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4
Overview of Analytic Approach and Results

The committee was charged with developing an analytic framework and an associated quantitative model that can aid in setting priorities for vaccine research and development. The committee sought an approach that makes it possible to compare the different potential new vaccines on the basis of their anticipated impact on both costs and benefits. The committee has used a cost-effectiveness model adapted from the model developed for the previous Institute of Medicine (IOM) study of priorities for vaccine development (IOM, 1985a). The model was implemented with spreadsheet software run on a personal computer. This chapter reviews key strengths and limitations of cost-effectiveness models, provides an overview of key components of the committee’s analysis, illustrates certain features of the model with hypothetical vaccine examples, and describes the results obtained by the committee when the model was applied. The committee examined 27 separate cases, each representing a specific combination of pathogen or condition, a candidate vaccine, and a population targeted to receive the vaccine. The committee examined 26 candidate vaccines, but included two distinct target populations for one candidate, thus 27 separate cases (see Table 4–1). The specifics of the calculations are described in Chapter 5 for those readers who desire more detailed explanations.

A COST-EFFECTIVENESS APPROACH

A variety of analytic methods are available for comparative assessments to support priority-setting and resource allocation decisions. In selecting the approach to be used for this study, the committee had to have a means of



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Vaccines for the 21st Century: A Tool for Decisionmaking 4 Overview of Analytic Approach and Results The committee was charged with developing an analytic framework and an associated quantitative model that can aid in setting priorities for vaccine research and development. The committee sought an approach that makes it possible to compare the different potential new vaccines on the basis of their anticipated impact on both costs and benefits. The committee has used a cost-effectiveness model adapted from the model developed for the previous Institute of Medicine (IOM) study of priorities for vaccine development (IOM, 1985a). The model was implemented with spreadsheet software run on a personal computer. This chapter reviews key strengths and limitations of cost-effectiveness models, provides an overview of key components of the committee’s analysis, illustrates certain features of the model with hypothetical vaccine examples, and describes the results obtained by the committee when the model was applied. The committee examined 27 separate cases, each representing a specific combination of pathogen or condition, a candidate vaccine, and a population targeted to receive the vaccine. The committee examined 26 candidate vaccines, but included two distinct target populations for one candidate, thus 27 separate cases (see Table 4–1). The specifics of the calculations are described in Chapter 5 for those readers who desire more detailed explanations. A COST-EFFECTIVENESS APPROACH A variety of analytic methods are available for comparative assessments to support priority-setting and resource allocation decisions. In selecting the approach to be used for this study, the committee had to have a means of

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Vaccines for the 21st Century: A Tool for Decisionmaking Table 4–1 Vaccine Candidates Vaccine Target Population Utilization (%) Purchase $ (per dose) Time to Licensure Development $ (millions) BORRELIA     Infants (restricted geography) 90 100 3 120   Migrants (restricted geography) 10 100 3 120 CHLAMYDIA     12-year-olds 50 50 15 360 COCCIDIOIDES IMMITIS     Infants (restricted geography) 90 50 15 360   Migrants (restricted geography) 10 50 15 360 CYTOMEGALOVIRUS     12-year-olds 50 50 7 360 ENTEROTOXIGENIC E. COLI     Infants 90 50 7 240   Travelers 30 50 7 240 EPSTEIN-BARR VIRUS     12-year-olds 50 50 15 390 HELICOBACTER PYLORI     Infants 30 50 7 240 HEPATITIS C     Infants 90 50 15 360 HERPES SIMPLEX VIRUS     12-year-olds 50 50 7 240 HISTOPLASMA CAPSULATUM     Infants (restricted geography) 90 50 15 360   Migrants (restricted geography) 10 50 15 360 HUMAN PAPILLOMA VIRUS     12-year-olds 50 100 7 360 INFLUENZA     Universal (every 5 years) 30 50 7 360 INSULIN-DEPENDENT DIABETES MELLITUS (therapeutic)     Early-stage patients 90 500 15 360

