countries' policy development: Australia, Canada, Japan, New Zealand, the Netherlands, and the United Kingdom. We also present a framework to consider how governments allocate resources across different public services.

RESULTS

Our analysis supports that identifying and describing the Value of a Life from disparate public sector activities in a manner that facilitates comparison is theoretically meaningful. The optimal allocation of resources across sectors depends on the relative position of benefits across different attributes, weighted by the social value that society puts on them. The value of a Quality-Adjusted Life Year is generally used as a demand-side threshold by Departments of transport and environment. It exceeds those used in health, often by a large enough proportion to be a multiple thereof. Decisions made across departments are generally based on an unspecified rationing rule.

CONCLUSIONS

Comparing government expenditure across different public sector departments, in terms of the value of each department outcome, is not only possible but also desirable. It is essential for an optimal resource allocation to identify the relevant social attributes and to quantify the value of these attributes for each department.

Cost-Effectiveness Analysis of Siltuximab for Australian Public Investment in the Rare Condition Idiopathic Multicentric Castleman Disease

OBJECTIVES

This paper presents an Australian model that formed part of the health technology assessment for public investment in siltuximab for the rare condition of idiopathic Multicentric Castleman Disease (iMCD) in Australia.

METHODS

Two literature reviews were conducted to identify the appropriate comparator and model structure. Survival gain based on available clinical trial data were modelled using an Excel-based model semi-Markov model including time-varying transition probabilities, an adjustment for trial crossover and long-term data. A 20-year horizon was taken, and an Australian healthcare system perspective was adopted, with both benefits and costs discounted at 5%. The model was informed with an inclusive stakeholder approach that included a review of the model by an independent economist, Australian clinical expert opinion and feedback from the Pharmaceutical Benefits Advisory Committee (PBAC). The price used in the economic evaluation reflects a confidential discounted price, which was agreed to with the PBAC.

RESULTS

An incremental cost-effectiveness ratio of A$84,935 per quality-adjusted life-year (QALY) gained was estimated. At a willingness-to-pay threshold of A$100,000 per QALY, siltuximab has a 72.1% probability of being cost-effective compared with placebo and best supportive care. Sensitivity analyses results were most sensitive to the length of interval between administrations (from 3- to 6-weekly) and crossover adjustments.

CONCLUSION

Within a collaborative and inclusive stakeholder framework, the model submitted to the Australian PBAC found siltuximab to be cost-effective for the treatment of iMCD.

Self-organization in Slovenian public spending

Private businesses are often entrusted with public contracts, wherein public money is allocated to a private company. This process raises concerns about transparency, even in the most developed democracies. But are there any regularities guiding this process? Do all private companies benefit equally from the state budgets? Here, we tackle these questions focusing on the case of Slovenia, which keeps excellent records of this kind of public spending. We examine a dataset detailing every transfer of public money to the private sector from January 2003 to May 2020. During this time, Slovenia has conducted business with no less than 248 989 private companies. We find that the cumulative distribution of money received per company can be reasonably well explained by a power-law or lognormal fit. We also show evidence for the first-mover advantage, and determine that companies receive new funding in a way that is roughly linear over time. These results indicate that, despite all human factors involved, Slovenian public spending is at least to some extent regulated by emergent self-organizing principles.

Cost-Benefit and Cost-Utility Analyses to Demonstrate the Potential Value-for-Money of Supermarket Shelf Tags Promoting Healthier Packaged Products in Australia

The supermarket environment impacts the healthiness of food purchased and consumed. Shelf tags that alert customers to healthier packaged products can improve the healthiness of overall purchases. This study assessed the potential value-for-money of implementing a three-year shelf tag intervention across all major supermarket chains in Australia. Cost-benefit analyses (CBA) and cost-utility analyses (CUA) were conducted based on results of a 12-week non-randomised controlled trial of a shelf tag intervention in seven Australian supermarkets. The change in energy density of all packaged foods purchased during the trial was used to estimate population-level changes in mean daily energy intake. A multi-state, multiple-cohort Markov model estimated the subsequent obesity-related health and healthcare cost outcomes over the lifetime of the 2019 Australian population. The CBA and CUA took societal and healthcare sector perspectives, respectively. The intervention was estimated to produce a mean reduction in population body weight of 1.09 kg. The net present value of the intervention was approximately AUD 17 billion (B). Over 98% of the intervention costs were borne by supermarkets. CUA findings were consistent with the CBA-the intervention was dominant, producing both health benefits and cost-savings. Shelf tags are likely to offer excellent value-for-money from societal and healthcare sector perspectives.

Avoiding Opportunity Cost Neglect in Cost-Effectiveness Analysis for Health Technology Assessment

Despite being a fundamental tenet of economic analysis there is a lack of clarity regarding the relevance of opportunity costs to cost-effectiveness analysis for health technology assessment. We argue that this is due, in part, to the importance of the decision context in understanding the nature of opportunity costs. Taking the example of the National Institute of Health and Care Excellence (NICE) on behalf of the National Health Service (NHS) in England and Wales, we explore the implications of existing discrepancies between policy thresholds and emerging empirical evidence of health opportunity costs. In particular, we consider analysts communicating the results of cost-effectiveness analysis, and recommend that analysts provide analysis according to both the policy threshold and the latest empirical evidence until the discrepancies are better understood or resolved. A number of conceptually related, but distinct, issues are discussed and clarified.

A cost-benefit analysis framework for preventive health interventions to aid decision-making in Australian governments

Background

Australian governments are increasingly mandating the use of cost–benefit analysis (CBA) to inform the efficient allocation of government resources. CBA is likely to be useful when evaluating preventive health interventions that are often cross-sectoral in nature and require Cabinet approval prior to implementation. This study outlines a CBA framework for the evaluation of preventive health interventions that balances the need for consistency with other agency guidelines whilst adhering to guidelines and conventions for health economic evaluations.

Methods

We analysed CBA and other evaluation guidance documents published by Australian federal and New South Wales (NSW) government departments. Data extraction compared the recommendations made by different agencies and the impact on the analysis of preventive health interventions. The framework specifies a reference case and sensitivity analyses based on the following considerations: (1) applied economic evaluation theory; (2) consistency between CBA across different government departments; (3) the ease of moving from a CBA to a more conventional cost-effectiveness/cost-utility analysis framework often used for health interventions; (4) the practicalities of application; and (5) the needs of end users being both Cabinet decision-makers and health policy-makers.

Results

Nine documents provided CBA or relevant economic evaluation guidance. There were differences in terminology and areas of agreement and disagreement between the guidelines. Disagreement between guidelines involved (1) the community included in the societal perspective; (2) the number of options that should be appraised in ex ante analyses; (3) the appropriate time horizon for interventions with longer economic lives; (4) the theoretical basis and value of the discount rate; (5) parameter values for variables such as the value of a statistical life; and (6) the summary measure for decision-making.

Conclusions

This paper addresses some of the methodological challenges that have hindered the use of CBA in prevention by outlining a framework that is consistent with treasury department guidelines whilst considering the unique features of prevention policies. The effective use and implementation of a preventive health CBA framework is likely to require considerable investment of time and resources from state and federal government departments of health and treasury but has the potential to improve decision-making related to preventive health policies and programmes.

Supplementary Information

The online version contains supplementary material available at 10.1186/s12961-021-00796-w.