Health economic evaluation throughout the ages

Prof Philip Clarke,School of Population Health University of Melbourne

Seminar, OHE Wednesday 21 September 2016

Scope

• While acknowledging earlier work (Petty, Smith) will focus on:– Victorian era 1860-1900 – Early 20th Century work (mainly from the US)– Post-war and development of modern

economic evaluation– End in late 1960s

• Product of several years part-time research using a variety of data-bases – google scholar, JSTOR, Trove et.al.

“Value of human life”

• Lot of discussion in the Victorian Era about the value of life in the context of:– Taking life (what crimes should receive

capital punishment)– Loss of life natural disasters and war– Reductions in mortality from advances

such as improvements to the water supply• Several attempts to place empirical

value on life and use it economic evaluation

Anonymous 1865 (Saturday Review)

• In 1865, in Mobile, Alabama, in the Southern United States, an ordnance depot exploded, killing some 300 persons. 

“If a similar catastrophe had happened, say, in Oxford.. we should not have heard the last of it for weeks. The intrinsic value of Oxford, both in an architectural point of view and in the quality of its inhabitants, is doubtless greater than that of Mobile…”

Anonymous 1871 (Saturday Review)

Goes on to argue that value we place on life maybe too great largely on Malthusian grounds.

William Farr (1807-83)

• British epidemiologist and founder of medical statistics

• Worked on the census and used a “Babbage” difference engine to develop a life table based on census data

• Book on vital statistics contains detailed estimates of the value of life based on difference between wages and living costs

Farr’s estimates of the value of life

So life was worth £243

First cost benefit analysis: Of the 1875 Public Health Act aimed at preventing cholera

Publication of the American Statistical Association 1891

Pub

lic H

ealth

Act

Value of life £175 ( Estimated by Farr)

Present value £80K-280K

Total cost: $US583million(1891 Est)

Total Benefits:850 thousand lives saved worth $US650million (1891 Est)

Victorian era health economic evaluation shows cleaning up the water supply was worth the money, but only just!

Doctors considering cost as well as outcomes

Published in Science in 1881“The trouble and cost of making fresh gas every few days has caused the great abandonment of its use.” “Small cylinders amounts [cost] thirty-five cents for each administration“taking into account the value of human life, nitrous oxide should stand at the head of all anesthetics, and its practical use be encouraged instead of ether and chloroform. ”

First Cost effectiveness analysis, BMJ 1899

Can find no google scholar citations

Notes that Bengal has the lowest cost per treated case.Indicate that this maybe due to licensing of inoculators.

Economist efforts to understand infant mortality

Causes of infant mortality have long been of interest to economists:• Jevons argued a key factor is women from lower

income households working in factories (Jevons 1880). • Mayo Smith in a publication of AEA in 1888:

“So, when in Bavaria we find that the infant mortality is highest in those counties where the mothers are accustomed to work in the field or the factory and feed the children on artificially prepared food, we have the cause of the increased mortality.” (p. 248)

• Bowley on correlation in infant mortality:

Statistical techniques used to tackle these issues (circa 1912)

Charles Value Chapin (1856-1941)

• Medical doctor and public health researcher• Superintendent of health for Providence, Rhode Island between 1884 and 1932. • Under took one of the first studies to link

census & tax data to mortality (1924)• Publish a paper on the Value of life in

1913, which argues the value of life must move beyond human capital

JAMA 1917

JAMA 1917; 2 citations

• “Sometimes a city councilman, getting his knowledge from the syndicated science of his Sunday paper, assumes to tell how the health department should be run.”

• “Again, it may be the new health officer himself who, in order to justify the political overturn of his office, seeks to reorganize the health work of his city after a few hours' study of some passing book on "sanitation.“”

• “Rare, indeed, is it that competent advisers are called in to plan a health department so as to utilize most effectively the best scientific knowledge of how to preserve the health of the city…”

Then and now?

Chapin’s ideal allocation of health resources

• Contains the insight that if you started again you may end up with a different mix of expenditure

• Tries to constructs a “league table” to compare effectiveness relative to spending across a wide range of interventions

HealHealth economics in the age of scarcity

Edgar Sydenstricker (1881-1936)

• Born in 1881 in China (moved to the US in 1896).

• Son of missionary parents and brother of Perl Buck

• Graduated from Washington and Lee University, Virginia.

• Undertook research Fellowship in Economics from the University of Chicago 1908.

• Worked as journalist, then for United States Immigration Commission and the United States Commission on Industrial Relations (interested in wages, working conditions, and scales of living of industrial workers).

Career in public health research

• In 1915, he was appointed the first statistician in the United States Public Health Service

• While at the Public Health Service he worked on a broad range of issues:– Health inequalities;– Health insurance;– Measurement of morbidity;– Evaluation of public health interventions;

• In 1923 took leave of absence for one year to organize the Epidemiological Service of the Health Organization of the League of Nations.

• In 1930s had input into proposal for development of national health insurance in the United States

• Was involved in the development of the first US National Health Survey.

• Died of a stroke in1936.

Academic productivity

• Prolific publication output (120 over his career including several books)

• Mainly published in public health journals and in books.

• Several papers in statistical and economic journals.

