Economic Analyses of Vaccine Policies

At the time of writing this chapter, COVID-19 is the pandemic of the century, globally affecting macro and micro-economies. Recognition of the economic disruption from outbreaks on the regional level (Ebola viral disease) and global level (COVID-19) has led to justifying novel financial mechanisms to address the macroeconomic impact of uncontrolled communicable diseases. New national and international mechanisms of global collaborations have been established to mitigate the impact of uncontrolled communicable diseases through vaccines in unprecedented time frames, perhaps forever changing how vaccines are valued.

This chapter in past editions covered the components of vaccine economics and analyses to support novel vaccines and strategies from a limited public health perspective. The current COVID-19 outbreak and response additionally demonstrate the dynamic perceptions of vaccine utility in the context of the disruption of all national economies, impacting labor, travel, supply chains, exports, among many other factors measured in the trillions of dollars. Consequently, historical funding models for vaccine discovery, development, and utilization have been upended. Global cooperation has increased exponentially with the recognition of the interdependence of public health and economics when it comes to rapidly transmissible deadly viral agents. A pathogen transmitted from human to human in any part of the world is a potential risk to all parts of the world.

The world had a regional foreshadowing event during the uncontrolled but regionally limited Ebola outbreak in Africa from 2014 to 2016 with a few spillover cases in the US and Europe. Macroeconomic interests of individual nations coalesced toward multinational interests to enhance public-private research collaborations and the acceleration of the development/implementation of novel vaccines with the creation of new funding models. The Coalition for Epidemic Preparedness Innovations (CEPI) evolved as a funding mechanism to catalyze the development of vaccines against emerging communicable agents and teamed with Gavi, the Vaccine, Alliance, and the WHO in the creation of the COVAX facility to address global distribution of SARS-CoV-2 vaccines.

Over the past decade, the threats of pandemics were no longer the purview of ministries of health, but elevated to a transsectoral perspective at the head-of-state level. This transition occurred at a modest pace with SARS-CoV-1, Middle Eastern Respiratory Syndrome (MERS), pandemic influenza, Ebola, and arboviruses such as Zika, Chikungunya, and dengue. But with Covid-19, suddenly there was a global awareness that this was not merely a communicable disease health issue, monitored by ministries of health. Instead, almost all heads of state devoted themselves to addressing Covid-19 at the domestic and international levels. Vaccine diplomacy is providing immunization through international collaborative efforts on an unprecedented scale.

In May 2021, the International Monetary Fund presented a proposal for a $50 billion investment through the support of the access to Covid-19 Tools Accelerator, which includes vaccinating at least 40% of the population in all countries by the end of 2021 and at least 60% by the first half of 2022, among other public health measures. This would deliver substantial potential benefits by hastening an end of the pandemic and restoring economic activity, estimated at a value of $9 trillion. Advanced economies would stand to gain around $1 trillion in additional tax revenues, justifying support as the highest-return public investment ever.

Unlike pandemics, vaccines for endemic diseases have required longer economic deliberations. Vaccination programs have greatly reduced morbidity and mortality worldwide. While new vaccines and the strategic use of existing vaccines offer the prospect of further reductions in disease, policy makers are often constrained by limited public health resources *

* Although private consumers individually judge the value of prevention and manufacturers assess commercial viability, for the purposes of this chapter, we only focus on the public-sector and private philanthropy.

and require assessments of a vaccine’s value to justify and optimize its use. Newer vaccines tend to cost more than older products and those not under patent protection. Studies involving the integration of epidemiologic and economic data are critical to identify the most efficient use of public health resources, to optimize health benefits and to help define research agendas.

Different quantitative techniques have been used to analyze policy decisions related to health outcomes, including those related to vaccine-preventable diseases. Economic analyses, such as cost analysis (CA), cost-benefit analysis (CBA), cost-effectiveness analysis (CEA), and cost-utility analysis (CUA) ( Table 79.1 ) estimate the potential financial requirements and program impact for direct comparisons among vaccination strategies. A systematic assessment of policy options helps to create policies that are based on a set of established criteria and provides transparent accountability for decisions.

These approaches share the characteristics of explicit delineation of possible alternatives, estimation of probabilities and costs associated with each of these alternatives, various health outcome metrics and values, and development of a summary statement of the implications of alternative courses of action. They also involve sensitivity analyses, in which estimated probabilities or costs are varied to determine how sensitive the conclusions are to specified variables.

CA is the basis of all economic studies because it quantifies the costs associated with a given intervention. The costs of the program may include vaccines, vaccine administration, public health surveillance, efforts to address adverse events, and public and vaccine provider education. CBA is an extension of CA that further accounts for the monetary benefits from a policy or program. Benefits are usually calculated as a function of the total cost of a disease in the presence and absence of an intervention. In a CBA, results are usually presented as ratios of the benefits from the intervention to the costs of conducting the program (B:C ratio) or the differences between the two, expressed as a net benefit (cost). If the B:C ratio is greater than 1.0, the intervention is considered cost saving.