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Vaccines for the 21st Century: A Tool for Decisionmaking MELANOMA     Patients 90 500 7 360 MULTIPLE SCLEROSIS     Patients 90 500 15 360 MYCOBACTERIUM TUBERCULOSIS     High-risk populations 90 50 15 360   Universal in multidrug-resistant areas 60 50 15 360 NEISSERIA GONORRHEA     12-year-olds 50 50 15 360 NEISSERIA MENINGITIDIS B     Infants 90 50 7 300 PARAINFLUENZA     Infants 90 50 7 300   12-year-old females 90 or 10 50 7 360 RESPIRATORY SYNCTIAL VIRUS     Infants 90 50 7 360   12-year-old females 50 50 7 360 RHEUMATOID ARTHRITIS     Patients 90 500 15 360 ROTAVIRUS     Infants 90 50 3 120 SHIGELLA     Infants 90 50 7 240   Travelers 30 50 7 240 STREPTOCOCCUS GROUP A     Infants 90 50 15 400 STREPTOCOCCUS GROUP B     High-risk people, and either: 30 50 7 See below   12-year-old females or 50 50 7 300   Women in their first pregnancy 10 or 90 50 7 400 STREPTOCOCCUS PNEUMONIA     Infants 90 50 3 240   65-year-olds 60 50 3 240

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Vaccines for the 21st Century: A Tool for Decisionmaking comparing the anticipated health benefits and costs of vaccine use across drastically different forms of illness, ranging from pneumonia, ulcers, and cancers to temporary and long-term neurologic impairments. Furthermore, some of the vaccines included in the study are intended to treat illness, while most will be used in the more familiar role of preventing disease. Cost-effectiveness analysis was judged to be the most satisfactory way to make these comparisons. The basis of comparison typically is a cost-effectiveness ratio that is expressed as cost per unit of health benefit gained. Monetary costs—the numerator of the ratio—reflect changes in the cost of health care that are expected to result from the use of an intervention such as a new vaccine plus costs associated with developing and delivering the intervention. Health benefits—the denominator of the ratio—increasingly are measured in terms of quality-adjusted life years (QALYs) gained by using the intervention under study. QALYs are a measure of health outcome that assigns to each period of time a weight, ranging from 0 to 1, corresponding to the health-related quality of life during that period, where a weight of 1 corresponds to optimal health, and a weight of 0 corresponds to a health state judged equivalent to death; these are then aggregated across time periods (Gold et al., 1996). The concept of QALYs, developed in the 1970s, was designed as a method that could integrate the health improvements for an individual from changes in both the quality and quantity of life, and could also aggregate these improvements across individuals (Torrance and Feeny, 1989). QALYs provide a summary measure of changes in morbidity and mortality that can be applied to very different health conditions and interventions. Interventions that produce both a health benefit and cost savings are inherently cost-effective, but many other interventions that do not save costs produce benefits at costs that are judged to be reasonable. Although cost-effectiveness analysis facilitates comparisons among interventions, comparisons across studies are often undermined by critical differences in assumptions and analytic techniques. A report by the Panel on Cost-Effectiveness in Health and Medicine (Gold et al., 1996), convened by the U.S. Public Health Service, reviews the field and provides recommendations intended to improve the quality and comparability of studies. In its assessment of potential new vaccines, the committee has generally followed the recommendations of that panel. An analysis such as the one performed by the present committee is a valuable tool in a variety of contexts for decisionmakers who must set priorities and allocate resources. It simplifies a complicated picture in which vastly different forms of illness and health benefit must be compared and related to a variety of costs. It cannot, however, address all of the qualitative judgments that shape policy decisions. The analysis cannot provide the value judgments required to determine whether expected health benefits and costs justify a particular investment in vaccine development. The aim of the analysis is to clarify trade-offs in decisions to invest in the development of one vaccine as compared to another.

