Health economic study dr amir hamzah

Health Economic Study in
Malaysia
Amir Hamzah Abdul Latiff
MMed, MRCP, FACAAI
Consultant Paediatrician & Clinical Immunologist/Allergist
Pantai Hospital Kuala Lumpur
President
Malaysian Society of Allergy & Immunology (MSA))

The recommendation
Recommendation 2 – HYDROLYSED FORMULA
For infants at increased risk of allergic disease and who cannot
be exclusively breastfed for the first 4 to 6 months, a hydrolysed
formula appears to offer advantages to reduce the risk of cow’s
milk protein allergy and allergic disease.
(Strength of recommendation – A)
1. Partially hydrolysed whey formula and extensively hydrolysed
casein formula reduce the risk of atopic dermatitis and cow’s
milk protein allergy to regular cow’s milk protein formula. 47,48
2. When considering a hydrolysed formula, it is advised to
choose one with reduced allergenicity that has been proven
or confirmed. 47

Economic impact of using
partially hydrolyzed whey infant formula
versus
standard cow’s milk formula
in the prevention of atopic dermatitis
(AD)

Some Definitions
• Economics
o Study of the allocation of scarce resources
• Health Economics
o Economic principles applied to healthcare
• Pharmaco-economics
o Economic principles applied to drug therapy
• Economic Evaluation
o main decision making tool in economics
o Economic evaluation is about efficiency and is:
‘the comparative analysis of alternative courses of action
in terms of both their costs and consequences’
(Drummond, 1997)

Types of economic evaluation
• Cost minimisation analysis
o Equal outcomes / clinical benefit assumed
o Which has lowest overall total costs?
• Cost Benefit analysis
o Both costs and outcomes expressed in monetary value
o Difficult to value all health benefits in monetary terms
• Cost Effectiveness analysis
o Outcomes expressed in natural units
o Cost per “% drop in blood pressure” / cure
• Cost Utility analysis
o Outcomes expressed in QALYs
o Cross disease comparisons possible
o Considered current gold standard measure

Background
Although infants should be breastfed for as long as appropriate,
some are not exclusively breastfed
Infants who are not exclusively breastfed may be fed with
standard cow’s milk formula (CMF) or alternate formulas, such as
partially hydrolyzed-whey formula (pHF-W)
Clinical trial data has shown that the incidence of atopic
dermatitis (AD) is higher among healthy at-risk children initially
fed with CMF vs. children fed pHF-W
The economic impact of early feeding with CMF or pHF-W when
considering the reduction in AD is unknown

Objective
• To estimate the economic impact of feeding high-risk infants
with partially hydrolyzed 100% whey based formula (pHF-W)
instead of standard cow’s milk formula (CMF) for the first 4
months of life as an nutritional intervention in the prevention
of atopic dermatitis (AD).

Lower Costs
Higher Costs
More EffectiveLess Effective
Health Economic Evaluation

Formula Cost
How about other costs?

Formula costs
and other
costs
For which non-
economic
advantages?
AD treatment costs
(Dietary, medical)

Costs
Non-
Economic
Advantages
Quality of life of
children
Formula
AD (tests, visits, formula change,
medicines)
Quality of life of
parents

Cost Effectiveness Ratio
CER = (Increase in Cost)
(Improved Effectiveness)
CER = (Cost of Treatment 1 – Cost of Treatment 2)
(Effectiveness of Treatment 1 - Effectiveness of Treatment 2)