Because of the difficulties of assigning economic values for certain outcomes, such as averted deaths and the overall disruption from outbreaks in transportation, labor, education, exports, etc., a full accounting for a CBA is challenging. However, because it can give a summary statement about whether the benefits of a program exceed its costs, irrespective of the character of the outcomes, it can be used to compare health programs with nonhealth programs. CEA and CUA are more useful for comparing different health programs and for avoiding the subjective valuation of intangibles such as death.

In CEA, results are presented in terms of the cost required to achieve a particular health outcome ( Table 79.2 ). Usually no attempt is made to assign an economic value to a prevented death. In general, interventions are considered highly cost effective (good buys) by financial authorities such as the World Bank if the cost per year of life saved is less than three times the annual per capita gross domestic product (GDP). The relative cost effectiveness of a death prevented can therefore depend on the age of the individual, life expectancy, and the consequent number of years of life saved. Ethical considerations are critical, because society must decide on the value of life-years saved at different ages or in populations with different economic means.

CEA is particularly practical when incorporated into a decision analysis of several options to achieve a common outcome (e.g., delivering a second dose of measles vaccine as part of a campaign or as part of a routine schedule to prevent outbreaks). CEA is not suitable to compare investments in alternative health programs with disparate outcomes, for example the cost to prevent a case of measles versus that of hepatitis B. In this situation, CUA is much more useful, because the units of measurement are standardized, albeit with subjective and therefore sometimes controversial, metrics.

CUA is a specific form of CEA in which health outcomes are reduced to a common denominator such as a quality-adjusted life-year (QALY) or a disability adjusted life-year (DALY). The units of each of these outcomes are standardized through a process by which panels of ethicists, researchers and decision makers weigh the value of different morbid states relative to full health for use in studies using either of these metrics. For example, a consensus group might find that two-thirds of a year living with full sight is equivalent to one year living with blindness, effectively equating the quality of the time spent with blindness as 67% of the quality of the time with full sight. The relative proportion of time preference with and without a specific condition allows the formulation of a common health metric unit that can offer direct comparisons of a variety of morbid conditions. There are more than 30 such health outcome metrics that integrate morbidity and mortality. Examples of these are provided in Table 79.2 . A common metric calculated through CUA permits comparisons to be made among interventions aimed at diseases with diverse outcomes, such as death, acute illness, and prolonged disability. Although common outcome metrics facilitate comparisons of many health interventions, numerous subjective, and ethical assumptions underlie their construct, and therefore they are not always easily interpreted.

IMPORTANT CONSIDERATIONS IN QUANTITATIVE POLICY ANALYSIS

There are many decisions to be made in designing a quantitative policy analysis. Widespread variability in choices of parameters or metrics has made it difficult to make comparisons among many of the published studies. This variability has previously been criticized. With the active support of philanthropy, there has been active engagement to compile many analyses which offer a compendium of the benefits of individual vaccines and vaccination programs. In the 1990s, a task force in the United States drew up suggested guidelines for carrying out cost-effectiveness studies of preventive services. The journal Vaccine has published an editorial statement on the submission of economic evaluations of vaccines. The US Centers for Disease Control and Prevention (CDC) has published guidelines that are required to be followed to present any economic analysis to the CDC Advisory Committee on Immunization Practices (ACIP). Additionally, the World Health Organization (WHO) has published a guide for the standardization of economic evaluations of immunization programs. ^, Guidelines help to ensure high quality studies to support the potential advocacy for vaccines and programs.

Economic models also may consider the indirect effects of immunization from the decrease of transmission (herd immunity). As an example, the impact of immunization of US infants with pneumococcal conjugate vaccine on the occurrence of pneumococcal disease in older, unvaccinated populations has been quite large. Additionally, there has been increasing interest in providing different modelers with common data to assess the divergence and convergence of results and identify important nuances for consideration. This approach has been taken with respect to research focusing on rotavirus and human papillomavirus (HPV) vaccines and measles eradication.

As a result of the increased levels of attention being given to the evidence base for new vaccine use, analytical tools and initiatives to assess new vaccine cost effectiveness have been developed. The ProVac Initiative of the Pan American Health Organization (PAHO) is a notable example. The Strategic Multi-Attribute Ranking Tool for Vaccines (SMART-Vaccines) has been developed to capture both quantitative and qualitative explicitly stated values to help make transparent decisions related to vaccine policy. Many attributes, such as impacts on societal disruptions, macroeconomic considerations and development, may be considered. These tools can help National Immunization Technical Advisory Groups (NITAGs) assess available information and make a country- and evidence-based decision on quantitative issues related to vaccines and immunization programs.

Perspective

Individuals, health care systems, commercial vaccine manufacturers, and society at large all benefit from immunizations. Although the societal perspective theoretically captures all costs and benefits, the costs and benefits of a vaccination program clearly accrue to different budget lines. Results from any analysis would vary from each perspective ^, so should be explicitly stated.

