Impact of Sleep Disorders Clinical Economics and Sleep Disorders

Sleep. 20(10):829-834 © 1997 American Sleep Disorders Association and Sleep Research Society

Impact of Sleep Disorders

Clinical Economics and Sleep Disorders B. Crawford The Lewin Group. Cambridge. Massachusetts. U.S.A.

Summary: Sleep disorders have been shown to have substantial psychosocial sequelae with large economic impact. Numerous studies have examined the psychosocial aspects of sleep disorders; however, there has been little published on the associated economic implications. With increasing pressure to contain health care expenditures and provide value for the dollar, clinical economics is playing an important role in the decision-making process about alternative strategies within health care organizations. There are several strategies one may pursue to examine the economics of medical interventions. The predominant strategies include: cost identification, cost effectiveness, cost utility, and cost benefit. This review provides a basis for performing clinical economic evaluations in sleep disorders. Key Words: Sleep disorders-Economics-Costs.

As the cost of health care has increased rapidly in recent years, means of controlling costs without sacrificing safety, efficacy, or effectiveness have been sought. To address these concerns, certain techniques have been devised to demonstrate the value for money inherent in a particular therapy. These techniques, which are rooted in medical, epidemiological, economic, and outcomes research, seek to assess the cost of new therapies as well as their overall clinical and economic impact. There has been little published on the economic implications of sleep disorders; however, numerous studies have been published regarding the psychosocial aspects of sleep disorders. The economics of sleep disorders focuses on the consequences of sleep disorders and treatment. To date, only the economic effects of sleep-related accidents and direct medical costs have been examined. These studies estimated the cost of sleep disorders in 1990 at $15.9 billion for direct costs only (1) and between $43.15 billion and $56.02 billion in 1988 for accidents related to sleep disorders (2). Studies should examine the direct costs of treatment and the corresponding medical outcomes and indirect costs, not a single component. For example, it has been noted that despite compliance with treatment, there is residual sleepiness and symptomatology in patients Accepted for publication July 1997. Address correspondence and reprint requests to Bruce Crawford, M.A., The Lewin Group, Suite 1701, 101 Main Street, Cambridge, MA 02142, U.S.A.

with narcolepsy (3,4). The effects of this residual sleepiness have their own sequelae which may result in accidents at home, work, or while driving (5-7), and which have been associated with both property damage and early death (8,9). These costs are important to an understanding of the full economic impact of this disorder with respect to pharmaceutical treatment. The removal of residual sleepiness may reduce the number of accidents, decreasing the expenditures on medical care and on personal and family suffering associated with severe accidents.

WHY EXAMINE THE ECONOMICS? In many health care systems in developed countries, decision makers (clinicians, medical directors, health care policy makers) consider the actual economic impact, or "intrinsic economic value", of new products and programs in their selection of treatment and prevention strategies. The intrinsic value of a product is equivalent to its economic efficiency and takes into account the global and long-term economic impact (direct, indirect, and intangible costs) as well as the effectiveness (e.g. events avoided, change in patient quality of life) of the product. Clinical economics is playing an increasingly important role in the decision-making process associated with alternative strategies within health care organizations. There has been increasing pressure from employer groups for health care organizations to dem-

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on strate the value of the health care dollar being spent (10). Managed care organizations (MCOs) have responded with various mechanisms to restrain their costs in order to keep employer premiums and member copayments down and to stay competitive. They have used clinical economics in the development of practice guidelines and benefits packages and to determine formulary [or pharmacy and therapeutic (P&T)] listings. It has been reported that 65% of the health maintenance organizations with memberships of over 40,000 have implemented drug formularies to encourage costeffective prescriptions (11). Therefore, it is crucial for a new technology to understand where it may have additional economic impact compared with existing therapies.

ECONOMIC EVALUATIONS

Analysis strategies There are several strategies one may pursue to examine the economics of medical interventions. The predominant strategies, described below, are cost identification, cost effectiveness, cost utility, and cost benefit. These evaluations examine all costs associated with treatment, comorbid disorders, and outcomes of treatment (adverse events, additional treatments due to misdiagnosis). Costs, to be detailed later, include direct costs (medication, office visits), indirect costs (lost work time, personal time), and, ideally, intangible costs (pain, suffering) related to the disorder and that are accrued over the respective time period. Quality of life evaluations are also often invoked to augment the results of an economic evaluation.

