Practical implications of differential discounting in cost-effectiveness analyses with varying numbers of cohorts

Economic analyses in cardiac electrophysiology: from clinical efficacy to cost utility

Cardiac electrophysiology is an evolving field that relies heavily on costly device- and catheter-based technologies. An increasing number of patients with heart rhythm disorders are becoming eligible for cardiac interventions, not least due to the rising prevalence of atrial fibrillation and increased longevity in the population. Meanwhile, the expansive costs of healthcare face finite societal resources, and a cost-conscious approach to new technologies is critical. Cost-effectiveness analyses support rational decision-making in healthcare by evaluating the ratio of healthcare costs to health benefits for competing therapies. They may, however, be subject to significant uncertainty and bias. This paper aims to introduce the basic concepts, framework, and limitations of cost-effectiveness analyses to clinicians including recent examples from clinical electrophysiology and device therapy.

The Effect of the Drug Life Cycle Price on Cost-Effectiveness: Case Studies Using Real-World Pricing Data

OBJECTIVES

Cost-effectiveness analyses (CEAs) generally assume constant drug prices throughout the model time horizon, yet it is known that prices are not constant, often with price decreases near loss of exclusivity (LOE). This study explores the impact of using dynamic drug-specific prices on the incremental cost-effectiveness ratio (ICER) using selected reproduced case studies.

METHODS

Case studies were selected following explicit criteria to reflect a variety of drug characteristics. For each drug, a published CEA model was identified, replicated, and modified with dynamic real-world pricing data, to compare ICERs based on constant drug prices with estimates obtained when including drug life cycle pricing. The impact of dynamic real-world pricing-inclusive LOE-was analyzed using a single patient cohort and multiple cohorts over time.

RESULTS

Fluvastatin, alendronic acid + colecalciferol combination therapy, letrozole and clopidogrel were selected as case studies. Inclusion of real-world pricing data compared with applying constant prices reduced the ICER in a single-cohort setting up to 43%. In the multicohort analyses, further reductions of the ICERs were observed of up to 113%. The ICERs were sensitive to the period of drug usage relative to the models' time horizons, the relative proportions of drug costs in the overall treatment costs, and timing of LOE compared with the cost year of the original analysis.

CONCLUSIONS

Assuming dynamic drug prices may lead to more representative ICER estimates. Future CEAs for drugs could account for predicted and disaggregated life cycle price developments based on retrospective data.

A comprehensive review of official discount rates in guidelines of health economic evaluations over time: the trends and roots

BACKGROUND

The question of discounting in health economics is anything but settled, so much so that a section of the Health Technology Assessment (HTA) guidelines is devoted to it.

OBJECTIVE

This study aimed to review the trend of the value of the official discount rates (DRs) of costs and health outcomes and their roots worldwide.

METHODS

Four methods were combined to identify official DRs over time globally. These methods included a systematic review of the HTA/pharmacoeconomic/health economic evaluation guidelines, a review of methodological documents or guidelines accessible on the websites of HTA organizations, and two separated reviews of the websites of the International Society for Pharmacoeconomics and Outcomes Research (ISPOR) and the Guide to Health Economic Analysis and Research (GEAR).

RESULTS

Our systematic search eventually yielded 339 documents from the literature, 35 links from the website of the HTA organizations, 51 documents from the website of the ISPOR, and 29 documents from the website of the GEAR. These documents referred to 48 countries over 30 years and 43 transnational guidelines over 43 years. DRs of 3% and 5% had the most frequent value. Among them, 38 countries always used an equal DR of costs and health outcomes. We categorized the rationales for selecting DRs into eight groups for the national documents and six groups for the transnational documents.

CONCLUSION

The comparability approach was the most frequent rationale for choosing the DR in national and transnational guidelines. The value of DR of costs and health outcomes ranged from zero to 10% over the years, but the most common values were 3% and 5%, mainly arising from the comparability approach chosen. Several transnational guidelines have suggested a specific DR without taking into account countries' economic conditions. It is useful to establish a specific guideline for calculating and updating the DR of the health sector in each country.

Understanding Health Economics in Joint Replacement Surgery

The number of arthroplasty procedures has been rising at a significant rate, contributing to a notable portion of the nation's health care spending. This growth has contributed to an increase in the number of health care economic studies in the field of adult reconstruction surgery. Although these articles are filled with important information, they can be difficult to understand without a background in business or economics. The goal of this review is to define the common terminology used in health care economic studies, assess their value and benefit in the context of total joint arthroplasty, and highlight shortcomings in the current literature. [Orthopedics. 2022;45(4):e174-e182.].