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Vaccines for the 21st Century: A Tool for Decisionmaking Reasons for Using Cost-Effectiveness Analysis Several factors make cost-effectiveness analysis particularly well-suited to the committee’s assessment of vaccine development priorities. It is a well-established tool for informing decisions regarding the allocation of resources related to health and health care. Comparisons of the benefits of preventing or treating very different forms of illness are made possible by measuring all health benefits in terms of QALYs. Cost-benefit analysis is similar in many respects to cost-effectiveness analysis but relies on valuing benefits in monetary terms. Cost-effectiveness analysis values health consequences in terms of their impact on the health of a community, while cost-benefit analysis values those consequences in terms of the monetary willingness of citizens to pay for them. Cost-effectiveness analysis is generally preferred for health-related studies because many health policymakers and analysts question the appropriateness of measuring the value of additional life expectancy or other health benefits in monetary terms, and because they have ethical qualms about using willingness to pay (and, implicitly, ability to pay) as a basis for guiding resource allocation. The cost-effectiveness approach also provides a framework within which the components of the analysis can be specified in detail and evaluated by those who use the results. This is particularly helpful for the committee’s analysis, which, of necessity, rests on many estimates and assumptions about the characteristics of future vaccines and their likely impact on health and costs. The detailed specification of the components of the model also facilitates sensitivity analyses for the testing of alternative estimates and assumptions, either for individual patients or for a population. Sensitivity analyses are discussed later in the chapter. Limits of Cost-Effectiveness Analysis The cost-effectiveness analysis used by the committee can provide an estimate of the cost of achieving the anticipated health benefit for each of the vaccines studied, but it cannot determine whether that health benefit is worth the cost. That decision is a value judgment and should reflect consideration of many factors that are not included in the analysis. For example, the committee’s analysis does not consider what resources will or should be available for vaccine development or how many vaccine candidates should be given priority for development. Moreover, the analysis does not address the allocation of resources between vaccine development and the development and use of other forms of prevention or treatment. Although priority setting and resource allocation can be informed by economic analyses, they require value judgments that cannot be captured by a cost-effectiveness model. It is also important to note that the results of the analysis depend on the accuracy and appropriateness of the data and the assumptions that are used, a point

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Vaccines for the 21st Century: A Tool for Decisionmaking of particular relevance to the committee’s work. Assumptions were necessary both to compensate for the limitations of the available data on current disease incidence and costs of care and to simplify some analytic tasks. Moreover, the vaccines that are the focus of the study are still in development, making it necessary to rely on expert judgment for values such as costs of vaccine development and time until a vaccine will be licensed for use. Those who use the committee’s analysis or similar studies should keep in mind that although the results are quantified, they should not be treated as precise measures. Ethical Issues Cost-effectiveness analysis raises several ethical issues, especially in the context of priority setting. Although ethical issues are discussed in greater detail in Chapter 6, a few ethical concerns should be mentioned here in the context of cost-effectiveness analyses. Some of these concerns are a function of value judgments incorporated into the model, and others are related to issues that are not addressed. For example, within the model, all QALYs are considered equal without regard to the nature of the health benefit that they measure. Thus, the number of QALYs for many people receiving a small health benefit as a result of a reduction of a minor form of illness can be the same as the number of QALYs achieved by averting a very small number of deaths. Some question the appropriateness of using such trade-offs. (See Chapter 6 for additional discussion.) Whether these quality-adjusted years of life should be counted equally across all ages is a separate concern. The committee specifically chose not to follow the practice of some analysts who have assigned a greater value to the economically productive adult years than to years at younger or older ages (Murray and Lopez, 1996). The committee’s principal analysis follows the standard practice for QALY-based analysis of assuming that a QALY, once calculated, is not directly affected by age. The structure of the model, however, would permit others to perform analyses that incorporate age- or condition-specific weighting of QALYs. Not addressed by the model are issues of equity in the allocation of resources. Some might argue that the needs of specific populations such as those defined by race, ethnicity, socioeconomic status, or health status should be given a higher priority than would be suggested by a strict ranking of cost-effectiveness ratios. The responsibility for judging what constitutes an equitable allocation should lie with accountable policymakers. Analytic Perspectives The analysis reflects several decisions by the committee regarding the approach to be used. These decisions resulted in the adoption of a societal per