Model Overview
Model Overview
Method Cost effectiveness (Markov) model using Microsoft Excel
Intervention First 4 months of life, feeding with pHF-W vs. CMF [based on GINI study]
Target population “At risk” (atopic heredity) healthy infants living in developed urban area who are not
exclusively breastfed and who would otherwise receive CMF
Cost considered All (“societal perspective”), regardless of who incurs these costs, per child
Data sources Published literature,
Opinion/data assumptions from KOLs, and
Pricing and market share data from Nestle affiliates
Analytical timeline Infant formula feeding for prevention of AD =4 months
Full analytical horizon = 6 years
Outcomes measures Cost, AD incidence, time spent post-AD diagnosis, AD symptoms-free days, quality
adjusted life years (QALYs)
Discount rate 3% per year for costs and clinical effects (i.e., QALYs)*
Sensitivity analysis Univariate deterministic and multivariate probabilistic
*In the model, costs and benefits occur at different time points. A common practice in cost–benefit analysis, called discounting, is to
express all costs and benefits in terms of their present value by assigning smaller weights to those that occur further away in the
future than to those occurring more recently. Discounting makes costs and benefits occurring at different times comparable.

Key Model Parameters / Assumptions
Key Model Parameters / Assumptions
Age Groupings
• <1 year
• 1-6 years
Treatment modality categories (for AD)
• Dietary (change in infant formula)
• Pharmacological
• Combined dietary and pharmacological
Maximum duration of formula use
(age when formula feed ends)
• 1 yr (hence: from 1 yr onward, treated pharmacologically only)
AD severity categories
• Mild
• Moderate
• Severe
Body location • Model does not distinguish location of AD symptoms on body
Medical perspective • Model considers paediatrician outlook
Quantities of formula
• Daily quantity of infant formula consumed adjusted for age-specific
nutritional requirements and infant formula product labels

Model
Concept
Birth (No
AD history)
[A]
Initiate
CMF or
pHF-W [B]
AD episode
on CMF or
pHF-W [C]
Switch to
next
formula 1
+ add drug
1 [E]
Switch to
next
formula 2 +
add drug 1
[K]
ADCS on
next
formula 1
[G]
Switch to
next
formula 2
[H]
Switch to
next
formula 1
[D]
Stay on
CMF or
pHF-W,
add drug 2
[M]
Stay on
CMF or
pHF-W,
add drug 3
[N]
ADCS on
CMF or
pHF-W [L]
Stay on
CMF or
pHF-W,
add drug 1
[F]
Initial AD
episode (by
severity)
No Response
Switch to
next
formula 2 +
add drug 1
[J]
No Response
ADCS on
next
formula 2
[I]
Response
Response
Flare
Response
Response
Response
Flare
No Response No Response
Flare
Flare
No
Response
Response
Flare

No AD
No AD
No AD
ModerateAD
Severe
Mild
No AD
fed with pHF-W
for 4 months
ModerateAD
Severe
Mild
No AD
fed with CMF for
4 months
• Incidence of AD depends on formula
• Choice of AD management depends on severity and age group
• Response rates vary by therapy
• Flares vary by severity
Simplified Model Structure
Dietary
Pharmacologic
or AD
Controlled
Flare
Infant age 0
without AD
responses
incidence
flares
management
Dietary+
Pharmacologic
No Flare
Start
here

Model Inputs and Sources
Model Input Source
Incidence of AD von Berg et al, Allergy Clin Immunol, 2008 (GINI study)
Utility of AD by severity
Pitt et al, Br J Dermatol, 2006; Stevens et al, Br J Dermatol,
2005
Severity of AD (Proportion of AD patients mild vs. mod/severe)
Approach to management of AD (use of formula change, medical, combo for AD treatment)
Diagnostic testing upon initial development of AD
Formula change - Change in initial formula for treatment (0-1 yr of age)
Time to Formula switch
Medical treatment used by age group
Response rates to AD treatment (infant formula only and combination treatment)
Response rates to 1st, 2nd and 3rd line medical treatment
Probability of AD flare
Hospitalization due to AD
Resource utilization – Number of Physician visits
Medical treatment used (specific products and quantities)
Primarily: KOL survey,
Secondarily: Nestle Malaysia (as needed)
Daily quantity of infant formula consumed due to partial breastfeeding
Infant Formula costs
Physician visit costs
Lab test costs
Hospitalization costs
Medical treatment costs
Indirect costs
Primarily: Nestle Malaysia
*Model inputs and sources listed have been reviewed/discussed with Nestle and KOLs at a previous meetings.

