Health Economic Modeling
Lecture 1; Introduction to Health Economic Modeling
Essential background information; self-study materials; background materials
Tutorial 1 & Tutorial 2
ISPOR-GRP: Conceptualizing a model (Roberts, 2012)
An Introduction to Markov modeling (Briggs, 1998)
After this course the student is able to:
1. describe and apply the concepts of a systematic review and meta-analysis;
2. describe the limitations of decision trees and Markov models for health economic
evaluations;
3. construct a cohort-level health economic model when provided with a basic model structure
and model requirements;
4. interpret and critically appraise the results of this health economic model in healthcare
technology decision making.
Focus on understanding the quantitative methods required for HEM and how they can be applied (in
R)
ISPOR = the leading professional society for health economics and outcomes research (HEOR)
globally. The Society’s mission is to promote HEEOR excellence to improve decision making for health
globally.
Health economic evaluations always s involves a comparative analysis of two or more alternative
investment possibilities (called interventions, strategies, policies) to perform an incremental (cost
effectiveness) analysis.
what are the consequences for implementing a technology compared to what we do now?
Incremental analysis we look for differences
Goal is to systematically:
Identify, measure, value, and compare
Costs and effects (consequences) of different alternative policies/interventions
Incremental (cost effectiveness) ratio (ICER) = differences in costs (saving or spending) / differences in
effects (positive or negative)
1
,Decision making in healthcare
What aspects determine if patients could use a (new) technology?
Safety/risks of new technologies
Costs of new technologies
Availability of new technologies
Actual appropriate use/prescription of new technologies (by care providers)
o Capability and willingness of health care professionals to use/implement the
technology
Effectiveness, does it work?
Types of healthcare decisions
1. Market approval decisions (EU regulation)
a. Are you allowed to sell it?
2. Market access and pricing decisions for new pharmaceuticals (companies)
a. If you are allowed to sell it, what is the price?
3. Reimbursement of new pharmaceuticals and medical devices (minister of health, National
Healthcare Institute (ZIN), national insurance)
4. Physicians deciding about medical treatment (physician/patient)
Comparative effectiveness research and health technology assessment
Also add the patient to this schematic? ^
Hierarchy of clinical evidence
IV: Expert opinions
III: Non-experimental studies
IIb: Quasi-experimental studies
IIa: Controlled studies without
randomization
Ib: Well performed RCTs
Ia: Systematic reviews of well
performed RCTs
2
,Market Authorization
Clinical evidence & regulatory decisions
Clinical evidence & weighting problem (>):
1. Implicit Regulatory Benefit-Risk Threshold (RED)
2. Patient Benefit-Risk Threshold Risks and
benefits are perceived differently by every
individual (BLUE)
Benefit-Risk trade-off in renal-cell carcinoma
Preparation/development of a Value Dossier
1. Collecting evidence (systematic review)
2. Synthesizing the evidence
a. Meta-analysis
b. Health economic model
3. Interpreting the health economic outcomes
Asking for a reimbursement
3
, Reimbursement decision
Providing an advice to the minister who decides to reimburse or to not reimburse in the technology
Low risk & low benefit probably not in insurance package but it may be allowed to sell it
If you know a drug works, but we don’t know how good it works
What are the costs?
o What is the budget impact: what does it cost to the country as a whole?
Costs effectiveness per patient may be good, but the costs for the country may not
Why do we often allow drugs on the market, and reimburse drugs, for which effectiveness is
uncertain?
Patient satisfaction
o Why is the drug available in an other country?
Company satisfaction
o The company has the drug ready, they want to sell
o A company could go to an other country and sell it there
We don’t want to withhold potential benefits to patients
National interests (pharmaceutical industry)
Which aspects/outcomes typically are most uncertain when the cost-effectiveness of a drug is first
assessed?
Long-term effectiveness
Effectiveness in target population
Side-effects: in the first year or so you can’t say anything about side-effects
o At first, it seems the drug works, but what happens after?
When is an innovation or drug too expensive?
When it is unaffordable (budget impact too high)
When health benefits do not outweigh the costs
Should we adopt the treatment based on expected cost-
effectiveness (>)?
What is the other major challenge in healthcare for the next few
decades?
Healthcare personal shortage
Evaluation procedure for new drug (National Healthcare Institute) (ZIN))
Stap 1: Toelating tot de Nederlandse markt
Stap 2: Verzoek tot vergoeding
Stap 3: Waar kijken we naar? (voor de beoordeling)
Stap 4: Beoordelen doen we samen
Stap 5: Wikken en wegen voor een goed advies
De minister besluit uiteindelijk of het medicijn vergoed
wordt uit het basispakket!
