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Reconciliation of economic concerns and health policy

Illustration of an equity adjustment procedure using proportional shortfall

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Abstract

Economic evaluations have become an important and much used tool in aiding decision makers in deciding on reimbursement or implementation of new healthcare technologies. Nevertheless, the impact of economic evaluations on reimbursement decisions has been modest; results of economic evaluations do not have a good record in predicting funding decisions. This is usually explained in terms of fairness; there is increasing awareness that valuations of QALYs may differ when the QALYs accrue to different patients. The problem, however, is that these equity concerns often remain implicit, and therefore frustrate explicitness and transparency in evidence-based decision making.

It has been suggested that a so-called equity adjustment procedure may (partially) solve this problem. Typically this would involve the application of so-called equity weights, which can be used to recalculate the value of QALY gains for different patients. This paper explores such an equity adjustment procedure, using the equity concept of proportional shortfall.

Proportional shortfall assumes that measurement of inequalities in health should concentrate on the fraction of QALYs that people lose relative to their remaining life expectancy, and not on the absolute number of QALYs lost or gained. It is the ratio of QALYs lost over the QALYs remaining. This equity concept combines elements of two popular but conflicting notions of equity: fair innings and severity-of-illness.

We applied the concept of proportional shortfall to ten conditions and tentatively explored how an equity adjustment procedure using proportional shortfall might affect priority setting. Our equity adjustment procedure lowered the cost-effectiveness threshold when a condition was relatively mild. Because the proportional shortfall caused by the ten conditions differed considerably, the equity-adjustment procedure discriminated strongly between the ten conditions, and this experiment provided a good opportunity to explore the impact of equity adjustment for healthcare reimbursement decisions.

In conclusion, our results suggest that equity can be measured and that integration of equity concerns into an economic evaluation improves the fit between economic models and reimbursement decisions. It is recommended that cost-effectiveness driven health policy systems consider equity adjustments.

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Acknowledgements

We would like to thank Alan Williams and Han Bleichrodt for their helpful comments. We also thank Stefan Pickee and the researchers who were involved in the cost-effectiveness analyses for their assistance in retrieving the raw data about the QALY profiles for the different patient groups. For developing the theoretical contents of this paper, we acknowledge the financial support of the NWO, The Netherlands Organisation for Scientific Research (project no. 945-10-034) and ZON-MW, The Netherlands Organisation for Health Research and Development under project VVS-2-7. A part of the empirical work was commissioned and funded by the Dutch Health Insurance Board.

The authors have no conflicts of interest that are directly relevant to the content of this review.

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Authors and Affiliations

  1. Institute for Medical Technology Assessment (iMTA), Rotterdam, Erasmus MC Rotterdam, 3000 DR Rotterdam, PO Box 1738, Rotterdam, The Netherlands

    Elly A. Stolk & Werner B. F. Brouwer

  2. Expert Centre for Health Ethics, Faculty of Philosophy, Erasmus University Rotterdam, Rotterdam, The Netherlands

    Gijs van Donselaar

  3. Institute for Health Policy and Management, Erasmus MC Rotterdam, Rotterdam, The Netherlands

    Werner B. F. Brouwer

  4. Institute for Medical Psychology and Psychotherapy, Erasmus MC Rotterdam, Vierspong Institute for Studies on Personality Disorders (VISPD), Halsteren, Rotterdam, The Netherlands

    Jan J. V. Busschbach

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  1. Elly A. Stolk
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  2. Gijs van Donselaar
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  3. Werner B. F. Brouwer
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  4. Jan J. V. Busschbach
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Correspondence to Elly A. Stolk.

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Stolk, E.A., van Donselaar, G., Brouwer, W.B.F. et al. Reconciliation of economic concerns and health policy. Pharmacoeconomics 22, 1097–1107 (2004). https://doi.org/10.2165/00019053-200422170-00001

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