Health Economics

Parkin, David; Devlin, Nancy

doi: 10.1002/hec.1086pmid: 16498700

This paper critically reviews theoretical and empirical propositions regarding visual analogue scale (VAS) valuations of health states and their use in cost‐utility analysis (CUA). A widely repeated assertion in the economic evaluation literature is the inferiority, on theoretical grounds, of VAS valuations. Five common criticisms are: VAS lacks a theoretical foundation; VAS values are not ‘choice based’; VAS values are not consistent with utility‐under‐uncertainty requirements; context and range effects observed in VAS valuation data mean that they cannot even be considered to represent measurable value functions; and when completing a VAS, people are not trying to express values. We address each of these points: the VAS does have a theoretical basis, being entirely consistent with the non‐welfarist foundations of QALYs and CUA; the ‘choiceless’ nature of the VAS is incorrectly judged by stated preference criteria relevant to monetary rather than health state valuations, and VAS valuations do in any case involve an element of choice; because valuations are intended for use in social decision‐making, it may be advantageous that VAS values are elicited under conditions of certainty; although there are measurement problems with the VAS, means such as better design and transformations of data can deal with these; and with any method of eliciting values, it is unrealistic to expect people consciously to think in terms of social science constructs such as utilities. Moreover, there are problems, both theoretical and empirical, with alternative methods. Selection of the appropriate valuation method should be based on empirical performance, and in this the VAS has important advantages. We conclude that there are strong grounds for disputing the consensus view against the VAS and challenge those who hold it to deploy more convincing arguments and evidence in favour of alternative methods. However, we identify areas where further research is required to establish and consolidate the potential of the VAS as a valuation method. Copyright © 2006 John Wiley & Sons, Ltd.

Abellán‐Perpiñán, José‐María; Pinto‐Prades, José‐Luis; Méndez‐Martínez, Ildefonso; Badía‐Llach, Xabier

doi: 10.1002/hec.1095pmid: 16518836

This paper presents a test of the predictive validity of various classes of QALY models (i.e. linear, power and exponential models). We first estimated TTO utilities for 43 EQ‐5D chronic health states and next these states were embedded in nonchronic health profiles. The chronic TTO utilities were then used to predict the responses to TTO questions with nonchronic health profiles. We find that the power QALY model clearly outperforms linear and exponential QALY models. Optimal power coefficient is 0.65. Our results suggest that TTO‐based QALY calculations may be biased. This bias can be corrected using a power QALY model. Copyright © 2006 John Wiley & Sons, Ltd.

Sculpher, Mark J.; Claxton, Karl; Drummond, Mike; McCabe, Chris

doi: 10.1002/hec.1093pmid: 16491461

The randomised controlled trial (RCT) has developed a central role in applied cost‐effectiveness studies in health care as the vehicle for analysis. This paper considers the role of trial‐based economic evaluation in this era of explicit decision making. It is argued that any framework for economic analysis can only be judged insofar as it can inform two key decisions and be consistent with the objectives of a health care system subject to its resource constraints. The two decisions are, firstly, whether to adopt a health technology given existing evidence and, secondly, an assessment of whether more evidence is required to support this decision in the future. It is argued that a framework of economic analysis is needed which can estimate costs and effects, based on all the available evidence, relating to the full range of possible alternative interventions and clinical strategies, over an appropriate time horizon and for specific patient groups. It must also enable the accumulated evidence to be synthesised in an explicit and transparent way in order to fully represent the decision uncertainty. These requirements suggest that, in most circumstances, the use of a single RCT as a vehicle for economic analysis will be an inadequate and partial basis for decision making. It is argued that RCT evidence, with or without economic content, should be viewed as simply one of the sources of evidence, which must be placed in a broader framework of evidence synthesis and decision analysis. Copyright © 2006 John Wiley & Sons, Ltd.

Baltussen, Rob; Stolk, Elly; Chisholm, Dan; Aikins, Moses

doi: 10.1002/hec.1092pmid: 16491464

Background: Many criteria have been proposed to guide priority setting in health, but their relative importance has not yet been determined in a way that allows a rank ordering of interventions. Methods: In an explorative study, a discrete choice experiment was carried out to determine the relative importance of different criteria in identifying priority interventions in Ghana. Thirty respondents chose between 12 pairs of scenarios that described interventions in terms of medical and non‐medical criteria. Subsequently, a composite league table was constructed to rank order a set of interventions by mapping interventions on those criteria and considering the relative weights of different criteria. Results: Interventions that are cost‐effective, reduce poverty, target severe diseases, or target the young had a higher probability of being chosen than others. The composite league table showed that high priority interventions in Ghana are prevention of mother to child transmission in HIV/AIDS control, and treatment of pneumonia and diarrhoea in childhood. Low priority interventions are certain interventions to control blood pressure, tobacco and alcohol abuse. The composite league table lead to a different and more differentiated rank ordering of interventions compared to pure efficiency ratings. Conclusion: This explorative study has introduced a multi‐criteria approach to priority setting. It has shown the feasibility of accounting for efficiency, equity and other societal concerns in prioritization decisions, and its potentially large impact on priority setting. Copyright © 2006 John Wiley & Sons, Ltd.

