Health Economics in Public Decision-Making

8 February 2013

TCRN member Dr Richard Norman is a Senior Research Fellow with the Centre for Health Economics Research & Evaluation (CHERE), University of Technology, Sydney. Below, Richard provides his thoughts on how we can maximise the collection of health economic data in quality of life evaluations to appropriately inform public decision-making.

The role of health economics in public decision-making (of which cancer is clearly a major component) is large. For example, most submissions for pharmaceutical reimbursement (through the PBAC) or listing of medical services (through the MSAC) require a full economic evaluation. The basic premise of this is to contrast the cost implication of public subsidy with some measure of benefit. In this way, it is argued that economic evaluation can demonstrate how best we as a society can allocate resources both within cancer and more generally to maximise the health improvement of the average citizen. This basic concept has been critiqued for a number of reasons, not least its general non-consideration of the distribution of health. Nevertheless, this type of approach offers assistance for consistent public decision-making, and is a key area in which we as a society can maximise the health of the population given a budget.

The role of quality of life is central to most contemporary health economic evaluations. To allow comparison of health across different settings, it is conventional for economic evaluation to combine mortality and quality of life into one composite measure of health. We can then provide an estimate of the relative value of interventions across the spectrum of diseases (as well as in preventative health). One such device for combining these two factors is the quality-adjusted life year (or QALY), which is defined as one year of full health for one individual. An economic evaluation using this type of outcome measure is known as a cost-utility analysis. In order to construct this, we need to be able to place a value on health states, allowing measurement of quality of life improvement rather than just impacts of an intervention on mortality.


Why Non-Economists Should Care

The collection of appropriate data to undertake a transparent and reliable economic evaluation will help an intervention to be judged fairly when under consideration for state funding. Thus, non-economists should care about how this process works as it is a key part of how they convince people that their intervention is of value, and should be publicly supported. The role non-economists play in this is central. Ultimately, health economists are end users of the data relating to quality of life, and it is the choice of other health experts (such as clinical trialists for instance) to collect data suitable for economic evaluation. In a clinical trial, there is of course concern about the burden we are placing on participants. We do not want to make patients and carers complete endless questionnaires, because of concerns about the amount of time spent answering them, and also the quality of the data collected. To this end, researchers working at the intersection of health economics and quality of life have spent considerable effort identifying how to describe and value health in a way that is amenable to economic evaluation, while remaining cognisant of the burden that large quality of life surveys can place on patients.

Some of the instruments that economists use are stand-alone instruments, and some are adaptations of existing quality of life instruments. For instance, the SF-6D is derived from the SF-36 or SF-12, and can be used in economic evaluation. In oncology, work is being undertaken both in Australia and internationally to create corresponding instruments derived from the QLQ-C30 and the FACT-G.


What can Non-Economists do to Help?

So, what can translational researchers (and non-economists more generally) do to assist in the timely and appropriate translation of their intervention into policy? Collecting only a subset of the necessary data may not ultimately prevent the adoption of an intervention, but it can introduce serious uncertainty which, in our present resource-constrained environment, may seriously delay uptake. As an economist, my view is that the provision of appropriate quality of life data to decision makers is a key requirement, and a factor to consider in the early stages of the research process – particularly in clinical trials where there is a significant lag between protocol development and reimbursement submission.

It is important to decide what information should be collected, and how frequently investigations should occur. In answering both questions, the same principles that apply to the clinical data apply to the quality of life data. It is self-evident that the quality of life data being collected should be able to capture any change in the domains that might be affected by the intervention. A well-designed and validated disease-specific measure can obviously do this, but there are major issues in adapting these instruments for use in economic evaluation. Importantly, can we compare quality of life improvements based on a variety of scales designed for different sets of patients? The answer is that it is difficult, if not impossible. Therefore, a more generic quality of life instrument such as the EQ-5D, the SF-6D, the AQoL or the HUI is required, but the selection between these instruments should consider whether the chosen instrument is capable of capturing what they are trying to measure. Regarding frequency of administration, balance has to be achieved between respondent burden and achieving an accurate picture of the progress of quality of life over the course of the trial and beyond. For many interventions, much of the benefit lies beyond the normal scope of a clinical trial. Any assumption about enduring benefits over time can impact significantly on cost-effectiveness results, and therefore follow-up data is a particularly useful area for economists to estimate the impact of an intervention.


Health economics (and more specifically economic evaluation) plays a major role in public decision-making in Australia and internationally. To ensure we as a society make the right decisions regarding allocation of resources, data which is suitable for economic evaluation needs to be collected. It is in this area that the economist is largely reliant on others. Ensuring that appropriate economic evaluation data is collected is a fundamentally collaborative process involving both economists and non-economists, and it is of paramount importance that each understands the needs of the other, and the role the collective outputs from their collaboration can have on the health of the nation.