Effectiveness

II

A

III

IV

Cost

FIG. 1. Graphically representing cost effectiveness combines the two independent variables in a meaningful way.

Cost-minimization analysis (CMA), or cost-cost, is used when the therapeutic interventions are assumed to have equal efficacy, and therefore only the cost of both the treatment and the corresponding outcomes are of concern. If there is a difference in efficacy or effectiveness, the comparison of therapies in terms of costs only may produce misleading information for decision makers. A less effective and less costly drug may truly cost more for a specified outcome once all comorbid and adverse events are accounted for. Cost-effectiveness analysis (CEA)

Cost-effectiveness analysis, the most common strategy, accounts for both the costs and outcomes of a medical therapy, unlike CMA, which only looks at the costs of the therapy. Effectiveness is reported as a single medical outcome or effect, such as cases identified, lives saved, or improvement in the Epworth sleepiness scale. This allows the comparison of costs associated with obtaining a specific outcome [see Rittenhouse (13) for further discussion]. A drawback associated Cost-identification analysis with CEA is that it does not explicitly assess whether Cost identification is the simplest strategy in eco- or not the costs are worth the outcomes obtained (14). Plotting the results of a cost-effectiveness analysis nomic evaluations. It can take the form of a "burden of illness" or "cost of illness" study or that of a cost will often provide some insight into the value of the minimization or cost-cost study. A burden of illness therapy under investigation. Figure 1 presents the two study identifies all costs associated with a disorder for independent variables combined in a meaningful way a particular time period, typically a year (prevalence regarding the choice between two medical technoloapproach), or over the lifetime of the individual, once gies. Because lower cost and improved outcomes are diagnosis has occurred (incidence approach). The in- preferred, any point to the upper left (quadrant I) of cidence approach, however, ignores any misdiagnosis the standard comparator, A, represents a dominant prior to the determination of the true diagnosis. The choice. In contrast, the points in quadrant IV are never prevalence approach may be modified to incorporate preferred. The points in quadrants II and III require these costs, using the incidence of diagnosis and mis- further information on the trade-off between costs and diagnosis. Burden of illness studies provide an overall outcomes in order to determine the preferred choice. cost estimate, allowing the identification of major cost For example, some combinations of increased cost and drivers. They may also be used as a baseline estimate increased effectiveness (quadrant II) may be preferred, for comparison against new medical treatments (12). whereas others may not be.

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CLINICAL ECONOMICS AND SLEEP DISORDERS

Another way to represent the outcomes of the costeffectiveness analysis is through the cost-effectiveness ratio. This ratio provides the costs associated with obtaining one unit of outcome, such as life year gained. The ratio may also be displayed as the incremental cost effectiveness. In other words, how much money will it cost to obtain one additional unit of outcome, relative to the baseline comparator? Cost-utility analysis (CUA)

Cost-utility analysis is a special form of cost effectiveness in which the effectiveness measure is expressed as quality adjusted life years (QALY) gained. A QALY is a life year that has been adjusted to reflect the health-related quality of the individual's life for the given year(s). The life year is discounted by utility weights representing the value an individual places on different states of health. This will simultaneously capture changes in mortality and morbidity and combine them into one measure [see Torrance (15) for further discussion]. Cost-utility analysis must focus on final outcomes, such as quality and quantity of life. The use of utilities affords the opportunity to measure patient preference for treatments and the effectiveness of a particular therapy, including side effects, duration of treatment, pain and suffering, and overall quality of life. For example, a program for the early identification of narcolepsy in school-aged children will result in appropriate treatment to relieve symptoms that may cause psychosocial problems in school (5). This may reduce comorbid disorders such as depression, reduce embarrassment, and improve the child's schooling (1), all of which have a positive impact on the patient's quality or utility of life. Simply stated, the more effective the treatment to relieve symptomatology, the happier the patient will be, and therefore that state is assigned a higher utility weight. Utilities can be derived through two main techniques: time trade off (TTO) or standard gamble (SG). The assessment of utilities through a TTO is commonly used, although theoretically such an assessment is inferior to the SG. In a TTO, individuals are asked how much time they would be willing to forgo to obtain a higher quality health state. The advantage of using a TTO is that it is measured in time, and thus bodes well with QALY s, adjustment of quality with time and outcomes in years. The assessment of utilities through a SG is theoretically preferred because it has its roots in economic utility theory, i.e. von Neuman-Morgernstern utility. In a SG, the individual is asked to choose a constant health state for X years or a health state that has a probability, p, of perfect health and (1-p) of death. The probability p is varied until the individual is in-