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Vaccines for the 21st Century: A Tool for Decisionmaking spective for measuring health effects and costs; a domestic perspective for identifying diseases of significance; an incremental perspective regarding the benefits that the vaccines under study would bring in comparison to current forms of care; and a steady-state perspective for assessing likely levels of vaccine use. A societal perspective for measuring health effects and costs in the United States means that all significant health outcomes and costs are taken into consideration, regardless of who experiences them. Thus, if use of a vaccine reduces hospital care costs, the analysis does not have to distinguish between cost savings that accrue to individuals and savings that accrue to insurers. The societal perspective can be contrasted with a more selective perspective, such as that of a particular government agency, health plan, or vaccine manufacturer, that might be used to examine these factors in other analyses. For these more selective analyses, the assessment of health effects might be limited to the members of a health plan or to a particular age group such as the Medicare population. Similarly, the costs (or savings) included in the analysis would be limited to those that would be incurred by the particular agency or organization. Costs borne by individuals or other organizations would not be considered in the analysis. A societal perspective, however, examines all costs and the health experience of the entire population. The analysis also reflects the domestic perspective in the charge to the committee. The vaccine candidates analyzed in depth were selected on the basis of their relevance to health status in the United States, not globally. Thus, for the vaccines that are likely to be used in many countries in addition to the United States, the analysis includes only a portion of the total health benefits and savings in costs of care that can be expected for relatively little additional investment in vaccine development. Excluded from the analysis are other vaccines that would be valuable for conditions that are important health problems in other countries, such as malaria and schistosomiasis, but that pose little threat in the United States. The committee would have liked to have examined the effect of a global perspective on the results of the analysis. To do so would have greatly increased the committee’s task and would have introduced sufficient uncertainties into the estimates that their relevance for domestic policy would be greatly undermined. Additional discussions of conditions of particular importance outside of the United States appear in Chapters 3 and 7. The cost-effectiveness ratios calculated for this study represent the estimated incremental changes in costs and health effects that can be expected with the use of a new vaccine compared to those from the use of current forms of prevention and treatment. For the vaccines against influenza and Streptococcus pneumoniae, the analysis must also consider the costs and health effects associated with the use of existing vaccines. The committee has based its analysis on the patterns of annual vaccine use that are expected at the point at which a “steady-state” of usage has been achieved. When a vaccine is first introduced, initial patterns of use can be expected to be unstable and to differ from those that will be seen in later years when

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Vaccines for the 21st Century: A Tool for Decisionmaking a more stable level of use has been reached. During this period of instability, both costs and health benefits will vary from year to year in ways that are difficult to estimate and that will differ from the typical costs and health benefits expected at steady-state levels of use. Several factors are likely to contribute to the early variation and instability in patterns of use. As the health care system and the public become more familiar with a vaccine, levels of use in a vaccine’s planned target population are likely to increase over time. The initial period of vaccine use is also likely to be affected by efforts to “catch up” on coverage. For preventive vaccines, this would involve administering additional doses of vaccines to groups beyond the target population, thus increasing the cost of vaccine delivery and altering the assumptions regarding the timing of health benefits relative to vaccination. Similarly, for some therapeutic vaccines, a catch-up effort might include administering the vaccine to a portion of the population of patients who already have a condition in addition to newly diagnosed cases. Treating these patients might contribute some added health benefits in the early years of vaccine use, as well as added costs, that would not match the levels associated with what the committee’s analysis has assumed to be a typical level of vaccine use. (In the case of diabetes and perhaps other therapeutic vaccines, however, such catch-up vaccination efforts will not be effective in treating established cases of illness.) Time Horizon and Discounting The conditions that the committee studied have different time lines for development of a vaccine, the age at which the vaccine would be given, and the age at which health effects and related costs would be experienced. For example, one vaccine might be available in 3 years for use in infants to prevent a condition that usually occurs within the first 2 years of life. Another vaccine might require 15 years in development for use in adolescents to prevent a condition that usually occurs at about age 50. For the first vaccine, benefits might be observable within 5 years, but for the second one, more than 50 years would be needed to realize the benefits of the vaccine. To provide a common point of comparison for the analysis, the health effects and costs for each case are calculated on an “annualized” basis and are discounted to their present values. The annualized estimates reflect the lifetime stream of health effects and costs that result from cases occurring during 1 year. The costs of vaccine development, which are assumed to be independent of the number of people who will use the vaccine, are prorated, or “amortized,” to produce an estimate of annual costs. Determining the “present value” of these health effects and costs requires the use of discounting to adjust their value on the basis of the interval between the present and the time at which the health effect or the cost will occur in the future. A standard assumption in cost-effectiveness analysis is that future dollars and health benefits have a lower value than dollars and health benefits available in the present. The scale of this “time preference” for present over future con-

