Economic Evaluation in Genomic and Precision Medicine

By Academic Press

Economic Evaluation in Genomic and Precision Medicine provides an in-depth examination of essential concepts, protocols and applications of economic evaluation in genomic and precision medicine. Contributions from leading international medical geneticists and health economists compile new ways to effectively assess the costs and outcomes of different genomic care pathways, implement cost-effective medical interventions, and enhance the value of genomic and precision healthcare. Foundational chapters and discipline-specific case studies cover topics ranging from the economic analysis of genomic trial design, to health technology assessment of next-generation sequencing, ethical aspects, economic policy in genomic medicine, and pricing and reimbursement in clinical genomics.

• Introduces clinicians, researchers and students to essential concepts, protocols and applications of economic evaluation in genomic and precision medicine
• Demonstrates, through foundational chapters and discipline-specific case studies, how to assess the relative costs and outcomes of different genomic care pathways and implement cost-effective budgets
• Establishes clear precedents on how genomic technologies can be leveraged to simultaneously reduce costs and enhance the value of healthcare
• Features contributions from leading international medical geneticists and health economists that are actively evolved in economic assessments of genomic and precision medicine

• Language: English
• Publisher: Academic Press
• Release date: Apr 19, 2023
• ISBN: 9780128133941

Book preview

Preface

We are delighted to deliver to the scientific community the textbook Economic Evaluation in Genomic and Precision Medicine. This is the second book on this topic published by Elsevier, following the successful launch of a similar title in 2015 by Fragoulakis, Mitropoulou, Williams, and Patrinos that was well received by the international scientific community.

Economic Evaluation in Genomic and Precision Medicine is a fundamental new discipline that aims to facilitate the integration of personalized medicine itnerventions into mainstream medical practice. This textbook provides an in-depth examination of essential concepts, protocols, and applications of economic evaluation in genomic and precision medicine. The 10 chapters in this textbook have been contributed by leading international human geneticists and health economists who are actively involved in economic assessment of genomic and precision medicine. These chapters discuss how to effectively assess the costs and outcomes of different genomic care pathways, implement cost-effective genomic interventions, and generally enhance the value of genomic and precision health care.

Foundational chapters and discipline-specific case studies cover topics ranging from economic analysis of genomic trial design to health technology assessment of next-generation sequencing, ethical aspects, economic policy in genomic medicine, and pricing and reimbursement in clinical genomics. Across these chapters, we provide multiple examples of how genomic technologies can be leveraged to simultaneously reduce costs and enhance the value of health care. As such, this textbook will allow health economists to learn to apply sound economic analysis to precision medicine, and healthcare professionals and clinical researchers will discover methods to better assess the value of genomic diagnostics and improve clinical genomic practice and drug discovery. The textbook also provides in-depth course material for professional, graduate, and undergraduate courses, examining innovative applications of economic evaluation in diverse clinical settings.

Constructive comments and feedback from colleagues and attentive readers would be gratefully received and will contribute to improving the contents of this book in future editions. We are grateful to the editors Peter Linsley and Kristi Anderson at Elsevier, who helped us in close collaboration to overcome encountered difficulties. We also express our gratitude to all contributors for delivering outstanding compilations that summarize their experience and many years of hard work in their field of research. We are indebted to Mark Rogers, who was responsible for the design and the cover of this book, and to the copy editor, who refined the final manuscript prior to its publication.

Last, but not least, we wish to cordially thank our families for their patience and continuous support, from whom we have taken a considerable amount of time to devote to this project.

Christina Mitropoulou, The Golden Helix Foundation, London, United Kingdom, Department of Genetics and Genomics, College of Medicine and Health Sciences, United Arab Emirates University, Al-Ain, United Arab Emirates

Sarah Wordsworth, Health Economics Research Centre, Nuffield Department of Population Health, University of Oxford, Oxford, United Kingdom, Oxford National Institute for Health Research Biomedical Research Centre, Oxford, United Kingdom

James Buchanan, Health Economics Research Centre, Nuffield Department of Population Health, University of Oxford, Oxford, United Kingdom, Oxford National Institute for Health Research Biomedical Research Centre, Oxford, United Kingdom