Time Frame

Vaccines protect against diseases that would otherwise occur at a variable future time. While measles vaccine protects against childhood disease, hepatitis B or human papilloma virus vaccines can prevent liver and cervical cancer, respectively, in adults. As a vaccine investment is made in a time frame different from the eventual benefit, economic analyses frequently discount future effects to take into account the implicit valuation that society has for health and financial costs and benefits over time. Even after accounting for inflation (which affects both costs and potential savings), there is an implicit difference in the value of an event that occurs today versus one that occurs in the future. For example, it is generally felt that 100 infant deaths prevented today is worth more than 100 deaths prevented 1 year from today. While this is an ethical and subjective valuation, there is general agreement among economists to discount both costs and benefits at the same rate, typically from 3% to 10% per year, most often at the lower end of the range. Mathematically, for the example above at a 3% discount rate, 100 deaths prevented today is equivalent to 103 prevented 1 year from now. Study results may be presented as both discounted and undiscounted to see the influence of this subjective assumption.

Disease Burden

Estimates of the potential impact of a vaccine on disease may be derived from surveillance data, extrapolations from other representative populations, clinical trials (e.g., vaccine probe studies ), or the results of mathematical models that simulate the natural history of microbes, infections, degrees of severity and population mixing, among other variables. Analyses might need to be specific for age group, population and occupational group, risk of exposure (e.g., health care workers), and outcome, including the timing of the outcome (e.g., death in the next year vs death 50 years in the future). An understanding of the different rates of transmission of microbial agents, given by generation time, and the reproductive rate, is essential to appreciate the direct and indirect impact that vaccines can have on populations. Disease burden is frequently underestimated. Recent publications have emphasized the severe limitations of estimating public health impact of vaccines which have considered only etiologically confirmed outcomes. Outcome sensitivity may be reduced by study enrollment case definitions, study analytic population definitions, limited test sensitivity, and the requirement for patients to have a biologic specimen obtained. Use of clinically defined outcomes—such as all-cause pneumonia for Hib and pneumococcal vaccines, all-cause acute gastroenteritis for rotavirus vaccines, and fever for dengue vaccines—overcome many of these limitations and often identify rate reductions several fold-higher than documented with etiologically confirmed outcomes. ^,

Measure Used for Health States

Outcomes ( Table 79.2 ) may be stated as the number of cases or deaths that occur or are prevented by an intervention. Years of potential life (YPL) represents a refinement of the death metric that quantifies the total years of life lost or prevented from being lost. It integrates the difference in an expected lifespan of each individual and the age at which death occurs. QALYs, which measure the number of years of healthy life lived, or the currently used WHO metric, DALYs, which measure the years of healthy life lost, are further refinements of YPL that integrate a valuation of various morbid states.

QALYs and DALYs are complementary concepts. Both metrics are derived from the product of the number of years lived and by the quality of those years. QALYs use utility weights of health states; DALYs use disability weights to reflect the burden of the same states. For example, if the utility of blindness is 0.67, the disability weight of blindness is 1–0.67 = 0.33. Disregarding age weighting and discounting, all other things being equal, a person who is blind for 50 years has 0.67 × 50 = 33.5 QALYs compared to 50 QALYs for a person with full sight. The condition of blindness contributed to 50–33.5 = 16.5 DALYs. These metrics defy simplicity, are derived from many subjective inputs, and might not be readily understood by some policymakers; however, they offer a common metric to compare disparate health outcomes.

Economic Valuation of Health Outcome States

Direct and indirect costs and benefits are usually counted. Direct costs include those related to medical treatment and to administering the vaccine, including ancillary costs such as screening for target groups. Indirect costs include lost wages of those ill and/or their caregivers. Intangible costs, such as pain and suffering or death, are difficult to quantify; however, they may be implicitly valued as the denominator of a CEA or CUA (e.g., as cost per death prevented), allowing the reader to apply his or her own value to the stated health outcome. An alternative valuation tool is the concept of willingness to pay, where individuals are asked what they would be willing to pay to achieve alternative health outcomes given different economic circumstances and probabilities. These collective responses are integrated with actual probabilities of risk to gauge individual or societal valuation of prevention.

Vaccine Program Characteristics

Vaccine effectiveness, coverage, adverse effects, and the potential for indirect benefits to accrue to unvaccinated persons owing to the reduction of transmission are all program characteristics that should be accounted when evaluating the cost-effectiveness of vaccine initiatives. A schematic model of a vaccine program is shown in Fig. 79.1 . Each component has, an associated cost or a benefit exists.

Sensitivity Analysis

Quantitative policy analysis provides the opportunity to evaluate the likely outcomes from a range of plausible epidemiologic and economic assumptions from those postulated in the base case analysis. This is particularly relevant when the value of a parameter used in an analysis is uncertain and must be estimated. Testing a range of values for one or more uncertain assumptions can help identify the variables to which the conclusion is most sensitive. In turn, defining those variables’ values can be the focus of further research to help guide a policy.