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Vaccines for the 21st Century: A Tool for Decisionmaking sumption is captured by the discount rate, which has been set at 3% for the committee’s basic analysis, as recommended in the review of cost-effectiveness methods (Gold et al., 1996). The discount rate is also used to amortize the fixed expenditure for vaccine development. Because some analysts question the appropriateness of discounting health effects (for a discussion of the issue, see Gold et al., 1996), the committee tested the impacts of using no discounting in its sensitivity analyses, which are reviewed later in this chapter. MODEL OVERVIEW The essential calculation for the cost-effectiveness ratio for each candidate vaccine is the net cost (i.e., the costs of vaccine development plus the costs of administering the vaccine to the target population, minus the saving in cost of care expected with the use of the vaccine) divided by the expected gain in health benefits. Interested readers are referred to several recent publications (e.g., Gold et al. 1996, Russell et al., 1996). Health Benefits: The Denominator Measuring the health benefits of vaccine use requires a quantitative assessment of a condition’s “burden of illness” in terms of both morbidity and mortality. The difference between the current burden of illness associated with each condition and the level that would be expected if a vaccine were in use represents the health benefit attributable to the vaccine. To compare the vaccines under study, the measure of the burden of illness must be applicable to widely varied conditions (e.g., pneumonia, meningitis, diarrhea, urethritis, melanoma, diabetes). The committee made this comparison using QALYs, a standard measure of burden of illness and health benefits for cost-effectiveness analyses (Gold et al., 1996).* QALYs reflect the combined impact of morbidity and mortality on the health-related quality of years of life lived. The measure can be applied to the total lifetime or to a specified interval such as the time spent with a temporary disability. The key steps in calculating health benefits are briefly reviewed here and illustrated further in Box 4–1. The entire process is reviewed in greater detail in Chapter 5 and summarized in Box 5–1. *   A substantial literature exists on the theory and practice of quantifying health status and the burden of illness. Key issues include defining the domains of health status, developing instruments to measure health status, determining preferences for health states, and applying health status measures to quality of life adjustments. Some sources that readers may wish to consult include Bergner et al., 1981; Drummond et al., 1987; Kaplan and Anderson, 1988; Ware and Sherbourne, 1992; Patrick and Erickson, 1993; McDowell and Newell, 1996; IOM, 1998.

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Vaccines for the 21st Century: A Tool for Decisionmaking BOX 4–1 Illustrating the Calculation of a Vaccine’s Health Benefits The basic features of the calculation of QALYs can be illustrated with a simple scenario. Assume 100,000 cases of an illness X, occurring at an equal rate at all ages and no deaths. Half of the cases of disease result in a mild illness determined to have an HUl-based quality-adjustment weight of .90 and half in a moderate illness with a quality adjustment weight of .70. Either form of illness is assumed to last 2 weeks (.0384 years). The quality-adjustment weights for illness X must be adjusted for the underlying health status of the population. Using survey-based data on general health status, the average quality-adjustment weight for the health status of the population without this illness is .896. Thus the adjustment weight for the mild form of illness becomes .806 (.90 • .896) and the weight for the moderate form of illness becomes .627 (.70 • .896). To calculate QALYs, these adjustment weights are multiplied by the time spent with the illness. With a 2-week duration, a case of mild illness occurring in a given year accounts for .031 QALYs (.806 • .0384). With the same 2-week duration, a case of moderate illness accounts for .024 QALYs (.627• .0384). For an individual in the general population not experiencing this illness, the same 2-week period would represent .034 QALYs (.896 • .0384). Use of a vaccine that prevents illness X would result in a gain of .003 QALYs for a case of mild illness (.034–.031) and .010 QALYs for a case of moderate illness (.034–.024). With cases distributed evenly between mild and moderate illness, the average gain would be .007 QALYs [(.5 • .003) + (.5 • .010)]. With 100,000 cases per year, the annual gain for the population would amount to 700 QALYs (.007 • 100,000). (The complete analysis would also require discounting QALYs for the interval between age at vaccination and average age of onset of illness X.) Quality Adjustments: Weighting To calculate QALYs, a quality-adjustment weight is applied to each period of time during which a person experiences a changed health state due to a particular condition, and these quality-adjusted time periods are added together. In theory, “perfect health” carries a weight of 1.0, giving full value to periods to which it applies. Death carries a weight of 0.0. A health state judged to be equivalent in quality to death would also have a weight of 0.0, meaning that time spent in that health state would have a QALY value of 0.0. A condition considered worse than death can be assigned a negative weight. These quality-adjusted periods can be summed over a person’s expected lifetime (or some other specified period of time).

