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ECONOMIC EVALUATION
Health Care Decision Makers Facing the Budget Allocation
Dilemma: Compressing Mortality vs. Compressing Morbidity
Giovanna Scroccaro, President, Societa’ Italiana di Farmacia Ospedaliera, Milan, Italy
The following is taken from the Second Plenary Session, Monday, 7
November, 2005, at the ISPOR 8TH Annual European Congress,
Florence, Italy.
My presentation will focus on three main topics: 1) The reimbursement system
( DRG s) and the consequent difficulty for hospitals to cover expenses deriving
from the application of new technologies; 2) the necessity to implement Health
Technology assessment at central and local level; and 3) the impact of hospital
prescriptions on community expenditure.
The Reimbursement System (DRGs)
The Italian National Health System finances the regions (of Italy) on the basis
of weighted capitation, and the regions fund the Local Health Care Agencies
(Aziende Sanitarie Locali-ASL) (Figures 1 & 2 [1]). The ASL reimburse the
activities of Large Public Hospitals and Private hospitals through the DRG
tariff.he budget of highly specialized hospitals is separate from the budget of ASL. This creates problems in the adoption of new technologies. The
cost for expensive drugs, for instance, oncological treatments (and expensive
medical devices used for neurological or cardiac diseases) are balanced by a
better quality of life, reduction of social costs, and reduction of other pharmaceutical
costs. Unfortunately, the costs of these new technologies are not
entirely covered by the DRG fee.
The majority of the admissions are covered by highly specialized hospitals
funded by DRG. T This can cause a problem because many hospitals
would not be very interested in introducing this new technology; each
treated patient causes an economic loss for the hospital.In some cases the hospitals ask the ASL for additional reimbursement
for very expensive drugs or medical
devices. Figure 3 shows some examples of
costs of antitumoral treatments compared
with the DRG fee. As you can see, if you treat
one patient with trastuzumab for metastatic
breast cancer, excluding staff, you spend €
2,000. The DRG is €
1,800, so this means for
each patient treated with trastuzumab, the
hospital has a loss of Ű 200. And when you
consider rituximab, for a non-Hodgkin’s lymphoma,
the hospital has a loss of € 3,000.
This is a problem because many hospitals
have difficulties adopting these new
technologies.
 Health Technology
Assessment
Health technology assessment is important at
a national and local level. At the national level,
it has been conducted by the Italian national
committee for medical devices. This committee
started its activities two years ago and was
in charge of conducting many activities
involving the classification of MDs into homogeneous
categories; formulary decisions;
reference pricing; technology assessment;
vigilance; and clinical trials. I will focus on
technology assessment. Figure 4 shows the
expenditure for medical devices in Italy. In
2004, Italy spent € 5 million for medical
devices. This expenditure is higher than the
expenditure for drugs which was € 3 million.
Price fixing by the national government does
not exist in Italy. The prices are defined by the
industries and there are no committees which
define the reimbursement for medical devices,
as there is for drugs. For this reason, the
Committee decided to prepare information for
the people who must decide on the purchase
of new medical devices. A specific working
group was The aim was to prepare
technology assessment reports and
these reports are now available on the Health
Ministry’s website (www.ministerosalute.it/
dispositivi).
 Published reports and the ongoing
assessments include: thermography (published);
ICD (implantable cardiac defibrillators)
(published); drug eluting stent (published);
percutaneous vertebroplasty (approved by
CUD); baloon kyphoplasty for vertebral compression
fractures (approved by CUD); and
MD for urinary incontinence (ongoing assessment
including: sacral nerve stimulation; artificial
urinary sphincter; and sling (TVT tension
free vaginal tape, IVS intravaginal slingplasty)).