Etilé, Fabrice

doi: 10.1002/hec.1090pmid: 16470707

This paper models heterogeneity in the relationship between exposure to information at school or in the media and cannabis use and heavy drinking, using latent class techniques applied to data on French teenagers collected in 1993. Teenagers cluster in five classes which differ in their tastes for drunkenness and cannabis, and in the correlations between information exposure and cannabis use or heavy drinking. Teenager heterogeneity and habit‐formation or precociousness effects limit the effectiveness of general information policies. Improving the impact of prevention requires that interventions be better targeted and personalised. We show how economic theory, latent class techniques and existing psychometric questionnaires can be used to build simple statistical tools for targeting prevention policies. Copyright © 2006 John Wiley & Sons, Ltd.

Norton, Edward C.; Yoon, Jangho; Domino, Marisa Elena; Morrissey, Joseph P.

doi: 10.1002/hec.1100pmid: 16541394

Proposed changes to the mental health care system are usually debated in terms of either health benefits or costs savings. However, because of the extensive intersection between the mental health system and the criminal justice system, changes in the organization and financing of mental health services may change the jail detention rate. We analyze jail incarcerations for felonies and non‐felonies following the start of a public managed mental health care program in King County, Washington (including Seattle). We analyze unique data that tracks individuals in and out of the public mental health, Medicaid, and criminal justice systems for 1993–1998. In this manuscript we examine individuals with severe mental illness who were enrolled in the Washington state Medicaid program. The final sample size has monthly observations on 6766 unique individuals aged 18–64. We estimate Markov models of the monthly transition probabilities among living in the community with no public mental health treatment, receiving inpatient or outpatient mental health or substance abuse services, or being in jail for either a felony or non‐felony charge. The transition probabilities are adjusted for demographics and policy changes that occurred during our study period. There is little evidence of any change in the jail detention rate for severely mentally ill users of the county mental health system in contrast with other SMI individuals following the public managed care program. Copyright © 2006 John Wiley & Sons, Ltd.

Grootendorst, Paul; Stewart, David

doi: 10.1002/hec.1103pmid: 16498702

Reference pricing (RP) limits drug plan reimbursement of interchangeable medicines to a reference price, which is typically equal to the price of the lowest‐cost interchangeable drug; any cost above that is borne by the patient. Much of the evidence of the effects of RP comes from ‘before and after’ studies of the RP scheme adopted by Pharmacare, the publicly funded drug plan for seniors and others in British Columbia, Canada. We critically assess the identifying assumption inherent in the before and after design – namely, that pre‐RP trends accurately predict counterfactual outcomes – in the context of estimating the impact of RP on Pharmacare's expenditure on anti‐hypertensive drugs for its senior beneficiaries. We use similar data from a public plan that has not introduced RP to estimate the effects on drug expenditures of patent expiration, secular changes in prescribing patterns and various other factors common to all Canadian public drug plans that could potentially confound the before and after estimates of the effect of RP on drug plan expenditures. We find that controlling for such factors reduces estimates of drug plan savings attributable to RP of the Calcium Channel Blockers by about half. Copyright © 2006 John Wiley & Sons, Ltd.

Deb, Partha; Li, Chenghui; K. Trivedi, Pravin; M. Zimmer, David

doi: 10.1002/hec.1096pmid: 16523440

This paper estimates treatment effects of managed care plans on the utilization of health care services using data from two contemporaneous, nationally representative household surveys from the USA. The paper exploits recent advances in simulation‐based econometrics to take the endogeneity of enrollment into managed care plans into account and identify the causal relationship between managed care enrollment and utilization. Overall, results from the two surveys are remarkably similar, lending credibility to their external validity and to the econometric model and estimation methods. There is significant evidence of self‐selection into managed care plans. After accounting for selection, an individual enrolled in an health maintenance organization (HMO) plan has 2 more visits to a doctor and has 0.1 more visits to the emergency room per year than would the same individual enrolled in a nonmanaged care plan. Copyright © 2006 John Wiley & Sons, Ltd.

McCabe, Christopher; Stevens, Katherine; Roberts, Jennifer; Brazier, John

doi: 10.1002/hec.1136pmid: N/A