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Vaccines for the 21st Century: A Tool for Decisionmaking Several methods are available for determining the quality-adjustment weights to be applied to calculate QALYs. For this purpose, the committee selected the Health Utilities Index (HUI) Mark II (see, e.g., Patrick and Erickson, 1993; Feeny et al., 1995; Torrance et al., 1995; McDowell and Newell, 1996). The HUI Mark II characterizes morbidity by using seven health attributes (sensation, mobility, emotion, cognition, self-care, pain, and fertility), each of which is divided into three, four, or five levels. Each level has a fixed quantitative score representing the “preference” for that level relative to full health or death. For the HUI Mark II, these preferences are derived from analyses of responses of a random sample of parents in a Canadian community (Torrance et al., 1995). As illustrated in Box 4–2, the score for normal function in any attribute is 1.0. Deviations from that level of functioning are scored somewhere between 0 (death) and 1. The score for limitations in sensory functions even with equipment (e.g., glasses or hearing aids) is 0.86. The score for severe pain not relieved by drugs and leading to constant disruption of normal activities is 0.38. Other quality-adjustment systems considered by the committee include the Disability-Distress Index (DDI) (Rosser, 1987; Rosser, et al., 1992; Kind and Gudex, 1994), the Quality of Well-Being Scale (QWB) (Kaplan and Anderson, 1988), and the World Bank/World Health Organization disability used to calculate disability-adjusted life years (DALYs) (Murray and Lopez, 1996). The HUI Mark II system was preferred to these alternatives because the multiple levels of its seven component attributes provided an explicit and flexible framework for the committee to use in characterizing the morbidity associated with diverse conditions included in the analysis. The HUI Mark II permits the identification of 24,000 unique health states versus 29 for DDI and 6 for DALYs. The QWB was not chosen because its weights tend to overvalue mild health problems. Some authors have attributed this problem with the QWB to the fact that the weights were obtained by rating scale methods rather than explicit tradeoff elicitation (Eddy, 1991). The HUI Mark II system was favored over DALYs because its weights are derived from community-based health-state preferences rather than expert judgment and are determined without regard to age. Another factor in the committee’s decision to use the HUI Mark II was the availability from the Canadian National Population Health Survey of age-specific health status weights for a general population (Wolfson, 1996). Although the committee found the HUI to be the most suitable instrument for its purposes, the model can accommodate quality-adjustment weights derived in other ways. Morbidity Scenarios The committee, with the advice of outside experts, developed morbidity scenarios to describe the characteristic patterns of illness associated with each condition under study. A scenario consists of a sequence of acute or chronic health states of specified duration that are experienced by a specified proportion of patients. The scenarios also capture the premature mortality associated with a