George P. Patrinos, Department of Pharmacy, School of Health Sciences, University of Patras, Patras, Greece, Department of Genetics and Genomics, College of Medicine and Health Sciences, United Arab Emirates University, Al-Ain, United Arab Emirates, Zayed Center of Health Sciences, United Arab Emirates University, Al-Ain, United Arab Emirates

Chapter 1: Introduction to economic evaluation in health sciences

Christina Mitropouloua,b; Vasileios Fragoulakisa; James Buchananc,d; Sarah Wordsworthc,d; George P. Patrinosb,e,f    a The Golden Helix Foundation, London, United Kingdom

b Department of Genetics and Genomics, College of Medicine and Health Sciences, United Arab Emirates University, Al-Ain, United Arab Emirates

c Health Economics Research Centre, Nuffield Department of Population Health, University of Oxford, Oxford, United Kingdom

d Oxford National Institute for Health Research Biomedical Research Centre, Oxford, United Kingdom

e Department of Pharmacy, School of Health Sciences, University of Patras, Patras, Greece

f Zayed Center of Health Sciences, United Arab Emirates University, Al-Ain, United Arab Emirates

Abstract

Economics refers to the social science that deals with the production, distribution, and consumption of goods and services. Health economics, in particular, deals with the choices of society regarding the healthcare sector. This chapter introduces the notions of economics and health economics, the latter being the primary focus of this book. We introduce the idea that individuals and societies must choose how to allocate scarce resources among competing alternative uses, describe key concepts such as budget constraints, demand, indifference curves, utility, opportunity costs, and social welfare, and provide an overview of an important resource allocation tool, namely, economic evaluation. Finally, we analyze the types of economic evaluation based on the notions of welfarism and extra-welfarism.

Keywords

Economics; Health economics; Utility; Budget constraint; Social welfare; Economic evaluation; Welfarism

1.1: Introduction

Economics is the social science that deals with the production, distribution and consumption of goods and services. This concept refers to a set of interdependent social activities through which people produce, share, and consume products, either individually or collectively, to meet their needs, improve their living conditions, and gain prosperity [1,2].

According to this definition, economics is a social science. Social is the term that refers to society, its institutions, and its members, as well as the relationships between these groups. Hence, economics examines the specific economic relationships and actions of social groups and individuals as they take place in a society at a particular time. Economics is also related to politics. Politics and economics have always been substantially and historically interwoven, since there can be no economic activity without an organized system for its rules of conduct that is implemented by a central authority.

While economics deals with the production of goods, it also describes the processes and methods by which raw materials and technical expertise are transformed into useful products ready for exchange. Economics is therefore also technical in character. At the same time, the concept of distribution is related to the way that people acquire the legal right to own the produced goods and, to a certain extent, economics reflects the degree of social consensus regarding the equalization of wealth and societal preferences related to social justice and ethics. In addition, the concept of consumption involves the notion of subjective preference of one good over another; therefore economic approaches can be used to define dynamic models of human behavior in the context of economic activity.

Economics, as a discipline, describes a way of thinking about situations and problems. Economists derive economic principles, which can be used to formulate policies to solve complex economic problems. Since, as individuals and as a society, we do not have enough goods, services, or economic resources to do or have everything we want, we have to make choices. Which of our needs do we satisfy, and which ones do we leave unsatisfied? By making these choices we are rationing our limited, scarce resources among the infinite variety of competing goods and activities. As individuals, we have to make choices about what types and amounts of goods and services we will purchase, and how we will allocate our time. As a society, we have to make choices about who will receive what types and amounts of goods and services, and how those goods and services will be produced and exchanged.

Economics is the science of constant choices about what should be produced and by whom, how it will be produced, how it will be distributed among people, and who will consume it now and in the future.

