Case Study - Incremental Cost-Effectiveness Answer

NoneYour Task

Hand calculate an Incremental Cost-Effectiveness Analysis using a WTP = $100,000/Life Year gained [NOTE THIS IS A COUNT SPECIFIC WTP THRESHOLD]

Perform a cost-effectiveness analysis of the treatment options using LYs as the measure of health effects.

Which strategy would you choose and why, if the willingness-to-pay threshold is $100,000 per life year gained?

Step 1: Calculate costs and effects for each strategy.

Discounted Cost Discounted Life Years
No Screen/Treat 2,800 19.04
Treat all 30,000 19.484
Screen all 4,950 19.68

Step 2: Sort table by costs in ascending order (Least Costly to most costly)

Strategy Discounted Costs Discounted LYs Incremental Costs Incremental LYs ICER ($/LY)
No Screen/Treat 2,800 19.04
Screen all 4,950 19.68
Treat all 30,000 19.484

Step 3a: Calculate the incremental costs and incremental LYs

Remember that we are comparing each strategy to the next cheapest. DO NOT compare all to the baseline.

Strategy Discounted Costs Discounted LYs Incremental Costs Incremental LYs ICER ($/LY)
No Screen/Treat 2,800 19.04
Screen all 4,950 19.68 4,950 -2,800 = 2,150 19.68 - 19.04 = 0.64
Treat all 30,000 19.484 30,000 - 4,950= 24,050 19.484 - 19.68 = -0.196

Step 3b: Calculate ICER based on difference in costs and effects.

\[ \frac{C_1 - C_0 \quad (\Delta C)}{E_1 - E_0 \quad (\Delta E)} \]

Strategy Discounted Costs Discounted LYs Incremental Costs Incremental LYs ICER ($/LY)
No Screen/Treat 2,800 19.04
Screen all 4,950 19.68 2,150 0.64 2,150/0.64 = 3,359.375
Treat all 30,000 19.484 24,050 -0.23 24,050/-0.196 = -122,704.1

Step 4: Determine dominated strategies (ICER<0).

We are looking for strategies with a higher cost and lower utility than the next cheapest strategy.

Strategy Discounted Costs Discounted LYs Incremental Costs Incremental LYs ICER ($/LY)
No Screen/Treat 2,800 19.04
Screen all 4,950 19.68 2,150 ⬆︎ 0.64 ⬆︎ 3,359.375
Treat all 30,000 19.484 24,050 ⬆︎ -0.23 ⬇︎ -122,704.1

Step 5: Re-calculate ICERs after eliminating dominated strategies.

Since the dominated strategy is the most expensive, we have nothing to recalculate. But remember that we don’t report negative ICERS.

Strategy Discounted Costs Discounted LYs Incremental Costs Incremental LYs ICER ($/LY)
No Screen/Treat 2,800 19.04
Screen all 4,950 19.68 2,150 0.64 3,359.375
Treat all 30,000 19.484 Dominated

Step 6: Determine strategies ruled out by extended dominance.

We are looking for the strategies that are not dominated but that have a strategy that is more cost effective than it. To determine these we want to compare the ICER of one strategy with the next most expensive strategy. If the next most expensive strategy has a lower ICER than the comparison strategy is weakly dominated.

In this example, we only have one ICER so there is nothing to compare

Strategy Discounted Costs Discounted LYs Incremental Costs Incremental LYs ICER ($/LY)
No Screen/Treat 2,800 19.04
Screen all 4,950 19.68 2,150 0.64 3,359.375
Treat all 30,000 19.484 Dominated

Final: Compare ICERs to WTP

Think of the WTP as a budget. In this example, you have $100,000 to spend. It is not your goal to save any of that money but instead to maximize the amount of health without going over that budget.

In this example, we only have one ICER so there is nothing to compare

Strategy Discounted Costs Discounted LYs Incremental Costs Incremental LYs ICER ($/LY)
No Screen/Treat 2,800 19.04
Screen all 4,950 19.68 2,150 0.64 3,359.375
Treat all 30,000 19.484 Dominated
Important

The ICER of $3,359.38/LY is less than $100,000/LY. Therefore, we would say that the Screen All strategy is the most cost-effective with a $100,000 WTP.