Trends in Author-Reported Cost-Effectiveness Thresholds in the United States from 1995 to 2018: Implications for Discount Rates

Background

Decisions based on cost-effectiveness analyses (CEAs) using equal discount rates for health and cost outcomes are consistent with using a constant cost-effectiveness threshold over time. We sought to analyze trends in author-reported cost per quality-adjusted life-year (QALY) thresholds from CEAs published for the US setting over 24 y to retrospectively assess whether the recommended equal discount rates for costs and health were consistent with trends in the CEA literature.

Methods

We used the Tufts CEA Registry to assess whether author-reported cost-effectiveness thresholds changed in CEAs published for the US setting between 1995 and 2018 and back-calculated the implied discount rate for health based on these trends for inflation-adjusted cost-effectiveness thresholds and an annual discount rate for costs of 3%.

Results

We found 1995 CEAs published for the US setting and found that average nominal and inflation-adjusted cost-effectiveness thresholds increased over that time period. The discount rate for health would need to equal 2.43% to 2.48% (depending on the subset of CEAs analyzed) to be consistent with the observed trends in inflation-adjusted author-reported cost-effectiveness thresholds. We also found that restricting our analysis to currency years between 1995 and 2014 would result in a back-calculated discount rate for health of 2.99% to 3.28%.

Conclusions

We found that CEA researchers have implicitly assumed that inflation-adjusted cost-effectiveness thresholds in the United States have been increasing over time (1995–2018), which is inconsistent with the recommended and prevailing choice of equal discount rates for health and cost outcomes. Our results are sensitive to the cutoff year used in the analysis.

Highlights

We show visually and through equations that the recommended and prevailing practice of using equal discount rates for cost and health outcomes in cost-effectiveness analyses (CEAs) logically implies a constant inflation-adjusted cost-effectiveness threshold over time. Using data from the Tufts CEA Registry, we found that author-reported cost-effectiveness thresholds used in CEAs published for the US setting with currency years between 1995 and 2018 increased over time (both with and without adjustment for inflation). Assuming an annual discount rate for costs equal to 3%, the discount rate for health would need to equal approximately 2.5% to preserve consistency across decisions taken at different dates given the observed trends in inflation-adjusted author-reported cost-effectiveness thresholds. This finding depends on the cutoff year used in the analysis (data from currency years 1995–2014 would support use of equal discount rates, whereas data after 2014 would suggest a sharper trend toward increasing cost-effectiveness thresholds).

NICE's Discounting Review: Clear Thinking on Rational Revision Meets Obstacle of Industrial Interests

The National Institute of Health and Care Excellence (NICE) recently published a review of discounting practice and theory as part of a consultation on its current methods guidelines. The review examines the case for revision or retention of current methods. The changes considered include eliminating favourable rates in certain special cases and the reduction of the base-case rate for costs and health effects from 3.5 to 1.5%. The review also notes the potential need to reduce the cost-effectiveness threshold to accommodate a discount rate reduction, explaining that an agreement between the UK government and the pharmaceutical industry proscribes changing NICE's threshold range until the end of 2023. We believe NICE should be commended for a useful overview of the existing literature and relevant issues. We firmly endorse NICE's view that favourable discount rates are not a good way to apply a preference for certain interventions. Similarly, we support the option of reducing the discount rate to 1.5%, which better accords with real government borrowing costs. We suggest further work to clarify the appropriate theoretical basis for the NICE's social discount rate and the sensitivity of the threshold to changes in discounting. The prospects of a necessary discount rate reduction appear to depend on whether a threshold reduction can be achieved within NICE's current range or if the range itself must be revised downwards. NICE has usefully informed the debate around discount rates. Ultimately, the path to a methodologically consistent and evidence-based revision of discounting depends on whether NICE needs to adjust the threshold too and if it is free to do so.