The Committee also defined a methodological
approach to calculate a suggested correct
price (Figure 5), which is principally based on
the economic estimation of the incremental
benefit. We started with the analysis of the
clinical trials, in order to estimate the incremental
clinical benefit. This incremental clinical
benefit was then converted into an economic
value according to a standard cost
effectiveness benchmark, which was the suggested
price. Obviously the proposal is only a
“suggested price”, because as previously
mentioned, in Italy there is no committee
which decides a national price. In addition, the
definition of a price should consider many
other factors among which are the costs sustained
by the manufactures for the research
and the price paid in other countries. As an
example, this methodology could be applied to
the implantable cardioverter defibrillators
(ICD).(Figure 6) [2].
If we consider the survival gain is mainly from
2 to 2.4 months per patient, and evaluate this
clinical benefit according to the benchmark of
€ 5000 for each gained month, the suggested
unit price is from € 10,000 to € 12,000.
If we compare this price with the current real
price, we see the average Italian price (€
15,000) is not very different. However, we
observe a great difference in the price paid
by the Italian hospitals. In fact, the price of a cardioverter defibrillator can vary from
€6,000 to € 23,000. This variability could
be reduced if the Minister of Health defined
the maximum price to be applied to the
hospitals.
The second example of technology assessment
was not performed by the National
Committee, but at the local level by the
Hospital Committee of Medical Devices of
the Verona Hospital, a 2000-bed teaching
hospital in the Veneto Region. I am a member
of the Committee, and we were asked to
evaluate whether or not to introduce a new
technique, Deep Brain Stimulation (DBS).
The essential steps that were taken in consideration
were: 1) the efficacy and safety
evidence; 2) the health economic studies
already published; and 3) the cost evaluation
at the local level. Regarding the clinical
evidence, there are many published clinical
trials but only few randomized clinical trials.
Regarding the second point, on the evaluation
of the health economic studies, a publication
from NICE was considered [3]. NICE
publishes interesting reports which, in my
opinion, should be analyzed before adopting
new technology. This review took into consideration
mainly three studies from the economic
point of view. The first study was a
cost-effectiveness analysis published in
Neurology 2001 (Figure 7) [4], and the
results suggest that Deep Brain Stimulation
may be cost effective if the quality of life after
the procedure is improved by 18% or more
compared to the best medical management.
 The second is a study conducted in Germany.
But the third study was the main one taken in
consideration by NICE and this study was
conducted in the United States (Figure 8) [5].
This study found that the medication costs
had significantly decreased by 32% from the
one-year preoperative costs and there was a
39% reduction after two years.This means
that even if we spend a lot of money for this
innovative technique we can save money previously
spent for medication, rehabilitation,
and social costs. The conclusion of NICE is this new technique
is important technique, but is very expensive,
so it should be limited to patients with moderate
to severe motor complications in the
latter stage of Parkinson’s disease who are
unresponsive to changes to medical therapy.
So, because of the high cost, NICE suggested
to limit the treatment only to some patients who will really benefit from this new technique.
This means it is very important to select the
patients and not to introduce this technique in
a broad way. Another study that was considered
by the Hospital Committee for Medical
Devices in Verona was a study published in
Pharmacoeconomics in 2002, which focuses on Italian costs (Figures 9 and 10) [
6]. The conclusions are the overall social monthly costs per
patient including direct and indirect medical costs, before the
implantation is € 3,800. After the implantation, the cost
decreased to € 2,700, with a saving of € 1,000 per month. This
means that a 17-month period is needed to cover the costs of DBS
(€ 20,000).
 The last step is the calculation of the costs at
the local level. The following is an example of
the calculation we did
(Figure 11). You can
see in the figure the overall cost of the procedure
in the Verona hospital (including the
cost of the device, staff, and hospitalization)
is € 28,000. The DRG reimbursement is
very low, only €
10,000. For this reason, the
Veneto Region decided to give an additional reimbursement of
€ 16,000 to the hospitals
which treat these patients. This way for each
patient we lose € 2,000 which can be considered
an acceptable loss.
Community Expenditure
In Italy, some expensive and innovative drugs
for chronic diseases (e.g. cancer, diabetes,
immunotherapy, HIV) can be prescribed only
by hospital specialists.