Additional Strategies

Another member of the lab has built a model that looks at screening by risk. They were able to provide you the Cost and Life years for two strategies. Include these in your CEA to determine which of the 5 total strategies is the most cost-effective.

Which strategy would you choose and why, if the willingness-to-pay threshold is $100,000 per life year gained?

Step 1: Calculate costs and effects for each strategy.

Discounted Cost Discounted Life Years
No Screen/Treat 2,800 19.04
Treat all 30,000 19.484
Screen all 4,950 19.68
Screen High Risk Only 28,000 19.89
Treat High Risk Only 29,000 19.91

Step 2: Sort table by costs in ascending order (Least Costly to most costly)

Strategy Discounted Costs Discounted LYs Incremental Costs Incremental LYs ICER ($/LY)
No Screen/Treat 2,800 19.04
Screen all 4,950 19.68
Screen High Risk Only $28,000 19.89
Treat High Risk Only $29,000 19.91
Treat all 30,000 19.484

Step 3a: Calculate the incremental costs and incremental LYs

Remember that we are comparing each strategy to the next cheapest. DO NOT compare all to the baseline.

Strategy Discounted Costs Discounted LYs Incremental Costs Incremental LYs ICER ($/LY)
No Screen/Treat 2,800 19.04
Screen all 4950 19.68 4950-2800=2150 19.68-19.04=0.64
Screen High Risk Only 28000 19.89 28000-4950=23050 19.89-19.68=0.21
Treat High Risk Only 29000 19.91 29000-28000=1000 19.91-19.89=0.02
Treat all 30000 19.484 30000-29000=1000 19.484-19.91=-0.43

Step 3b: Calculate ICER based on difference in costs and effects.

\[ \frac{C_1 - C_0 \quad (\Delta C)}{E_1 - E_0 \quad (\Delta E)} \]

Strategy Discounted Costs Discounted LYs Incremental Costs Incremental LYs ICER ($/LY)
No Screen/Treat 2,800 19.04
Screen all 4950 19.68 2150 0.64 2150/0.64=3359.38
Screen High Risk Only 28000 19.89 23050 0.21 23050/0.21=109761.9
Treat High Risk Only 29000 19.91 1000 0.02 1000/0.02=50000
Treat all 30000 19.484 1000 -0.43 1000/-0.43=-2347.42

Step 4: Determine dominated strategies (ICER<0).

We are looking for strategies with a higher cost and lower utility than the next cheapest strategy.

Strategy Discounted Costs Discounted LYs Incremental Costs Incremental LYs ICER ($/LY)
No Screen/Treat 2,800 19.04
Screen all 4950 19.68 2150 ⬆︎ 0.64 ⬆︎ 3359.38
Screen High Risk Only 28000 19.89 23050 ⬆︎ 0.21 ⬆︎ 109761.9
Treat High Risk Only 29000 19.91 1000 ⬆︎ 0.02 ⬆︎ 50000
Treat all 30000 19.484 1000 ⬆︎ -0.43 ︎⬇︎ -2347.42

Step 5: Re-calculate ICERs after eliminating dominated strategies.

Since the dominated strategy is the most expensive, we have nothing to recalculate. But remember that we don’t report negative ICERS.

Strategy Discounted Costs Discounted LYs Incremental Costs Incremental LYs ICER ($/LY)
No Screen/Treat 2,800 19.04
Screen all 4950 19.68 2150 0.64 3359.38
Screen High Risk Only 28000 19.89 23050 0.21 109761.9
Treat High Risk Only 29000 19.91 1000 0.02 50000
Treat all 30000 19.484 Dominated

Step 6: Determine strategies ruled out by extended dominance.

We are looking for the strategies that are not dominated but that have a strategy that is more cost effective than it. To determine these we want to compare the ICER of one strategy with the next most expensive strategy. If the next most expensive strategy has a lower ICER than the comparison strategy is weakly dominated.

Strategy Discounted Costs Discounted LYs Incremental Costs Incremental LYs ICER ($/LY)
No Screen/Treat 2,800 19.04
Screen all 4950 19.68 2150 0.64 3359.38
Screen High Risk Only 28000 19.89 23050 0.21 109761.9 (⬆︎ 109761.9 >3359.38)
Treat High Risk Only 29000 19.91 1000 0.02 50000 ( ⬇︎50000 <109761.98)
Treat all 30000 19.484 Dominated
Warning

Looks like the “Treat High Risk Only” gets more health at a lower cost ($5,000/LY vs $109,761/LY) “Screen High Risk Only” despite being more expensive.