Adherence to Discounting Guidelines: Evidence from Over 2000 Published Cost-Effectiveness Analyses

Previous studies have shown that not all cost-effectiveness analyses (CEAs) adhere to recommended guidelines on intertemporal discounting. This analysis investigates adherence in a sample of over 2000 CEAs from seven countries. Guideline discount rates were retrieved for Australia, Belgium, Canada, Ireland, The Netherlands, New Zealand and the UK. Data on the rates applied in published CEAs were retrieved from the Tufts CEA Registry from the sample countries within the periods covered by the discounting guidelines. The relationship between adherence and candidate explanatory factors were assessed using logistic regression. The analysis appraised 2270 CEAs. The overall rate of adherence to discounting recommendations was 79%. Country-specific adherence ranged from 28% in New Zealand to 87% in Belgium and the UK. Adherence in Australia and Canada was 73% and 66%, respectively. Adherence is statistically significantly higher in more recent studies, countries currently applying differential discounting and manufacturer-sponsored studies. Relative to the reference case of Australia, adherence is statistically significantly higher in the UK and lower in Canada and New Zealand. There is notable variation in the rates of adherence to discounting recommendations between countries and over time. Incomplete adherence raises concerns regarding the comparability of evidence between studies. In turn, this raises concerns regarding equity of access to scarce healthcare resources. Journal editors should ensure that adherence to discounting recommendations is assessed as part of the peer review process.

Economic evaluation of meningococcal vaccines: considerations for the future

In 2018, a panel of health economics and meningococcal disease experts convened to review methodologies, frameworks, and decision-making processes for economic evaluations of vaccines, with a focus on evaluation of vaccines targeting invasive meningococcal disease (IMD). The panel discussed vaccine evaluation methods across countries; IMD prevention benefits that are well quantified using current methods, not well quantified, or missing in current cost-effectiveness methodologies; and development of recommendations for future evaluation methods. Consensus was reached on a number of points and further consideration was deemed necessary for some topics. Experts agreed that the unpredictability of IMD complicates an accurate evaluation of meningococcal vaccine benefits and that vaccine cost-effectiveness evaluations should encompass indirect benefits, both for meningococcal vaccines and vaccines in general. In addition, the panel agreed that transparency in the vaccine decision-making process is beneficial and should be implemented when possible. Further discussion is required to ascertain: how enhancing consistency of frameworks for evaluating outcomes of vaccine introduction can be improved; reviews of existing tools used to capture quality of life; how indirect costs are considered within models; and whether and how the weighting of quality-adjusted life-years (QALY), application of QALY adjustment factors, or use of altered cost-effectiveness thresholds should be used in the economic evaluation of vaccines.

Methods for Health Economic Evaluation of Vaccines and Immunization Decision Frameworks: A Consensus Framework from a European Vaccine Economics Community

BACKGROUND

Incremental cost-effectiveness and cost-utility analyses [health economic evaluations (HEEs)] of vaccines are routinely considered in decision making on immunization in various industrialized countries. While guidelines advocating more standardization of such HEEs (mainly for curative drugs) exist, several immunization-specific aspects (e.g. indirect effects or discounting approach) are still a subject of debate within the scientific community.

OBJECTIVE

The objective of this study was to develop a consensus framework for HEEs of vaccines to support the development of national guidelines in Europe.

METHODS

A systematic literature review was conducted to identify prevailing issues related to HEEs of vaccines. Furthermore, European experts in the field of health economics and immunization decision making were nominated and asked to select relevant aspects for discussion. Based on this, a workshop was held with these experts. Aspects on 'mathematical modelling', 'health economics' and 'decision making' were debated in group-work sessions (GWS) to formulate recommendations and/or--if applicable--to state 'pros' and 'contras'.

RESULTS

A total of 13 different aspects were identified for modelling and HEE: model selection, time horizon of models, natural disease history, measures of vaccine-induced protection, duration of vaccine-induced protection, indirect effects apart from herd protection, target population, model calibration and validation, handling uncertainty, discounting, health-related quality of life, cost components, and perspectives. For decision making, there were four aspects regarding the purpose and the integration of HEEs of vaccines in decision making as well as the variation of parameters within uncertainty analyses and the reporting of results from HEEs. For each aspect, background information and an expert consensus were formulated.

CONCLUSIONS

There was consensus that when HEEs are used to prioritize healthcare funding, this should be done in a consistent way across all interventions, including vaccines. However, proper evaluation of vaccines implies using tools that are not commonly used for therapeutic drugs. Due to the complexity of and uncertainties around vaccination, transparency in the documentation of HEEs and during subsequent decision making is essential.