 Even if the drugs are prescribed by hospital
specialists, the costs are charged to the
community budget, but the Community
Health Unit (ASL) has little influence on the
prescriptions. Figure 12 shows an example
of these drugs. The expenditure for the drugs
used for rheumatoid arthritis was €
800,000
in 2003; € 1,300,000 in 2004; and the projection
for 2005 is € 2 million. So, there is a
big expenditure increase for these drugs; an
increase of 150%. These
drugs can be prescribed
only by hospital specialists but,
because they are for chronic therapy, the
expenditure is charged to the community.
Another interesting example is the drugs
used for the treatment of breast cancer.
Figure 13 shows the expenditure of the Local
Health Units in Verona (ASL 20). In 2004, the
ASL spent € 1,500,000 for these drugs: this
is because 70% of the women were treated
with the less expensive drug Tamoxifen
(Figure 14). The aromatase inhibitors are more expensive. We tried to imagine what
could happen if all the oncologists decided to
use the more expensive drugs. If 30% of the
women were treated with aromatase
inhibitors, we would spend € 1,500,000, and
if the oncologists decided to use the new
drugs in 90% of the patients, we would
spend € 4 million. These drugs are prescribed
by hospital specialists, so the ASL
doesn’t have any possibility to steer the prescriptors
towards less expensive treatments.
 The last example I will present is the case of
off-label treatments. We know that many
patients get benefit from off-label therapies.
Hospital doctors start these treatments after
the failure with conventional therapies but in
Italy, after the patient is discharged, the general
practitioner cannot continue the therapy.
The drugs in some cases are either very
expensive or not found in the community
pharmacy and must be paid for by the
patients. Only the ASLs can decide if and
how to reimburse the pateints for the therapies.
So, there is a discontinuity of care
because the patients leave the hospital with
this therapy and it is not well defined whether
ASL will reimburse the continuation of the
therapy or not.
Figure 15 shows some examples of treatments
that were prescribed in 2004 and 2005
by doctors of the Verona teaching hospital;
these are chronic treatments which need to
be continued outside the hospital.
Conclusion
It
would be very important for the Hospital Managers and Community
(ASL) managers to define together the pharmaceutical budget for
Hospitals and for Health Community Units. This process should
consider the high cost of new technologies used in hospitals and
are not covered by the DRG fee can save money for the Community
Unit. They should also consider the cost for drugs prescribed by
the hospital specialists for chronic diseases. ASLs should have the possibility to monitor
the appropriateness of the technologies
(drug or medical devices) which are set-up
inside the hospitals but payed by the ASL. Hospital and Community stakeholders
should share an annual planning for care and for new medical
technologies. In fact, as you have already seen, DBS is s a big
expenditure for the Hospitals, but can save money for the
Community Health Unit. And the last, but not less important
topic, is the reimbursement policy for the off label use should
be the same in the hospital and in the community. We would avoid
starting treatments in hospitals which cannot be continued in
the community.
REFERENCES
1. Mapelli V. Il
Sistema Sanitario Italiano, 1999.
2. Rahimtoola SH. Food for afterthought: reflections from two
implantable cardioverter defibrillator trials. Arch Intern Med
2004;164:1835-9.
3. National Collaborating Centre for Chronic Conditions, Royal
College of Physicians. Full version of NICE Guideline: DRAFT
August 2005. Parkinson’s Disease: Diagnosis and Management in
Primary and Secondary Care.
http://www.nice.org.uk/pdf/PD_Fullguideline_0805.pdf
4. Tomaszewski KJ, Holloway RD. Deep brain stimulation in the
treatment of Parkinson’s disease. Neurology 2001;57:663-71.
5. Charles PD, Padalyia BB, Newmann WJ, et al. Deep brain
stimulation of the subthalamic nucleus reduces antiparkonsonian
medication costs. Parkinsonism Relat Disord 2004;10:475-9.
6. Gerzeli S, Cavallo MC, Caprari F, et al. Analysis of deep
brain stimulation (DBS) costs: an observational study of Italian
patients. Pharmacoeconomics - Italian Research Articles 2002;
4:65-79.
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