1914

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1918

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1936

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Publication Counts by Year

Empirical work involving measures of morbidity

From cotton mills work Depression as a natural experiment of effect of income change on health

Evaluation of Public Health Interventions

• Depression in 1930 sawdramatic increase in unemployment & poverty in USA• Argued for the expansion of public health

measures in 1930s in response to the depression

• These were included in 1935 Social Security Act, but no funds appropriated

• Argued strongly for the funds ($13.5 million), but for an additional $2 million for evaluation of the most effective interventions

Contributions to economic evaluation

The Milbank Memorial Fund Quarterly, 1936, 2 citations

Importance of measure outcomes

• Agued that evaluation of public health should be based on outcomes, not inputs or process measures;

Ways of measuring outputs via observation

• Detailed discussions of how to measure public health interventions

• Does not propose trials, but believe in the use of controls to isolate the effects

• See evaluation of TBintervention (left)

Using time trends in Deaths

Dorfman 1943 screening for syphilis

• In WWII the US army wanted to screen recruits for syphilis

• Screening was done by a blood test – so two options for efficient screening :– Screen blood of each individual– Pool blood across individuals and then re-test

each individual if a group is found to test positive

– Optimization problem which will depend on the prevalence of syphilis

• Widely cited paper from 1943 (850 citations, but not that well known by health economists).

Lower the prevalence- larger the groups

What scope is there for improving the efficiency of any type of medical screening by group testing?

Health Economics post-war

• Two traditions:– Operations researchers & economists mainly

working for the US military – Economist working mainly on public health

problems (e.g. for newly formed WHO)• Quite separate traditions – with little cross

over during the 1950s• Operations research has its origin in the

air defense of Britain, taken up by US military during WW2 & afterward.

Origins of cost-effectiveness

Outcomes, here are deaths rather than lives saved, but the analysis is very much the same

Efficiently saving lives…

US defense secretary who was appointed by Kennedy advocated using operations research to improve efficiency of the US military

Inspired one of the first CEAs to look at cost per life year….

US Military commissioned at least two set of contractors (including RTI and Stanford Research Institute to conduct evaluations )Even by todays standards they are sophisticated involving:

• A Cost-effectiveness plane • Consideration of parametric

uncertainty • Computer simulation • Wide range of sensitivity analyses

Search into the most cost-effective way to survive a nuclear war

“Public health” in the time of nuclear war

A US Military commissioned study into the most cost-effective ways to get people into fallout sheltersFirst Cost-effectiveness analysis to use lives saved as an outcome

Stanford Research Institute, Nov 1965

Simulating the effects of nuclear war

Public health tradition: Gunnar Myrdal

• Provided advice to the WHO on how to value health program particularly in developing countries in 1952.

• Argued that its hard to measure the economic value of programs in developing countries

• Argued that cost and benefits are likely to be different in short run and very much linked to more general development.

Selma J. Mushkin (1913-1979)

• Mushkin received her BA in economics from Brooklyn College in 1934, MA and PhD follow.

• Worked on a wide range of health and other public sector issues

• Worked between academia and public service

Public Health Reports, 1958, 103 citations

Towards a definition of Health Economics

One of first papers to try to define health economics as a discipline Examined what makes health different, focusing on why we simply cannot rely on consumer preferences including:• Externalities (influenza vaccine) • Public goods Fluoridation of water• Societal need to care (e.g. looking after the mentally

ill)• Interestingly cites, Smith and Farr, but not Sydenstriker

Herbert Klarman 1917-1999

• Born in Chmielnik, Polandemigrated in 1929 to New York• Degree in economics from Columbia University in

1939• Professor of public health administration from

1962 to 1969 at John Hopkins• Undertook several economic evaluations including

the first to use of a QALY• Wrote first Health Economics text book (1965)

Medical Care 1968, 360 citations

• Attempts to value renal dialysis

• Uses a combination of lifetable methods as well as first known attempt to adjust life years for quality of life

• Fanshel & Bush develop the theoretical underpinning later

Before the decade was out we have the QALY

Contains: Time-trade-offPerson trade-offPaired comparisonsNotion of health status index

Oh to be in England?

Hinchliffe Committee which included Maurice Kendall (the statistician) recommended: (i) information on "economy in prescribing" to be included in the medical curriculum;(ii) need for postgraduate instruction of GPs in pharmacology to enable them to judge the manufacturers claims;(iii) more clinical trials and to publish the results in an independent journal;(iv) economic and social aspects of the NHS to be researched (in and outside of government);(v) the appoint a permanent expert committee which should include an economist.

Martin Feldstein contribution to the NHS (1939 - )

Oxford Economic Papers,1963

Impact of the Office of Health Economics- first research paper

Our Scientific Editor Financial Times (London, England) , Thursday, February 25, 1965, Issue 23,554, p.16 (147867 words).

Compared with Dr Evil’s one million $ ransom – drug development was expensive!

OHE focusing on obesity back in the 60s

Fishlock, David Financial Times (London, England) , Wednesday, April 2, 1969, Issue 24,813, p.17 (200826 words). From The Financial Times Historical Archive, 1888-2010

Back in 60s the OHE was “Health Economics”

My top five economic evaluations

Cheat slightly and suggest everyone should read Selma Muskin’s Towards a definition of health economics anyway…1.Gary N. Calkins, “Some Results of Sanitary Legislation in England Since 1875”, Publications of the American Statistical Association, Vol. 2, No. 14 (Jun., 1891), pp.297-303 5 citations2.Charles V. Chapin, “The relative values of public health procedures”, JAMA July 4 1917 ;LXIX(2):90-95. 2 citations3.Edgar Sydenstricker, “Economy in Public Health”,The Milbank Memorial Fund Quarterly,Vol. 14, No. 1 (Jan., 1936), pp. 3-12 2 citations4.Robert Dorfman “The Detection of Defective Members of Large Populations” Ann. Math. Statist. Volume 14, Number 4 (1943), 436-440 851 citations5. Herbert E. Klarman, John O'S. Francis and Gerald D. Rosenthal, Cost Effectiveness Analysis Applied to the Treatment of Chronic Renal Disease, Medical Care, Vol. 6, No. 1 (Jan. - Feb., 1968), pp. 48-54 314 citations

What would I take to my desert Island?

The end of the beginning…