WHO GUIDE TO COST- EFFECTIVENESS ANALYSIS CONTENTS The graphic on the cover is a stylized representation of Figure in Background Paper showing uncertainty analysis M AKING C HOICES WHO IN H EALTH : GUIDE TO COST- EFFECTIVENESS ANALYSIS E DITED BY T TAN -T ORRES E DEJER , R B ALTUSSEN , T A DAM , R H UTUBESSY, A A CHARYA , D.B E VANS AND C.J.L M URRAY World Health Organization Geneva WHO Library Cataloguing-in-Publication Data World Health Organization Making choices in health: WHO guide to cost-effectiveness analysis/ edited by T Tan-Torres Edejer … [et al.] Cost-benefit analysis – methods Health care rationing – economics Decision making Health priorities – economics Models, Econometric Guidelines I Tan-Torres Edejer, Tessa II WHO-CHOICE III.Title ISBN 92 154601 (LC/NLM classification: HD 47.4) © World Health Organization 2003 All rights reserved Publications of the World Health Organization can be obtained from Marketing and Dissemination, World Health Organization, 20 Avenue Appia, 1211 Geneva 27, Switzerland (tel: +41 22 791 2476; fax: +41 22 791 4857; email: bookorders@who.int) Requests for permission to reproduce or translate WHO publications— whether for sale or for noncommercial distribution—should be addressed to Publications, at the above address (fax: +41 22 791 4806; email: permissions@who.int) The designations employed and the presentation of the material in this publication not imply the expression of any opinion whatsoever on the part of the World Health Organization concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries Dotted lines on maps represent approximate border lines for which there may not yet be full agreement The mention of specific companies or of certain manufacturers’ products does not imply that they are endorsed or recommended by the World Health Organization in preference to others of a similar nature that are not mentioned Errors and omissions excepted, the names of proprietary products are distinguished by initial capital letters The World Health Organization does not warrant that the information contained in this publication is complete and correct and shall not be liable for any damages incurred as a result of its use Printed in Switzerland CONTENTS Preface IX List of Acronyms and Abbreviations XXI PA RT O N E : M E T H O D S F O R G E N E R A L I Z E D C O S T - E F F E C T I V E N E S S A N A LY S I S What is Generalized Cost-Effectiveness Analysis? Undertaking a study using GCEA 17 Estimating costs 29 Estimating health effects 49 Discounting 67 Uncertainty in cost-effectiveness analysis 73 Policy uses of Generalized CEA 83 Reporting CEA results 91 Summary of recommendations 93 References 97 Annex A WHO-CHOICE activities on Generalized Cost-Effectiveness Analysis 107 Annex B Draft list of intervention clusters for evaluation by WHO-CHOICE 110 Annex C An illustration of the types of costs included in a selection of intervention activities at central levels 111 Annex D Interpreting international dollars 112 Annex E DALYs to measure burden of disease 113 Annex F Measuring intervention benefit at the population level 115 Annex G Epidemiological subregions as applied in WHO Generalized CEA 118 Endnotes 119 PA RT T W O : B A C K G R O U N D P A P E R S A N D A P P L I C AT I O N S Development of WHO guidelines on generalized cost-effectiveness analysis 125 Christopher J.L Murray, David B Evans, Arnab Acharya, Rob M.P.M Baltussen PopMod: A longitudinal population model with two interacting disease states 151 Jeremy A Lauer, Klaus Röhrich, Harold Wirth, Claude Charette, Steve Gribble, Christopher J.L Murray Programme costs in the economic evaluation of health interventions 177 Benjamin Johns, Rob Baltussen, Raymond Hutubessy Econometric estimation of country-specific hospital costs 197 Taghreed Adam, David B Evans, Christopher J.L Murray Stochastic league tables: communicating cost-effectiveness results to decision-makers 217 Raymond C.W Hutubessy, Rob M.P.M Baltussen, David B Evans, Jan J Barendregt, Christopher J.L Murray Uncertainty in cost-effectiveness analysis: probabilistic uncertainty analysis and stochastic league tables 225 Rob M.P.M Baltussen, Raymond C.W Hutubessy, David B Evans, Christopher J.L Murray Effectiveness and costs of interventions to lower systolic blood pressure and cholesterol: a global and regional analysis on reduction of cardiovascular-disease risk 237 Christopher J.L Murray, Jeremy A Lauer, Raymond C.W Hutubessy, Louis Niessen, Niels Tomijima, Anthony Rodgers, Carlene M.M Lawes, David B Evans Generalized cost-effectiveness analysis: an aid to decision making in health 277 Raymond C.W Hutubessy, Rob M.P.M Baltussen, Tessa Tan-Torres Edejer, David B Evans Ethical issues in the use of cost effectiveness analysis for the prioritization of health care resources 289 Dan W Brock Index 313 ACKNOWLEDGEMENTS Many individuals have contributed to the refinement of the framework, methods and tools for generalized cost-effectiveness analysis Their contributions are recognized collectively under the name WHO-CHOICE Collaboration In addition to them, a number of experts provided valuable input in anonymous reviews for the published papers, during the consultative meeting in Geneva in 2001, and during other scientific meetings where WHO-CHOICE or generalized cost-effectiveness analysis was presented Their contributions are gratefully acknowledged Another important source of feedback has been the policy-makers and analysts from many different countries who have attended the workshops on generalized cost-effectiveness analysis that we have conducted over the past years Close interaction with them as they applied the tools and techniques gave us insights into a range of concerns from a user’s perspective, and made us aware of the need to be responsive to different audiences Lastly, we would like to give special thanks to Margaret Squadrani, Marilyn Vogel, Kai Lashley and Keith Wynn who, with their dedication, patience and painstaking attention to detail, made the actual production of the book possible This guide benefited from the input of many experts, including those participating in a meeting on Methods for Cost-Effectiveness Analysis held in Geneva in January 2002 Those who participated were: Dr Arnab Acharya, The Institute of Development Studies, UK Dr Jan Barendregt, Erasmus University, The Netherlands Dr Stephen Birch, McMaster University, Canada Dr Dan Brock, National Institutes of Health, USA Dr Werner Brouwer, Erasmus University Rotterdam, The Netherlands Dr Vilma Carande-Kulis, Centers for Disease Control & Prevention, USA Dr Michael Drummond, University