Question

A new disease called Sudden Adult Disability Syndrome (SADS) has become the most common cause of death among previously health 18-24 year olds. The etiology of SADS is unknown but is thought to be infectious. SADS is a disease of sudden onset that without treatment produces progressive weakness, slow mental deterioration and death within a year 50% of the time. The other 50% of the individuals who develop SADS make a spontaneous full recovery without any treatment.

There are three known treatment for SADS

• Ordinary Knowledge (O.K.) - the conventional treatment (i.e. standard treatment)
• Live-Better
• Live-Longer

The probabilities of cure and side effect have been extensively investigated. Cost of the treatments have been calculated from a social perspective and thus include the costs regardless of who incurs the costs or pays the bills.

Benefits and Harms

• Ordinary Knowledge (O.K.) results in a 80% probability of cure without side effects. The remaining 20% die of SADS.
• Live-Better results in an 85% probability of cure. There are no known side effects. The remaining 15% die from SADS
• Live-Longer results in an 80% probability of cure. However, 10% of those who take the treatment become totally and permanently blind in both eyes. The remaining 10% die of SADS.

Costs

• OK cost $100,000 per use and can be delivered entirely as an outpatient.
• Live-Better costs $400,000 per use. Live-Better is an expensive drug that can be delivered during a one day stay in the hospital. The hospital is reimbursed only for the hospital stay and at a lower than average daily rate.
• Live-Longer costs $220,000 per use. Live-Longer is an intensive inpatient treatment that requires expensive equipment and extensive training. Hospitals receive reimbursement that covers the average cost of delivering Live-Longer plus an above average payment for the required week of hospitalization

Answer the following questions

1. Draw a decision tree indicating the potential outcomes for each of the possible treatments i.e. O.K. therapy, Live-Better and Live-Longer and indicate the probability of occurrence of each of the potential outcomes. Assume that the outcomes are mutually exclusive.

2. Assume cure brings your utility to full health i.e. 1.0. Use the utility that you personally have chosen for total and permanent blindness and calculate your overall expected utilities for each of the possible treatments. Indicate which is your personal preferred treatment based upon the decision tree. Explain.

3. Again calculate the expected utilities but this time assume that the utility of total and permanent blindness is .5. Which is the preferred treatment? What other factors would you consider in making the decision? Explain

4. Assume that the life-expectancy for the average life saved is 60 years and the utility of total and permanent blindness is .5. Assume that blindness does not alter life expectancy. Calculate the additional or incremental QALYs for Live-Better and also for Live-Longer compared to OK treatment. Show your calculations. Interpret the meaning of these differences in QALYs

5. Calculate the incremental cost-effectiveness ratios that is the cost per additional or incremental QALYs produced compared to OK treatment for Live-Better and also for Live-Longer. Use the information on utility and life expectancy from question #4. Assume the cost of OK treatment is $100,000 per use, the cost of Live-Better is $400,000 per use and the cost of Live-Longer is $220,000 per use. Based upon these incremental cost effectiveness ratios are either Live-Better and/or Live-Longer considered cost-effective in the United States? Explain

6. Now redo your calculations performing a sensitivity analysis of the incremental cost-effectiveness ratios of Live-Better and Live-Longer compared to OK treatment assuming that the utility of blindness is 0.20 instead of 0.50. In this sensitivity analysis is the decision sensitive to the utility placed on blindness?

7. Imagine that you are

• A hospital administrator who has empty beds in your hospital
• A patient with financial resources to pay the cost of any of the treatments whose utility for blindness is 0.20.
• A public health official responsible for paying for the care of SADS who has concerns that SADS may be an infectious disease

Which of the treatment would you favor for each of the above?- defend your choice

Answer 1