South Asian Cardiovascular Research Methodology Workshop Economics and

South Asian Cardiovascular Research Methodology Workshop Economics and Health Thomas Songer, Ph. D

Economics and Health

Human Development Income/Economic Population Health & Nutrition Education Political

Transitions in Human Development Epidemiologic Disease - Infectious to Chronic Demographic Younger to Older populations Rural to Urban Economic Developing to Developed Economies

Transitions in Human Development Health Care Systems Centralized to Decentralized, Cost Containment Political Controlled to Free Market Economies

Trends in Death in Developing Areas Deaths (millions) NCDs Comm. Dis. Injuries 40 30 20 10 0 1990 2000 2010 2020 Global Burden of Disease

DALYs in Developing Areas 1990 Infectious Disease 2020 NCDs Injury

Economic Transition

Economic Growth • Many Differing ways of defining growth • Goods and services produced • GNP - money value of all goods and services produced • GNP per capita; reflects the average income of a country’s citizens • GNP per capita; outlines general standard of living

Gross National Product, per capita Average Annual 1991 Growth Rate, $ 1980 -91(%) Sub-Saharan Africa East Asia & Pacific South Asia Europe & C. Asia Mideast/N. Africa Latin America OECD members World 350 650 320 2, 670 1, 940 2, 390 21, 530 4, 010 - 1. 2 6. 1 3. 1 0. 9 - 2. 4 - 0. 3 2. 3 1. 2

GNP per capita Monetary value of goods and services population

GNP per capita Impact of Population Changes • An increasing population makes it more difficult to increase GNP per capita • With a stable population, increases in GNP will increase GNP per capita

How does the development level of an economy relate to health?

Economics and Health

Higher GNP per capita is associated with …. Longer life expectancy lower infant mortality better access to safe water better education

Income and Health Spending World Bank Development Report Share of GDP spent on health 12 10 8 6 4 2 0 5000 10000 15000 20000 GDP per capita (1991 dollars) 25000

Economics Poverty and Health malnutrition poor sanitation poor education poor housing - crowding no quality health care

Low economic growth High fertility Poverty Poor health

UNDP Poverty Report 2000 OVERCOMING HUMAN POVERTY

Increased productivity Low fertility Rising incomes Better health

Economic growth Economic development

Economic growth increase in the amount of goods and services produced Economic development combines economic growth with an improvement in living standards

Economic growth does not always translate to economic development

In the 1950 s and 1960 s, a large number of 3 rd world countries achieved UN growth targets, yet the levels of living for most remained unchanged GNP per capita is a narrow definition of growth and development Todaro 1997

Health used to be viewed as an end product of the growth process: New thinking is that health enhances economic growth

Economics and Health

Economics and Health

WHO: Commission on Macroeconomics and Health • Ill-health undermines economic development and efforts to reduce poverty. Investments in people’s health are vital pre-conditions for economic growth and human development. www. who. int/macrohealth/en

Chadwick: The human being is an investment of capital Healthy people are productive people

Chadwick: The human being is an investment of capital Healthy people are productive people Better sanitation is a good investment Prevention of disease is a good investment

The Commission on Macroeconomics and Health • established in January 2000 • Mandate: To examine the links between investment in health, economic development and poverty reduction • CMH Structure: 6 working groups, 18 Commissioners, hundreds of experts in public health, finance and economics.

Summary of key CMH findings • Ill health undermines economic development and efforts for poverty reduction • A few health conditions account for most of the avoidable deaths in low / middle-income countries • HIV/AIDS, TB, malaria, maternal & child health, and tobacco-related illness • The HIV/AIDS pandemic is a “distinct and unparalleled catastrophe” not only in its human dimension but in its implications for economic development

HIV/AIDS and Economic Development • High HIV/AIDS prevalence leads to… – decline in labor force participation – decline in productivity – decline in human capital

HIV/AIDs in Russia, 2001 World Bank 2002

HIV/AIDs in Russia by 2020 • 5. 4 to 14. 5 million cases • -2 to -14% change in effective labor supply • -5 to -25% decline in GDP

Health Economics

Why is there an interest in health economics? Economics and health are related Rising costs of health care Limited resources for health care Variations in health outcomes exist Economic data influence government decisions regarding health care

Economic Approaches in Health Care Descriptive Cost studies Evaluative Cost-Benefit Analysis Cost-Effectiveness Analysis Cost-Utility Analysis Explanatory Demand/Supply issues Regulation/Taxation

Cost Effectiveness Analysis • Primary form of economic analysis of health care interventions • Very often included in clinical trials that are testing new interventions • A method for evaluating the outcomes and costs of interventions designed to improve health.

The purpose of economic evaluation, such as cost effectiveness analysis, is to identify, measure, value, and compare the costs and consequences of alternative interventions.

Cost Effectiveness Calculation Comparison of interventions examines differences in cost by the differences in benefits gained Cost with intervention [A] - Cost with intervention [B] Benefit with [A] - Benefit with [B] in other words Δ Cost Δ Benefit

Cost Effectiveness Calculation Intervention A Costs Effectiveness $4, 000 B $5, 000 3 months 8 months . Incremental CE = (5, 000 – 4, 000)/8 -3= $200/month

Cost-effectiveness analysis – Important Steps • • Define the question to be analyzed Define the audience for the evaluation Specify the perspective of the analysis Define the relevant time frame for the analysis Identify relevant outcomes Identify relevant costs Determine the summary measure to be reported

Defining interventions or the question to be assessed • Major increase or decrease in an existing activity Or • Adding a new activity to replace an existing one or adding a new activity when there is no current activity Mulligan/Mills

Selected interventions in malaria control • Early diagnosis and effective treatment • Intermittent therapy during pregnancy • Chemoprophylaxis for target groups Personal & • Insecticide treated materials Community • Home repellants and insecticide use Protection Vector • Indoor residual spraying control • Larviciding, fogging • Civil engineering: drainage and filling • Mobilization of individual, family and Social communities Action/ Managemen • Health Education t • Surveillance of infection and disease Mulligan/Mills effectiveness Drug use

Defining the Audience and Perspective of the study • • • Health care payers Health care providers Patients Government health plans Society among others

Identify Time frame • Short-term – Within the time period of the trial • Long-term – e. g 5 years – e. g. 10 years • Lifetime – Many interventions in chronic disease show benefits years later

Summary Outcome Measures 1. Quality-adjusted Life Years 1. Survival weighted by patients’ value of health-related quality of life 2. Patients value health states on a 0 (death) to 1 (optimal health) scale 3. Recommended as a gold standard 2. Other Clinical Outcomes: pain, test results 3. Non-Clinical Outcomes: health status, patient satisfaction

Examples of outcome measures Logan et al. (1981) Hypertension 3: 2: 211 -18 Hull et al. (1981) NEJM 304: 1561 -67 Hypertension treatment Diagnosis of deep vein thrombosis Sculpher and Buxton (1993) Asthma Pharmaco. Economics 4: 5: 345 -52 Mark et al. (1995) NEJM 332: 21: 1418 -24 Thrombolysis mm. Hg blood pressure reduction cases of DTV detected episode-free days years of life gained

Cost-Effectiveness Analysis in the TODAY (Treatment Options for Diabetes in Adolescents and Youth) Study • Results expressed as – Cost per change in Hb. A 1 c – Cost per unit of treatment failure • e. g. cost per day of treatment failure avoided – Cost per unit of clinical improvement • e. g. change in weight, BMI, obesity – Cost per quality-adjusted life year (QALY)