Volume 18, Issue 1, Spring 2018

Recent Literature from the ACHORD Journal Club

(Paper discussed Tuesday, February 6, 2018; Commentary by Nathan McClure)

Vallejo‐Torres L, García‐Lorenzo B, Serrano‐Aguilar P. Estimating a cost‐effectiveness threshold for the Spanish NHS. Health Economics. 2017 Dec 28. doi: 10.1002/hec.3633.

Background
The cost-effectiveness threshold is a decision-criterion used to evaluate the value of health that is generated from health spending. The threshold is often conceptualized in terms of a ratio of costs (numerator) to outcomes (denominator), which is most commonly given as the cost per quality adjusted life-year (QALY) in the health-utility context (i.e., health-utility threshold). This paper provides an estimate of the (supply side) cost-effectiveness threshold for the Spanish National Health Service based on variation in health service budgets and quality-adjusted life expectancy (QALE) over 5 years and among 17 different health service regions.

Summary
The authors used ordinary least squares regression using (region and year specific) QALEs and (one-year lagged) health expenditure as the outcome and explanatory variables, respectively. In this regard, the beta-coefficient estimates the health spending elasticity for health (adjusting for differences between regions and over time). Since differences in health spending may be determined by differences in need, which, in turn, is correlated with health outcomes, an instrumental variable approach was used to test for potential endogeneity. Age specific QALEs were calculated from EQ-5D data captured by the Spanish Health Survey (2011/12), as well as predicted EQ-5D values estimated from generalised linear models based on other health and socio-economic indicators from the European Health Interview Survey (2006/07 and 2009/10). Age specific cost per QALY estimates were estimated from the model and combined to give a (population) mean and overall cost per QALY. The estimated average health spending elasticity for health was 0.07, yielding a cost per QALY estimate between 22,000 – 25,000 Euros.

Discussion
The cost-effectiveness threshold estimated by this supply side approach is less than the 30,000 Euro figure commonly used for Spain in economic evaluations of health technologies. We discussed how the threshold is useful in interpreting the outputs of economic evaluations of health technologies, specifically incremental cost-effectiveness ratios, in that it divides the Northeast and Southwest quadrants of the cost-effectiveness plane into areas representing “good-value” (i.e., accept technology) and “poor-value” (i.e., reject technology). To this end, the challenge for health economists and decision-makers is the determination of a cost-effectiveness threshold that captures the opportunity cost or shadow price, namely the potential health gains that would be realized by investing in other alternatives that are given up to invest in the technology under consideration (i.e., the forgone benefits). We considered two conventional types of opportunity cost: demand side and supply side. In the former case, willingness-to-pay approaches are used to estimate the opportunity cost; however, this may not be appropriate in publically funded healthcare systems and social decision-making with the goal of making care available to all with scarce resources (and not based on one’s ability to pay). The supply side opportunity cost reflects allocation decisions under a constrained budget scenario wherein the cost-effectiveness threshold is the health (at a population level) that is displaced by an alternative use of the healthcare resources. We also noted how the estimated health spending elasticity for life expectancy was 0.01 to 0.02, which is similar to other estimates and recent Canadian estimates from Dutton DJ et al. (2018) (see CMAJ 2018;190:E66-71. doi: 10.1503/cmaj.170132). Journal Club members agreed that it would be useful to estimate a supply side cost-effectiveness threshold for QALEs in Canada, exploring regional differences (i.e., between provinces).

ACHORD Seen and Heard

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