Therefore, the “Screen High Risk Only” is weakly dominated!

Strategy Discounted Costs Discounted LYs Incremental Costs Incremental LYs ICER ($/LY)
No Screen/Treat 2,800 19.04
Screen all 4950 19.68 2150 0.64 3359.38
Screen High Risk Only 28000 19.89 23050 0.21 Weakly Dominated
Treat High Risk Only 29000 19.91 1000 0.02 50000
Treat all 30000 19.484 Dominated

Effectivness Plane

Step 7: Re-calculate ICERs after ruling out all dominated strategies.

Strategy Discounted Costs Discounted LYs Incremental Costs Incremental LYs ICER ($/LY)
No Screen/Treat 2,800 19.04
Screen all 4950 19.68 4950-2800=2150 19.68-19.04=0.64 2150/0.64=3359.38
Treat High Risk Only 29000 19.91 29000-4950=24050 19.91-19.68=0.23 24050/0.23=104565.22
Screen High Risk Only 28000 19.89 Weakly Dominated
Treat all 30000 19.484 Dominated

Step 8: Repeat 6-7 as needed.

Step 6 Round 2: Determine strategies ruled out by extended dominance.

We are looking for the strategies that are not dominated but that have a strategy that is more cost effective than it. To determine these we want to compare the ICER of one strategy with the next most expensive strategy. If the next most expensive strategy has a lower ICER than the comparison strategy is weakly dominated.

Strategy Discounted Costs Discounted LYs Incremental Costs Incremental LYs ICER ($/LY)
No Screen/Treat 2,800 19.04
Screen all 4950 19.68 2,150 0.64 3,359.38
Treat High Risk Only 29000 19.91 24,050 0.23 104,565.22 (⬆︎ 104,565.22 >3359.38)
Screen High Risk Only 28000 19.89 Weakly Dominated
Treat all 30000 19.484 Dominated

The “Treat High Risk Only” has a higher ICER than the “Screen All” strategy. There are no other ICERs to compare, therefore, we have found all the dominated strategies

Final: Compare ICERs to WTP

Think of the WTP as a budget. In this example, you have $100,000 to spend. It is not your goal to save any of that money but instead to maximize the amount of health without going over that budget.

In this example, we only have one ICER so there is nothing to compare

Strategy Discounted Costs Discounted LYs Incremental Costs Incremental LYs ICER ($/LY)
No Screen/Treat 2,800 19.04
Screen all 4950 19.68 2,150 0.64 3,359.38
Treat High Risk Only 29000 19.91 24,050 0.23 104,565.22
Screen High Risk Only 28000 19.89 Weakly Dominated
Treat all 30000 19.484 Dominated

The ICER of “Screen All”: $3,359.38/LY is less than $100,000/LY.
The ICER of “Treat High Risk Only”: $104,565.22 /LY is MORE than $100,000/LY.

Important

Therefore, the “Treat High Risk Only” would be “over our budget”.

This means that the Screen All strategy is the most cost-effective with a $100,000 WTP.

Compare ICERs to a $200,000 WTP

Now you have $200,000 to spend. It is not your goal to save any of that money but instead to maximize the amount of health without going over that budget.

In this example, we only have one ICER so there is nothing to compare

Strategy Discounted Costs Discounted LYs Incremental Costs Incremental LYs ICER ($/LY)
No Screen/Treat 2,800 19.04
Screen all 4950 19.68 2,150 0.64 3,359.38
Treat High Risk Only 29000 19.91 24,050 0.23 104,565.22
Screen High Risk Only 28000 19.89 Weakly Dominated
Treat all 30000 19.484 Dominated

The ICER of “Screen All”: $3,359.38/LY is less than $200,000/LY.
BUT The ICER of “Treat High Risk Only”: $104,565.22 /LY is ALSO less than $200,000/LY.

While there are both cost-effective under the WTP of $200,000/LY, we are trying to get us the MOST health. The “Treat High Risk Only” will give us more health.

Important

This means that the “Treat High Risk Only” strategy is the most cost-effective with a $200,000 WTP.