Model-based Estimated Time to AD Diagnosis
61%
75%
14%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0 52 104 156 208 260 312
PercentsurvivingwithoutADdiagnosis
Weeks since birth
CMF pHF-W
pHF-W reduces the proportion of patients developing AD by 14 percentage points

0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0 1 2 3 4 5 6
Cumulativeproportionofinfants
developingADasreportedinGINI
Years
Cumulative Incidence of AD &
Average Time Spent Post-AD Diagnosis
CMF Time after AD =1.69 years
pHF-W Time after AD =1.01 years
39%
14%
pHF-W reduces the proportion of patients developing AD by 14 percentage points and reduces the time
spend post-initial-AD diagnosis
25%

Cumulative Discounted Total Costs
(Malaysian Ringgit $)
$2882
$1766
Difference =
$1116
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
0 52 104 156 208 260 312
Discountedcumulativecostsforanaverage
infantenteringthemodel
Weeks since birth
PHF-W CMF
pHF-W reduces the cumulative costs associated with AD by $1,116 at 6 years
pHF-W is also less expensive over almost the entire period

Direct and Indirect Costs by Category
(Malaysian Ringgit $)
$-
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
CMF pHF-W
Indirect Costs
Hospitalization
Nurse calls
Lab tests
Pharmacological treatments
Visits
Note: Indirect costs include time loss for taking care of AD child, travel to clinic, and time loss to go to
the lab
The cost of AD are largely driven by visit, pharmacological treatment, and indirect costs (each accounting
for about 1/3 of costs)
pHF-W reduces costs for all key categories

Discounted costs (Malaysian Ringgit $) per child CMF pHF-W Difference
Direct $1,966 $1,216 -$750
Indirect# $916 $550 -$366
Total $2,882 $1,766 -$1,116
Undiscounted effects (per child)
Percent with AD 39% 25% -14%
Number of days with AD symptoms 93.04 55.11 -37.93
Quality-adjusted life-years 5.90 5.94 0.04
Cost effectiveness ratios (all discounted)
Discounted incremental cost per AD case avoided Dominant
Discounted incremental cost per AD day avoided Dominant
Discounted incremental cost per quality-adjusted life yeargained Dominant
Cost and Cost-Effectiveness
# Indirect costs include time loss for taking care of AD child, travel to clinic, and time loss at the lab
*Dominant means that pHF-W is less expensive and more effective than CMF
pHF-W decreases costs, the risk of AD, and the number of days with symptoms, and increases QALYs
Since it is less expensive and more effective, it is considered to be a “dominant” option in health
economic jargon

Univariate Sensitivity Analysis
Tornado Chart of Cost Difference (pHF-W vs. CMF)
The model results are most sensitive to the assumptions about the incidence of AD and the degree to
which CMF is associated with a higher risk of AD than pHF-W

Multivariate Probabilistic Sensitivity Analysis
-$2,500
-$2,000
-$1,500
-$1,000
-$500
$0
$500
0.00 0.02 0.04 0.06 0.08 0.10 0.12 0.14 0.16 0.18 0.20
ΔCost ΔQALY
Median
CI region
Base Case
Number of Simulations ran – 5,000
When the model is run 5,000 times, and each time with different inputs for each variable (which are selected according to a pre-
specified, e.g. normal distribution), the results change both in terms of cost savings and QALY gained. The figure is above is a
scatter plot of the net costs and net QALY differences for these 5,000 runs
The base case results and median results across the 5,000 simulations are very consistent
pHF-W is cost saving in almost all runs
the cost savings range from $650 to $1464 per child; the QALY gains range from 0.017 to 0.079