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different. However, the complexity of the formula and difficulties in patient understanding hamper the implementation of the SG. Cost-benefit analysis (CRA)

In cost-benefit analyses, unlike the previous strategies, both costs and benefits are measured and expressed in terms of monetary units. The results of CBA allow the comparison of therapeutic outcomes across the spectrum of disorders. This allows policy makers to ration fixed health care resources to produce the maximum benefit to society. A major limitation of CBA is the difficulty it entails in terms of evaluating indirect and intangible costs and benefits (12). Two methods for evaluating benefits in monetary units are predominantly used: human capital approach and willingness to pay approach [see 10hannesson and Weinstein (16) for further discussion]. These methods are described under cost evaluations. Quality of Life (QOL)

The assessment of changes in QOL from medical interventions is gaining widespread use. Quality of life assessments examine change in patient-perceived quality of life across a disorder pathway. Medical interventions that improve various domains of a patient's QOL should consider the use of QOL measurements. A QOL questionnaire is a multidimensional self-assessment of various aspects of the patient's psychological, social, and func;tional ability. It may be either disorder-specific or generic. A generic QOL questionnaire may be used "generically" for any disorder because it has been designed to examine the major domains of a patient's QOL. Many of these generic questionnaires have been validated for specific disorders. A disorderspecific QOL questionnaire is designed to be able to detect clinically relevant differences. Disorder-specific questionnaires were developed because specific disorders have specific outcomes that may not be captured with a generic QOL instrument. In sleep disorders, it-is important not only to capture the quality of the patient's sleep but also to understand how residual daytime sleepiness affects various QOL domains (e.g. social interaction, mood, concentration). A recent article by Idzikowski (17) reviewed the impact of insomnia from a variety of illnesses on QOL. Leger et al. (18) examined QOL in insomnia for the treatment of zopiclone. However, the measurement of QOL in itself is not sufficient. Results in changes in QOL must be correlated with meaningful clinical information to demonstrate what a significant change in QOL really means for the patient. Sleep, Vol. 20, No. 10, 1997

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Direct Medical Costs

Direct Non Medical Costs

Inpatient Care

• Specific Equipment

• Days Hospitalization

• Transportation

• Lab Tests

• Nursing

• Hospital Drugs

• Personnel

• Surgery/Procedures

• Specific Diet/Care

though they should be presented individually so that decision makers may examine the costs relevant to their perspectives. For example, an insurer will primarily be interested in the costs associated with medical treatment (i.e. direct medical costs) but may also be interested in the impact on employment as a marketing tool to employer groups.

• Consultations Indirect Costs Outl!atient Care

• Days Missed From Work

• Physician Consultations

• Under/Unemployment

• Outpatient Drugs

• Time Lost

• Lab Tests • ProcedureslTherapies

Intangible Costs • Pain/Suffering • Loss of ADLs SOCIETY

HEALTH INSURANCE

PATIENT

FIG. 2. The appropriate costs to include in any study are dependent upon the perspective. Three perspectives are shown, each with their own associated costs. Note that societal costs include both the health insurer and the patient perspectives.

Cost evaluations The compilation of cost estimates may be the most difficult task in an analysis. Costs should include not only those associated with the provision of a medical technology but also those that accrue as a result of changes in treatment and the trajectory of the disorder (19).

Costs need to be identified, measured, and valued for the perspective chosen. The perspective of an analysis should drive the cost identification. Perspectives for costs include society, payers (insurance companies), providers, or patients. It is important that all the resource utilization and changes in productivity be measured appropriately during the study. Upon completion of the study, one standardized cost should be associated with each resource. This will eliminate bias from geographical or site differences. Additionally, the true costs of producing an intervention are difficult to obtain (although cost-to-charge ratios (20) may be used), and they are irrelevant to the managed care organization. Straight charges are often used as a compromise. When possible, average reimbursed amounts for an MCO should be obtained, thereby addressing the relevant payer's need (20). The costs to be measured are direct, indirect, and intangible. Their association to perspectives is diagrammed in Fig. 2. Note that the societal view encompasses all costs, whereas the patient and insurance perspectives are not as inclusive. It is recommended, however, that all costs be included in any analysis, alSleep, Vol. 20, No. 10. 1997

Direct costs Direct costs consist of resource utilization attributable to the medical intervention under investigation. These include direct medical and direct nonmedical expenditures. Direct medical costs are those related to the therapy obtained, such as hospitalization, diagnostic tests, physician visits, pharmaceutical use, switching of therapies due to inefficiency, and treatment of adverse events cif therapy. Direct nonmedical costs include those paid by the patient, such as transportation and caregiver costs.

