Health-care expenditures are major costs for individuals, societies and governments. Policymakers need to decide how to obtain the most effective health-care interventions and technologies for the money spent. The recommendations that they make will affect the public, individual patients, healthcare providers, the vaccine manufacturers, and health insurers.
Of course, each of these stake holder groups considers expenses and outcomes of interventions very differently. Public health officials often consider the expense and value of a healthcare intervention—such as a new vaccine—in terms of its value to society. That is, all costs and benefits, regardless as to who pays the costs and who obtains the benefit.
There are three main methods used to assess the economics of a health care intervention designed to control and prevent a disease: cost-benefit analysis (CBA), cost-effectiveness analysis (CEA), and cost-utility analysis (CUA). (1) Public health officials and national advisory groups often use these types of analyses to help them decide strategies for vaccine use.
Cost-benefit analyses include all the costs (See table below) and benefits that might arise from an immunization program up to a particular time. Because a dollar now is likely to be worth less in the future, these expected costs and benefits are discounted over time. If the total discounted benefits are greater than the total discounted costs, the program is said to have a positive net present value (NPV).
CBA may be useful in these cases:
In a CBA all costs and benefits must be expressed in monetary terms (for example, dollars), including the value of human lives lost or saved as a result of vaccination. An example of a CBA was a study that examined the costs and benefits of routinely recommending vaccinating first-year college students who lived in dormitories against meningococcal disease. (2)
Cost effectiveness analyses take into account the costs and savings that result from an immunization program using a predefined unit of health outcome—for example, lives saved or cases of the disease avoided.
Economists calculate the total costs of an immunization program and then divide them by the number of lives saved or cases of the disease avoided. The result of these calculations shows, for example, how many dollars were saved or spent per case prevented.
CEA are best used when comparing two or more interventions that have the same health outcome in the same population—for example, vaccination is more cost-effective than using antiviral drugs to prevent a case of influenza in people 65 years of age or older. (1)
Another example is the pneumococcal conjugate vaccine (PCV7). When PCV7 was first licensed in 2000, a cost-effectiveness analysis was conducted to evaluate the projected health and economic impact of the vaccine. (3) It was projected that vaccination of healthy infants with PCV7 would prevent more than 12,000 cases of meningitis and bloodstream infection, 53,000 cases of pneumonia, 1 million episodes of otitis media, and 116 deaths due to pneumococcal infection. The analysis showed that, before accounting for vaccine costs, the vaccination program would save $342 million in medical expenses and $415 million for work-loss and other costs. That meant that the program had the potential to be cost-effective. The cost of the vaccine and its administration, however, would determine if it would be cost saving or not to society.
Assessing survival from disease, or cases prevented, does not fully measure gains in health. Cost-utility analyses assess health outcomes in terms of survival and health-related quality of life. For example, when assessing what a new vaccine program might accomplish it is important to also consider the number of years of life that would have been lost without the vaccine for those who died as well as also the quality of life of the survivors over time, for example, if a hand had needed to be amputated.
A CUA uses a non-monetary unit of valuation, usually the Quality-adjusted life year (QALY). A QALY takes into account both quantity and the quality of life saved during the remaining life years generated by the health care intervention. In a QALY, a year of perfect health is worth 1; a year of less than perfect health life expectancy is worth less than 1. Death is equivalent to 0; however, some health states may be considered worse than death and could have a negative value. (4)
The result of a CUA may state, for example, how many dollars were saved or spent per QALY gained.
A cost-utility analysis of influenza vaccination showed that among persons 65 years of age or more, vaccination resulted in a net savings per QALY gained whereas each QALY gained among younger age groups would cost $23--$256. (5)
Similarly the relative costs/QALY saved for different types of health interventions can be assessed—such as mammograms to detect early breast cancer or bicycle helmets to prevent head trauma.
Understanding Health Economics
Understanding health economics helps one understand how health strategies are developed. For example, for some time CDC recommended that children under 5 years of age who lived in certain areas of the United States where the incidence of the disease is higher than the national average be immunized against hepatitis A—even though hepatitis A usually causes no symptoms in young children. (6) However, both parents and the community benefit because vaccinating children might protect them at a later age, when their risk of having symptomatic hepatitis A is greater. Immunizing young children against hepatitis A also reduces the transmission to older siblings, parents, and caregivers.
Economic analyses also have limitations. For instance, economic analyses that examine the benefits to society anticipate the economic impact of having an immunization program—or not having the program—on society as a whole. However, they do not measure the impact of the program on individuals, families, single communities, healthcare providers, insurance companies, and public health agencies, among others.
There are examples, however, were more than one perspective is examined. For example, in a study looking at the economics of vaccinating restaurant workers against Hepatitis A, it was demonstrated that from both the societal perspective and from the perspective of restaurant owners such a program would not be costs savings. (7) Such multiple-perspective studies can help policy makers and the public better understand who will pay and who will benefit from immunizations.
1. Meltzer MI (2001). Introduction to health economics for physicians. The Lancet, 358(9286): 993-998.
2. Scott RD, Meltzer MI, Erickson LJ, et al (2002). Vaccinating first-year college students living in dormitories for Meningococcal disease: an economic analysis. American Journal of Preventive Medicine, 23(2): 98-105.
3. Lieu TA, Ray GT, Black SB, et al (2000). Projected Cost-effectiveness of Pneumococcal Conjugate Vaccination of Healthy Infants and Young Children. JAMA, 283: 1460-1468
6. Jacobs RJ, Greenberg DP, Koff RS, et al (2003). Regional variation in the cost effectiveness of childhood hepatitis A immunization. The Pediatric Infectious Disease Journal, 22(10): 904-914
7. Meltzer MI, Shapiro CN, Mast EE, Arcari C (2001). The economics of vaccinating restaurant foodhandlers against Hepatitis A. Vaccine, 19: 2138-2145
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