of York, UK Dr Alastair Gray, University of Oxford, UK Dr Paul Kind, University of York, UK Dr Martin Meltzer, Centers for Disease Control and Prevention, USA Dr Mark Miller, National Institutes of Health, USA Professor Anne Mills, London School of Hygiene & Tropical Medicine, UK Dr Raul Molina, Universidad Autonoma Metropolitana-Iztapalapa, Mexico Dr Benjamin Nganda, University of Nairobi, Kenya Dr Louis Niessen, Erasmus University, The Netherlands Dr Max Price, University of the Witwatersrand, South Africa Professor Jeff Richardson, Centre for Health Programme Evaluation, Australia Dr Juan Rovira, The World Bank, USA Dr Orville Solon, University of the Philippines, Philippines Dr Siripen Supakankunti, Chulalongkorn University, Thailand Dr Ben van Hout, Utrecht University, The Netherlands Dr Leena K Eklund, WHO Regional Office for Europe, Denmark Dr Hossein Salehi, WHO Regional Office for the Eastern Mediterranean, Egypt The views expressed in these guidelines are those of the authors and not necessarily those of the participants P R E FA C E A number of guidelines on cost-effectiveness analysis (CEA) already exist There are two reasons for producing another set The first is that traditional analysis has focused on assessing new or additional interventions in comparison with current practice in that area It is difficult to use this type of “incremental” analysis to determine if the current mix of interventions represents an efficient use of resources Secondly, for all but the richest countries, the cost and time required to evaluate the large number of interventions and identify opportunities to enhance efficiency are prohibitive It is important to maximize the possibility of generalizing results from one setting to another The approach of generalized CEA (GCEA) proposed in this Guide seeks to provide analysts with a method of assessing whether the current mix of interventions is efficient as well as whether a proposed new technology or intervention is appropriate It also seeks to maximize the generalizability of results across settings The WHO Guide to Cost-Effectiveness Analysis should be considered as complementary to existing guidelines on CEA GCEA proposes the evaluation of interventions against the counterfactual of “doing nothing”, thereby providing decision-makers with information on what could be achieved if they could start again to build the health system, i.e reallocate all health resources As will be shown in the Guide, this information is a prerequisite to the definition of an efficient mix of interventions, achievable in the long run This specific feature—not addressed in traditional CEA which typically evaluates new interventions in comparison with the current mix (intervention mix constrained CEA or IMC-CEA)—categorizes GCEA as a different, more fundamental, type of economic analysis For many narrower applications of CEA, such as the appraisal of a new version of an existing drug in a specific country, the currently practised CEA remains an appropriate method although it should be realized that this does not inform decision-makers on the best use of health resources in general.i It is also possible to undertake a traditional analysis as part of a GCEA The main objective of this Guide is to provide policy-makers and researchers with a clear understanding of the concepts and benefits of GCEA It provides guidance on how to undertake studies using this form of analysis and how to interpret the results The main focus is on those WHO Guide to Cost-Effectiveness Analysis methodological issues which make GCEA different from traditional CEA, such as the definition of the counterfactual for analysis In addition, attention is paid to controversial issues in CEA where choices are required, such as the inclusion or exclusion of productivity costs Furthermore, the Guide provides some detailed discussions on issues which are little debated in the literature but nevertheless important, for example, the technical approach to the transferability of cost estimates across settings On all these matters, the Guide has benefited from a meeting of experts in cost-effectiveness analysis convened by WHO in Geneva in early 2002 In that meeting, the first version of the Guide was presented, and this published version builds on some of the discussion in that meeting Since GCEA and IMC-CEA are both embedded in the same economic framework, they share many of the same techniques which are discussed in detail elsewhere, such as the methods for the allocation of hospital costs In those instances, the reader is referred to the other literature This Guide proposes a standard set of methodological choices on how to perform GCEA to enhance the comparability and generalizability of results The intended audience are those analysts with some background in CEA The Guide, in Part One, begins with a brief description of GCEA and how it relates to the two questions raised above It then considers issues relating to study design, estimating costs, assessing health effects, discounting, uncertainty and sensitivity analysis, and reporting results Detailed discussions of selected technical issues and applications are provided in a series of background papers, originally published in journals, but included in this book for easy reference in Part Two The first paper by Murray et al., on “Development of WHO Guidelines in Generalized Cost-Effectiveness Analysis” formally lays out the motivation and framework for GCEA It highlights the use of GCEA for improving sectoral efficiency, based on the comparative analysis of current as well as proposed new interventions against a common counterfactual The second paper, “PopMod: A longitudinal population model with two interacting disease states”, is a detailed technical description of the multi-state dynamic life table that calculates the health and mortality experience of a population with two interacting conditions or disease states, as well as other causes of mortality and morbidity It was developed by WHO in a spreadsheet format, and subsequent collaboration with a scientific consultancy group and Statistics Canada allowed the model to be transferred into various programming environments including a microsimulation version The next two papers, “Programme costs in the economic evaluation of health interventions” and “Econometric estimation of country-specific hospital costs”, describe how cost estimates can be derived for different subregions The programme cost paper describes how one category of costs, those which represent resources consumed at all levels aside from &RVW'$/< (XU$ &RVWV '$/