Indirect costs Indirect costs occur from loss of productivity (both work and leisure) and death. These costs may be substantial in patients with sleep disorders and should be addressed as completely as possible (1). Reduced productivity from excessive daytime sleepiness in a narcoleptic sample has been shown to be a significant problem (1,5). This reduction in productivity has a large financial impact on firms and on patients through loss of promotions or jobs. The loss of productivity is commonly measured by the human capital approach, in which the patient's wage is used to value lost productivity, including time removed from the workforce due to early death. The human capital method, although the most widely used, is economically flawed in that it does not incorporate the individual's valuation of his/her health and survival. Additionally, it biases disorders that affect a higher proportion of working people. The latter may be indirectly addressed through the use of an average wage or salary that is applied to all lost productivity, regardless of employment. Alternatively, productivity may be measured by the friction cost method (21). This method is more involved in that it accounts for the economic circumstances in each firm, e.g. excess production capacity that may be used to cover an absent employee. Although this method provides a better estimate of the true costs of lost productivity, its implementation is hampered by the need for numerous labor variables (production capacity, industry unemployment rate, average time to fill an opening).

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CLINICAL ECONOMICS AND SLEEP DISORDERS Intangible costs Intangible costs represent the economic value of pain, suffering, loss of activities of daily living (ADLs), inconvenience, and other nonfinancial outcomes of a disorder and its treatment. Evaluation of intangible costs is difficult and is often ignored in analyses. The importance of intangible costs should be recognized in an analysis, even if these costs are not measured. For example, how does one measure the frustration associated with insomnia or the embarrassment of a cataplectic attack? The development of CUA has attempted to capture these intangible costs using the willingness to pay approach. The willingness to pay approach measures an individual's willingness to pay for the avoidance of a disorder or death or for improvement in outcomes. The willingness to pay method is not widely used because of the difficulties associated with measuring an individual's preference or valuation of a change in outcomes/symptoms.

DISCUSSION There have been numerous studies examining the psychosocial impacts of sleep disorders. However, little has been published to address the economic consequences of these impacts. Leger (2,22) and Webb (23) have examined the costs of sleep-related accidents, but that is only one component of sleep disorder costs. The National Commission on Sleep Disorders Research (1) examined the direct costs of sleep disorders but was unable to provide estimates of indirect and intangible costs due to the lack of comprehensive data. Again, direct costs reflect only one component of sleep disorders. There is a need to understand the breadth of costs--costs of production loss, impaired schooling, psychiatric disorders, and treatment. To fully understand these costs and the economic impact of each component, investigators first need to address the cost of the illness. This may be done with a cost of illness study or the continual "piecing process" of economic impacts of each component until the puzzle has been completed. Chilcott and Shapiro (24) and Stoller (25) provide a nice overview of the socioeconomic impact of insomnia. They provide the best overviews in sleep disorders that have attempted to capture all relevant costs-direct and indirect. The authors arrived at their disease burden through the piecing together of multiple sources and estimates, demonstrating the lack of complete information on sleep disorders. One avenue to increase available data may be to collect the economics alongside the psychosocial studies. Investigators will then be able to use the strategies described above to evaluate new interventions and diagnostics. The field of sleep disorders is an open stage

for economic evaluations, and the base needs to be built. In summary, the economic impact of sleep disorders may be quite large. It is our duty as physicians, scientists, and researchers to break down the public misconceptions about sleep disorders and to provide economic figures for these disorders and associated benefits of new technologies. The use of economic evaluations allows for medical technologies to enter the MCO environment in a credible fashion with the ability to present the results of controlled and accepted studies. This will help secure appropriate reimbursement, acceptance, and penetration in the marketplace.

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22. Leger D. The cost of sleepiness: a response to comments. Sleep 1995;18:281-4. 23. Webb W. The cost of sleep-related accidents: a reanalysis. Sleep 1995; 18:276-80. 24. Chilcott L, Shapiro C. The socioeconomic impact of insomnia: an overview. Pharmacoeconomics 1996; Suppl 1:1-14. 25. StoBer ~,,1. Economic effect of insomnia. Clin Ther 1994;16: 873-97.