Total Cost per Child with AD
Notes: all costs are undiscounted; restricted means (as follow up ends at the end of age 6); expressed in Malaysian Ringgit.
*Cost per year is not cost over 6-year follow up divided by 6 years – it is rather the cost over 6-year follow-up divided by the
number of years post AD diagnosis. The same applies for the number of visits.
Direct costs/child with AD over 6-year follow up* $5378
Total costs/child with AD over 6-year follow up* $7851
Direct costs/child with AD per year $1289
Total costs/child with AD per year $1882
Number of visits/child with AD over 6-year follow up:* GP and specialist 28.9
Number of visits/child with AD per year: GP and specialist 6.92
Number of visits/child with AD per year: GP 5.06
Number of visits/child with AD per year: Specialists 1.86
The cost of AD per child who develops AD over the 6-year period is $7851
The annual cost per year is $1,882
The number of visits over the 6-year period is approximately 29
The number of visits/year after AD develops is approximately 7, including 5 with GPs and 2 with specialists

Estimated Annual GP Visits for Incident AD Case
The average annual number of visits per incident AD case are estimated at
approximately 4.24, 4.73, and 1.89 for Indonesia, Malaysia, and Singapore, respectively.
Study Country Population Pub Year Mild Moderate Severe Total
Chang and Sung U.S. Patients with an AD diagnosis 2005 1.74
Pharmerit Singapore >0-6 Years 2013 2.35
Barbeau and Lalonde Canada 6 months to 84 years 2004 2.31 3.19 5.74 3.59
Ngamphaiboon et al Thailand Children aged 0-5 2012 4 8 13 4.27a
Ngamphaiboon et al Thailand Children aged 0-5 2012 4 8 12 4.58b
Pharmerit U.S. >0-6 Years 2013 5.05
Mertens et al Germany >1 year (average 23) 2012 5.40
Pharmerit Malaysia >0-6 Years 2013 6.92
Pharmerit Indonesia >0-6 Years 2013 8.12
Pharmerit Philippines >0-6 Years 2013 11.06
Su et al Australia 4 mos-15yrs at dermatology clinic 1997 7.0 13.0 23.2 12.88
Taylor et al U.K.
Paediatric patients with CMA
who started nutrition with eHF
2012 13.1
Paediatric patients with CMA
who started nutrition with AAF
2012 17.5
a – atopic dermatitis, not specific to cow’s milk allergy
b – atopic dermatitis, specific to cow’s milk allergy
Compares reasonably well with rest of literature

Literature Review – Annual AD costs
a – atopic dermatitis, not specific to cow’s milk allergy
b – atopic dermatitis, specific to cow’s milk allergy
* Figure in parenthesis when excluding cost of GP visits
Study Country Costs Age Severity Year of data Annual Cost (US$)
Annual Cost (2013)
(US$)
Ngamphaiboon 2012 Thailand Direct Children aged 0-5 Alla
2010 175 184a
Ngamphaiboon 2012 Thailand Direct Children aged 0-5 Allb
2010 310 338b
Pharmerit Malaysia Direct 0-6 yrs All 2013 388 (308)* 388 (308)*
Pharmerit Philippines Direct 0-6 yrs All 2013 433 433
Pharmerit Philippines Total 0-6 yrs All 2013 443 443
Su 1997 Australia Total 4 mos-15yrs Mild 1997 263 477
Pharmerit Malaysia Total 0-6 yrs All 2013 566 (486)* 566 (486)*
Pharmerit Indonesia Direct 0-6 yrs All 2013 220 682
Pharmerit Indonesia Total 0-6 yrs All 2013 689 689
Ellis 2002 U.S. Direct Pediatrics NA 2001 450 705
Barbeau 2004 Canada Total 6 mos-84yrs All 2002 618* 742
Ellis 2002 U.S. Direct All NA 2001 580 910
Pharmerit U.S. Direct 0-6 yrs All 2013 945 945
Pharmerit Singapore Direct 0-6 yrs All 2013 958 958
Pharmerit Singapore Total 0-6 yrs All 2013 1,070 1,070
Fivenson 2002 U.S. Direct All (mean 17yrs) NA 1997 609 1,104
Ellis 2002 U.S. Direct Pediatrics NA 2001 740 1,160
Pharmerit U.S. Total 0-6 yrs All 2013 1,071 1,071
Su 1997 Australia Total 4 mos-15yrs Mod 1997 653 1,184
Fivenson 2002 U.S. Direct 0-4 yrs NA 1997 725 1,314
Ellis 2006 Multinational Total 2-17 yrs, conventional meds
Mild-
Mod
2004 1,253 1,725
Su 1997 Australia Total 4 mos-15yrs Sev 1997 1,001 1,815
Ellis 2002 U.S. Direct All NA 2001 1,250 1,960
Ellis 2006 Multinational Total 2-17 yrs, pimecrolimus
Mild-
Mod
2004 2,581 3,553
The annual cost of AD/child who develops AD (converted in $US)
appears within range of other estimates