In this book, we focus on a particular field within economics called health economics and specifically a subset of this field: economic evaluation of personalized healthcare. Health economics is concerned with the choices of society regarding the healthcare sector [3]. Which health services should we produce? Who will pay for them? The government or the individual? Who is entitled to health care? Those who pay taxes or the unemployed as well? Who will consume health services and how will consumption be prioritized? Who will produce health services? The government or the private sector? These are just a few of the thousands of questions that could be raised in the subject. In this book we focus specifically on the economic evaluation of health services, which is an approach that combines methods from classical economics, mathematics, statistics, and health sciences. Economic evaluations generate evidence on the costs and benefits of new health technologies compared to existing practice, and this evidence can be used to determine which technologies should be provided by a healthcare system. For example, economic evaluations could produce evidence on whether it is socially worthwhile for a healthcare system to offer genomic testing for specific types of patients, and what the benefits of testing might be for society or for insurance companies. We provide a more detailed introduction to economic evaluation in Section 1.3. In the following section, we introduce the reader to the key concepts of economics and consider how these concepts apply within the field of health economics.

1.2: Key economic concepts and terminology used in health economics

1.2.1: Budget constraints and demand

If an economic agent (e.g., a hospital, a private patient, an insurance fund, etc.) has a budget constraint, this means that they have a limited amount of money to invest, which restricts their consumption of goods and services. In the short term, an agent could borrow money to relax their budget constraint. However, in general, the level of production of an organization or a state defines their budget constraint, which then determines their maximum consumption. For example, wealthy countries with high incomes can invest in health infrastructure, while others with low productivity and incomes cannot invest at the same level. This is also true for private organizations and individuals; those who produce useful goods and are paid for them receive more resources and have more consumption opportunities.

Budget constraints should be expressed in real terms, that is, the number of real, natural products that can be purchased, rather than in abstract measurement units such as monetary units (e.g., Euros, dollars, etc.). In economic analyses carried out on health services, the conclusions are often different if the budget constraint changes. For example, an expensive new healthcare technology could be adopted (and reimbursed) by one resource-rich healthcare system, whereas a second healthcare system with fewer resources considers this technology to be prohibitively expensive. Economic analyses are therefore commonly reproduced in different countries and healthcare systems to reflect differences in disease management and budget constraints.

The concept of the budget constraint can be represented graphically. Let us assume that a society has only two commodities—apples and oranges—and 100 monetary units (e.g., dollars) that can be allocated between those two commodities. Let us further assume that apples cost 10 per unit and oranges cost 20 per unit. The following simple equation describes the budget constraint of this society:

si1_e

Given that the prices and the available income are known, there are several feasible combinations of those two goods that could be purchased. Fig. 1.1 describes the set of options available.

Fig. 1.1

Fig. 1.1 Budget constraint.

This set of options takes the form of a straight line. If the income of society increases (decreases) this line shifts outwards (inwards). If the relative prices of the goods change, the slope of this line would also change accordingly. If these hypothetical goods are replaced by other, realistic commodities (healthcare services, education, etc.), the budget constraint shows the rate of substitution when we want to choose between these commodities.

The preceding example illustrates a common scenario: often in life a choice must be made between two alternatives that both offer benefits. The concept of opportunity cost captures this idea in economics. This term reflects the fact that a person must give up some of one resource in order to get some of another, and is defined as "the amount that the person has to sacrifice in order to enjoy a certain quantity of some other good (opportunity). For example, it makes no sense to mention how valuable a project or product is if we do not consider which other projects will be canceled in its favor. The economic evaluation of health services is driven by this notion: new therapies can only be appropriately evaluated if the opportunity cost of alternative uses of this money is considered.

For instance, one aim of genomic medicine is to exploit an individual’s genomic profile to personalize therapeutic interventions, which has the potential to improve patient quality of life and reduce healthcare expenditure. To this end, and to maximize the outcome of the various genome-guided interventions, one needs to create an appropriate healthcare environment by identifying and adequately targeting evidence gaps for the importance of public health genomic priorities. This way not only will clinicians be persuaded for the need to implement genome-guided decision-making but also policymakers and regulators for the need to adopt and reimburse genomic tests from insurance funds and to prioritize research, development, and innovation in all genomic medicine disciplines. This process must be implemented in a way that provides an understanding of the relative benefits and drawbacks of alternative strategies (within and outside of the genomic sector) to ensure that patients receive not only effective but also economically efficient care and that healthcare systems remain sustainable in the future. It must, however, be noted that in the healthcare sector the role of competition amongst providers is contested and the debate about the potential role for competition is often