4
Lecture 1; Introduction to Health Economic Modeling
Essential background information; self-study materials; background materials
Tutorial 1 & Tutorial 2
ISPOR-GRP: Conceptualizing a model (Roberts, 2012)
An Introduction to Markov modeling (Briggs, 1998)
After this course the student is able to:
1. describe and apply the concepts of a systematic review and meta-analysis;
2. describe the limitations of decision trees and Markov models for health economic
evaluations;
3. construct a cohort-level health economic model when provided with a basic model structure
and model requirements;
4. interpret and critically appraise the results of this health economic model in healthcare
technology decision making.
Focus on understanding the quantitative methods required for HEM and how they can be applied (in
R)
ISPOR = the leading professional society for health economics and outcomes research (HEOR)
globally. The Society’s mission is to promote HEEOR excellence to improve decision making for health
globally.
Health economic evaluations always s involves a comparative analysis of two or more alternative
investment possibilities (called interventions, strategies, policies) to perform an incremental (cost
effectiveness) analysis.
what are the consequences for implementing a technology compared to what we do now?
Incremental analysis we look for differences
Goal is to systematically:
Identify, measure, value, and compare
Costs and effects (consequences) of different alternative policies/interventions
Incremental (cost effectiveness) ratio (ICER) = differences in costs (saving or spending) / differences in
effects (positive or negative)
1
,Decision making in healthcare
What aspects determine if patients could use a (new) technology?
Safety/risks of new technologies
Costs of new technologies
Availability of new technologies
Actual appropriate use/prescription of new technologies (by care providers)
o Capability and willingness of health care professionals to use/implement the
technology
Effectiveness, does it work?
Types of healthcare decisions
1. Market approval decisions (EU regulation)
a. Are you allowed to sell it?
2. Market access and pricing decisions for new pharmaceuticals (companies)
a. If you are allowed to sell it, what is the price?
3. Reimbursement of new pharmaceuticals and medical devices (minister of health, National
Healthcare Institute (ZIN), national insurance)
4. Physicians deciding about medical treatment (physician/patient)
Comparative effectiveness research and health technology assessment
Also add the patient to this schematic? ^
Hierarchy of clinical evidence
IV: Expert opinions
III: Non-experimental studies
IIb: Quasi-experimental studies
IIa: Controlled studies without
randomization
Ib: Well performed RCTs
Ia: Systematic reviews of well
performed RCTs
2
,Market Authorization
Clinical evidence & regulatory decisions
Clinical evidence & weighting problem (>):
1. Implicit Regulatory Benefit-Risk Threshold (RED)
2. Patient Benefit-Risk Threshold Risks and
benefits are perceived differently by every
individual (BLUE)
Benefit-Risk trade-off in renal-cell carcinoma
Preparation/development of a Value Dossier
1. Collecting evidence (systematic review)
2. Synthesizing the evidence
a. Meta-analysis
b. Health economic model
3. Interpreting the health economic outcomes
Asking for a reimbursement
3
, Reimbursement decision
Providing an advice to the minister who decides to reimburse or to not reimburse in the technology
Low risk & low benefit probably not in insurance package but it may be allowed to sell it
If you know a drug works, but we don’t know how good it works
What are the costs?
o What is the budget impact: what does it cost to the country as a whole?
Costs effectiveness per patient may be good, but the costs for the country may not
Why do we often allow drugs on the market, and reimburse drugs, for which effectiveness is
uncertain?
Patient satisfaction
o Why is the drug available in an other country?
Company satisfaction
o The company has the drug ready, they want to sell
o A company could go to an other country and sell it there
We don’t want to withhold potential benefits to patients
National interests (pharmaceutical industry)
Which aspects/outcomes typically are most uncertain when the cost-effectiveness of a drug is first
assessed?
Long-term effectiveness
Effectiveness in target population
Side-effects: in the first year or so you can’t say anything about side-effects
o At first, it seems the drug works, but what happens after?
When is an innovation or drug too expensive?
When it is unaffordable (budget impact too high)
When health benefits do not outweigh the costs
Should we adopt the treatment based on expected cost-
effectiveness (>)?
What is the other major challenge in healthcare for the next few
decades?
Healthcare personal shortage
Evaluation procedure for new drug (National Healthcare Institute) (ZIN))
Stap 1: Toelating tot de Nederlandse markt
Stap 2: Verzoek tot vergoeding
Stap 3: Waar kijken we naar? (voor de beoordeling)
Stap 4: Beoordelen doen we samen
Stap 5: Wikken en wegen voor een goed advies
De minister besluit uiteindelijk of het medicijn vergoed
wordt uit het basispakket!
4