Limitations and strengths
• Model structure is simplification of reality but nevertheless attempts to
capture treatment patterns and costs with a high degree of detail
• Results are based on survey of KOLs
• The impact on the AD child’s parent’s productivity loss while at work was
only partially considered whereas the impact on the parent’s quality of life
was entirely excluded
• Longer-term impact of AD was excluded; that is, all costs were restricted to
the first 6 years, hence means are somewhat biased
• Costs for other allergies (e.g., allergic rhinitis) potentially affected by the use
of pHF-W vs. CMF were also excluded
• Cost of AD and number of visits for AD were within range of other published
studies

• Over the 6-year follow-up period, use of pHF-W instead of CMF among high-risk
infants results in:
• costs savings (-$1,116)
• avoided AD cases (-14% absolute percentage),
• additional days without AD symptoms (+38 days),
• Additional years without AD diagnosis (+0.68 years, i.e., just over 8 months), and
• QALY gains (+0.04 QALYs).
• pHF-W appears to be a cost effective strategy for the prevention of AD in high-risk
infants.

Abstract
Cost Effectiveness of Partially Hydrolyzed Whey Protein Formula in the Primary Prevention of Atopic Dermatitis in
At-Risk Urban Infants in Malaysia
Bhanegaonkar AJ 1, Horodniceanu EG1, Abdul Latiff AH2, Woodhull S3, Khoo PC3, Detzel P4, Ji J1, Botteman MF1
Objectives: To estimate the economic impact of feeding high-risk infants with partially hydrolyzed 100% whey based formula
(pHF-W) instead of standard cow’s milk formula (CMF) for the first 4 months of life as a nutritional intervention in the prevention
of atopic dermatitis (AD).
Methods: A cohort Markov model was developed to simulate, from birth through age 6, the incidence and cost of AD in high-risk
infants fed with pHF-W instead of CMF during the first 4 months of life. Data sources included published literature, market data,
and key opionion leader inputs. Key modeled outcomes included reduction in AD risk, time spent post-AD diagnosis, AD-free
days, quality-adjusted life years (QALYs), and costs. All results were discounted by 3% per year. Costs were expressed in 2013
Malaysian Ringgit ($).
Results: Feeding high-risk infants pHF-W instead of CMF resulted in an estimated absolute 14 percentage point reduction in the
risk of AD, a reduction in the time spent post-AD diagnosis of 8.16 months (95% CI: 5.40, 10.03) per child, and an additional 38
(95% CI: 16, 62) AD-free days per child. The AD-related cost estimates when feeding high-risk infants with pHF-W or CMF were
$1,766 (95% CI: $1,389, $2,267) and $2,882 (95% CI: $2,531, $3,239) per child, respectively, resulting in a net difference in favor
of pHF-W of $1,116 (95% CI: $650, $1464) per child. Considering those who do develop AD, the mean annual cost of AD was
$1882 (across both arms) per child with AD. The mean cost of AD over the entire period was $7851 (across both arms) per child
with AD.
Conclusions: Using pHF-W instead of CMF in high-risk infants is expected to result in reduction in the burden of AD and save
$1,116 per child.

Health economic study dr amir hamzah

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