Dealing with Time in Health Economic Evaluation: Methodological Issues and Recommendations for Practice

Time is an important aspect of health economic evaluation, as the timing and duration of clinical events, healthcare interventions and their consequences all affect estimated costs and effects. These issues should be reflected in the design of health economic models. This article considers three important aspects of time in modelling: (1) which cohorts to simulate and how far into the future to extend the analysis; (2) the simulation of time, including the difference between discrete-time and continuous-time models, cycle lengths, and converting rates and probabilities; and (3) discounting future costs and effects to their present values. We provide a methodological overview of these issues and make recommendations to help inform both the conduct of cost-effectiveness analyses and the interpretation of their results. For choosing which cohorts to simulate and how many, we suggest analysts carefully assess potential reasons for variation in cost effectiveness between cohorts and the feasibility of subgroup-specific recommendations. For the simulation of time, we recommend using short cycles or continuous-time models to avoid biases and the need for half-cycle corrections, and provide advice on the correct conversion of transition probabilities in state transition models. Finally, for discounting, analysts should not only follow current guidance and report how discounting was conducted, especially in the case of differential discounting, but also seek to develop an understanding of its rationale. Our overall recommendations are that analysts explicitly state and justify their modelling choices regarding time and consider how alternative choices may impact on results.

Economic evaluation of vaccines: specificities and future challenges illustrated by recent European examples

This study reviews the current challenges in the economic evaluation of vaccines with a focus on European countries. In particular, the type of clinical evidence generally available, the impact of discounting for time preference and the use of modeling to derive valid cost-effectiveness assessments are considered. First, the characteristics of evidence for vaccines are discussed, as well as potential difficulties faced when using evidence-based medicine applied to curative drugs to interpret vaccine evidence. Then, discounting is considered and specific examples illustrating issues with different types of discounting are described, taking HPV as the example. Finally, the need for sometimes complex dynamic models for vaccines is explored, and specific types of models are reviewed, keeping into consideration the adage "complex when needed, straightforward if allowed."

Multicohort models in cost-effectiveness analysis: why aggregating estimates over multiple cohorts can hide useful information

BACKGROUND

Models used in cost-effectiveness analysis (CEA) of screening programs may include 1 or many birth cohorts of patients. As many screening programs involve multiple screens over many years for each birth cohort, the actual implementation of screening often involves multiple concurrent recipient cohorts. Consequently, some advocate modeling all recipient cohorts rather than 1 birth cohort, arguing it more accurately represents actual implementation. However, reporting the cost-effectiveness estimates for multiple cohorts on aggregate rather than per cohort will fail to account for any heterogeneity in cost-effectiveness between cohorts. Such heterogeneity may be policy relevant where there is considerable variation in cost-effectiveness between cohorts, as in the case of cancer screening programs with multiple concurrent recipient birth cohorts, each at different stages of screening at any one point in time.

OBJECTIVE

The purpose of this study is to illustrate the potential disadvantages of aggregating cost-effectiveness estimates over multiple cohorts, without first considering the disaggregate estimates. Analysis. We estimate the cost-effectiveness of 2 alternative cervical screening tests in a multicohort model and compare the aggregated and per-cohort estimates. We find instances in which the policy choices suggested by the aggregate and per-cohort results differ. We use this example to illustrate a series of potential disadvantages of aggregating CEA estimates over cohorts.

CONCLUSIONS

Recent recommendations that CEAs should consider the cost-effectiveness of more than just a single cohort appear justified, but the aggregation of estimates across multiple cohorts into a single estimate does not.

On discounting of health gains from human papillomavirus vaccination: effects of different approaches

OBJECTIVES

Discounting has long been a matter of controversy in the field of health economic evaluations. How to weigh future health effects has resulted in ongoing discussions. These discussions are imminently relevant for health care interventions with current costs but future benefits. Different approaches to discount health effects have been proposed. In this study, we estimated the impact of different approaches for discounting health benefits of human papillomavirus (HPV) vaccination.

METHODS

An HPV model was used to estimate the impact of different discounting approaches on the present value of health effects. For the constant discount approaches, we varied the discount rate for health effects ranging from 0% to 4%. Next, the impact of relevant alternative discounting approaches was estimated, including hyperbolic, proportional, stepwise, and time-shifted discounting.

RESULTS

The present value of health effects gained through HPV vaccination varied strongly when varying discount rates and approaches. The application of the current Dutch guidelines resulted in a present value of health effects that was eight or two times higher than that produced when using the proportional discounting approach or when using the internationally more common 4% discount rate for health effects, respectively. Obviously, such differences translate into large variations in corresponding incremental cost-effectiveness ratios.

CONCLUSION

The exact discount rate and approach chosen in an economic evaluation importantly impact the projected value of health benefits of HPV vaccination. Investigating alternative discounting approaches in health-economic analysis is important, especially for vaccination programs yielding health effects far into the future. Our study underlines the relevance of ongoing discussions on how and at what rates to discount.