Valuing Health for Regulatory Cost-Effectiveness Analysis (2006) / Chapter Skim
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5 Recommendations for Regulatory Cost-Effectiveness Analysis
5 Recommendations for Regulatory Cost-Effectiveness Analysis
Pages 159-190
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From page 159... ...
The Committee drew on a variety of sources for insights, information, and evidence in determining how CEA could best inform regulatory decision making. These sources include: · Interviews with policy and analytic staff at federal agencies about how they currently assess the economic costs and benefits of environmental, health, and safety regulations; · Federal Executive Office of the President guidance on regulatory development, analysis, and reporting; · Regulatory impact analyses for proposed and final regulations from 159
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From page 160... ...
Different measures of effectiveness, including singledimension measures such as life years and integrated metrics that combine estimates of HRQL and longevity such as HALYs, each provide useful and distinctive perspectives on regulatory impacts. · As in the case of BCA, the results of CEA for regulatory interventions are not by themselves sufficient for informed regulatory decisions.
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From page 161... ...
Our recommendations for the use of CEA in regulatory analysis fall into four areas: · Selecting integrated measures of effectiveness; · Constructing and reporting cost-effectiveness ratios; · Providing additional information needed for decision making; and · Pursuing data collection and research necessary to improve HRQL measurement and regulatory CEA. The recommendations are discussed in the following section and the chapter concludes with a brief summary.
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From page 162... ...
population. · In the absence of direct preference elicitation for health conditions of interest from the affected population, QALY estimates should be based on well-developed, generally accepted, and widely used generic HRQL indexes whose valuation is based on general population samples.
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From page 163... ...
The QALY estimate also should reflect, to the extent possible, the effect of the health state on the particular population affected by the regulatory intervention in terms of characteristics such as age, preexisting conditions, income, and geographic location. If the HRQL estimate reflects a health state or scenario that differs from the regulatory health endpoint (i.e., addresses a somewhat different condition or affected population)
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From page 164... ...
The following discussion summarizes the Committee's conclusions from Chapter 3 and offers guidance regarding the use of existing HRQL research and generic indexes for QALY-based regulatory analysis. Valuation.
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From page 165... ...
The aggregation of individual preferences for one's own health is but one approach to determining societal preferences for improved health, and evidence suggests that values for health states elicited in the standard way may not be well correlated with societal health resource allocation choices (Ubel et al., 1996)
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From page 166... ...
HRQL measurement quality. Finally, the Committee recommends that sources of HRQL values for QALY-based CEA should be evaluated with specific and consistent criteria regarding: · The quality of underlying valuation surveys; and · The precision and reliability with which health states of interest are captured or located by direct elicitation or generic indexes, respectively.
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From page 167... ...
Costs would include those associated with compli ance, offset by estimates of the net changes in health care treatment costs associated with the outcomes included in the QALY measure. · A comprehensive ratio using QALYs as the outcome measure and incorporating the value of other benefits as offsets to compliance costs.
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From page 168... ...
. As discussed in Recommendations 8 and 9, agencies should also highlight information on distributional impacts and ethical considerations, on uncertainty in the estimates, and on any regulatory impacts not included in the cost-effectiveness measure.
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From page 169... ...
$100 million = $30 million Cost-effectiveness ratios: Compliance costs per premature death averted = $100 million / 10 lives = · $10 million/death averted Compliance costs per life year gained = $100 million/100 life years = $1 · million/life year Costs per QALY, health benefits only = ($100 million $20 million) / 400 · QALYs = $200,000/QALY Costs per QALY, comprehensive = ($100 million $20 million $40 million)
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From page 170... ...
This ratio focuses on the number of deaths averted, without regard for the expected years of life extended by a regulatory action. It is the simplest of the four ratios and excludes consideration of the HRQL for the life years gained, of nonfatal health impacts, of medical care savings, and of benefits that are not health related.
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From page 171... ...
· Quality-adjusted life years gained: the net change in health-related quality of life associated with morbidity, injury, and preventable mortality attributable to the regulation, summed across the affected population. · Regulatory compliance costs: the net value of the materials, labor, and other inputs used to comply with the requirements of the regulation, and the impact of these net costs on related markets.
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From page 172... ...
Any limitations of the data used to predict life expectancy should be included in the assessment of the uncertainty in the estimates and modeling. QALYs gained reflects the net changes in HRQL and HRQL-adjusted life expectancy in the affected population without and with the regulation, including the HRQL impacts of morbidity, injury, and preventable mortality.
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From page 173... ...
In addition, they should discuss data sources, calculations, results, and the implications of nonquantified effects as well as uncertainty in the quantified results. Recommendation 3: The life-year and QALY estimates used in regulatory analyses should reflect actual population health as closely as possible, comparing the predicted HRQL and life expectancy of the affected population in the absence of the intervention (i.e., the regulatory baseline)
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From page 174... ...
population HRQL averages exist for four of the generic indexes used in the Committee's case studies. (See Hanmer et al., 2006, for population norms for several indexes.)
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From page 175... ...
The ranking of interventions and whether they are dominated can vary among these ratios. So, for example, in Table 5-2, intervention B dominates C on compliance costs/life year saved, and is dominated by C on comprehensive costs/QALY gained.
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From page 176... ...
gained Cost numerators Compliance costs $100 million $140 million $200 million Compliance costs net of $90 million $135 million $190 million health care savings Compliance costs net of $50 million $35 million Savings of health care savings and $10 million other benefits Incremental cost-effectiveness Compliance costs per death $13 million $20 million per Dominated by B averted p e r case additional case Compliance costs per life $400,000 per $800,000 per Dominated by B year gained life year additional life year Compliance costs net of $45,000 per Dominated by A Dominated by A health care savings per QALY QALY gained Compliance costs net of $25,000 per Dominated by C Cost saving health care savings and QALY other benefits per QALY gained NOTES: For simplicity, this example provides the results for a single year and does not report information on the uncertainty in the estimates. All results are rounded to two significant figures.
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From page 177... ...
impacts Averted mortality 200 QALYs 240 QALYs 220 QALYs Averted incidence of heart disease 1,700 QALYs 520 QALYs 600 QALYs (morbidity only) Averted asthma exacerbations 100 QALYs 40 QALYs 180 QALYs Total 2,000 QALYs 800 QALYs 1,000 QALYs Single-dimension impacts Averted mortality 8 cases; 250 10 cases; 300 9 cases; 280 life years life years life years Averted incidence of heart disease 85 cases 26 cases 30 cases Averted asthma exacerbations 30,000 events 12,000 events 54,000 events NOTES: For simplicity, this example provides the results for a single year and does not provide information on the uncertainty in the estimates.
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From page 178... ...
See also Estimating the Public Health Benefits of Proposed Air Pollution Regulations (NRC, 2002) , which considers sources of uncertainty and offers guidance on the reporting of uncertainty in regulatory analysis.
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From page 179... ...
179 RECOMMENDATIONS FOR COST-EFFECTIVENESS ANALYSIS TABLE 5-4 Nonmonetized Benefits of the Environmental Protection Agency's Nonroad Diesel Rule Pollutant/ Type of Impact Nonquantified Effects Ozone health Premature mortality. Respiratory hospital admissions.
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From page 180... ...
Different generic instruments and elicitation methods produce different results without a clear consensus on the theoretical or empirical superiority of one particular approach or model. Measurement error in estimating health state index values should be reported as credible intervals around point estimates and examined in the uncertainty analysis.
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From page 181... ...
First, as discussed in Chapter 2, agencies often use monetized HALYs in their BCAs, apparently because suitable, high-quality willingness-to-pay estimates are lacking for many nonfatal health effects of concern. Health state index values are more plentiful, and address the shortcomings associated with reliance on other proxy measures (such as cost-of-illness estimates)
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From page 182... ...
These concerns may relate to the disproportionate adverse effects of baseline (preregulatory) or postregulatory health conditions on subgroups of particular concern (e.g., very young and very old people, minority and/or lowincome groups, or individuals with preexisting conditions)
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From page 183... ...
Although comparisons of CEA ratios across different types of regulatory interventions can provide useful information on the relative impacts of different programs or policies, those using or reviewing these comparisons should recognize their limitations. Both policy makers and scholars are often interested in the relative effectiveness of different governmental or nongovernmental interventions aimed at achieving particular outcomes, such as the relative effectiveness of different programs for reducing preventable mortality.
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From page 184... ...
Data Collection and Research Needed to Improve HRQL Measurement and CEA for Regulatory Decision Making Although useful for regulatory analysis, the data and methods currently available for measuring and valuing health impacts in CEA have limitations
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From page 185... ...
In addition, QALY-based CEAs may use any one of several generic HRQL indexes, and estimates based on different survey instruments are not readily combined or compared, because the relationships among the estimates produced by different instruments are not well understood. Perhaps most importantly, the data collection efforts for the risk assessments and epidemiological studies that underlie the economic analyses of regulations have not been designed with QALY-based analyses in mind, and the data are often inadequate for estimating HRQL impacts.
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From page 186... ...
at least one complete HRQL survey instrument that supports a preference-based measure in order to provide age- and sex-specific population HRQL norms or baselines. Survey questions regarding specific health conditions should be developed in consultation with regulatory agencies so that conditions that are common health endpoints for regulatory analyses or that are anticipated to be the targets of future regulatory action can be included.
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From page 187... ...
Research to facilitate improved methods is needed. In addition, methods for eliciting societal values for investments in health (in contrast to individual preferences for health states)
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From page 188... ...
Methods to correlate QALY estimates based on different generic HRQL indexes should be developed so that estimates from different underlying valuation studies are consistent and can be used in the same analysis. As noted in Chapter 3, a federally supported survey effort with a nationally representative sample of noninstitutionalized adults is under way to collect HRQL information using several generic indexes, so that the relationships among the estimates produced by different indexes can be documented and conversion formulae developed.
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From page 189... ...
Because these rules vary significantly in the type of intervention, the characteristics of the affected population, and the characteristics of the risks addressed, benefits measures are needed that can be applied to a broad range of health scenarios. These measures should be supplemented by discussion of any attributes of the scenarios that cannot be fully captured in the quantitative measures.
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