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Vaccines for the 21st Century: A Tool for Decisionmaking Vaccine X Case 4: Mild/Moderate Illness with Deaths, in the Elderly Case 5: High-Risk Infant Target Population Case 6 High Cost Vaccine ($100) Cases 100,000 /yr 100,000 /yr 100,000 /yr Age-specific incidence all 65+ uniform uniform Deaths (from acute infection) 1% 1% 1% Morbidity scenarios   Mild scenario 50% 50% 50% Moderate scenario 50% 50% 50% Severe scenario 0% 0% 0% Permanent impairment 0% 0% 0% Target Population 60 years of age high risk infants infants (infants, adolescents, etc) 2,000,000 500,000 4,000,000 Cost of Vaccine/dose $50 $50 $100 Discount Rates   Health benefits 3% 3% 3% Costs 3% 3% 3% a. Immediately available vaccine (100% efficacy and use, no development cost or time) $/QALY $41,176 $1 $175,049 QALYs to be gained 4,796 7,027 7,027 Net cost $197,476,989 $9,848 $1,230,009,848 Cost of care saved $162,523,011 $89,990,152 $89,990,152 Delivery costs $360,000,000 $90,000,000 $1,320,000,000 Development costs $0 $0 $0 b. Immediately available vaccine with likely effect and use (no development cost or time) $/QALY $66,197 $4,271 $237,668 Net cost $629,102,526 $20,256,647 $1,127,256,647 Cost of care saved $18,897,474 $60,743,353 $60,743,353 Delivery costs $648,000,000 $81,000,000 $1,188,000,000 Development costs $0 $0 $0 c. Vaccine available, expected use, and effectiveness with addition of development cost and time $/QALY $69,368 $6,435 $239,833 QALYs to be gained 2,271 3,327 3,327 Net cost $157,503,581 $21,407,605 $797,835,132 Cost of care saved $76,943,500 $42,604,166 $42,604,166 Delivery costs $227,247,081 $56,811,770 $833,239,298 Development costs $7,200,000 $7,200,000 $7,200,000 NOTE: “C” is the primary analysis reported in the results section

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Vaccines for the 21st Century: A Tool for Decisionmaking Vaccine X Case 7: Mild/Moderate Illness, No Deaths, Uniform Ages Case 8: Mild/Moderate Illness, No Deaths, Uniform Ages, High Incidence Case 9: No Deaths with Moderate/Severe Disease, Impairment Cases 100,000 /yr 10,000,000 /yr 100,000 /yr Age-specific incidence uniform uniform uniform Deaths (from acute infection) none none none Morbidity scenarios   Mild scenario 50% 50% 0% Moderate scenario 50% 50% 50% Severe scenario 0% 0% 50% Permanent impairment 0% 0% 1% Target Population infants infants infants (infants, adolescents, etc) 4,000,000 4,000,000 4,000,000 Cost of Vaccine/dose $50 $50 $50 Discount Rates   Health benefits 3% 3% 3% Costs 3% 3% 3% a. Immediately available vaccine (100% efficacy and use, no development cost or time) $/QALY $2,597,233 ($341,305) $10,174 QALYs to be gained $243 $24,257 $3,623 Net cost $630,009,848 ($8,279,015,232) $36,857,314 Cost of care saved $89,990,152 $8,999,015,232 $683,142,686 Delivery costs $720,000,000 $720,000,000 $720,000,000 Development costs $0 $0 $0 b. Immediately available vaccine with likely effect and use (no development cost or time) $/QALY $3,586,639 ($331,411) $76,420 Net cost $587,256,647 ($5,426,335,282) $186,878,687 Cost of care saved $60,743,353 $6,074,335,282 $461,121,313 Delivery costs $648,000,000 $648,000,000 $648,000,000 Development costs $0 $0 $0 c. Vaccine available, expected use, and effectiveness with addition of development cost and time $/QALY $3,649,335 ($330,784) $80,618 QALYs to be gained 115 11,484 1,715 Net cost $419,089,997 ($3,798,722,390) $138,272,951 Cost of care saved $42,604,166 $4,260,416,552 $323,421,211 Delivery costs $454,494,162 $454,494,162 $454,494,162 Development costs $7,200,000 $7,200,000 $7,200,000 NOTE: “C” is the primary analysis reported in the results section

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Vaccines for the 21st Century: A Tool for Decisionmaking Vaccine X Case 10: Discounting for Costs Only Case 11: No Discounting Cases 100,000/yr 100,000/yr Age-specific incidence uniform uniform Deaths (from acute infection) 1% 1% Morbidity scenarios   Mild scenario 50% 50% Moderate scenario 50% 50% Severe scenario 0% 0% Permanent impairment 0% 0% Target Population infants infants (infants, adolescents, etc) 4,000,000 4,000,000 Cost of Vaccine/dose $50 $50 Discount Rates   Health benefits 0% 0% Costs 3% 0% a. Immediately available vaccine (100% efficacy and use, no development cost or time) $/QALY $16,671 $12,305 QALYs to be gained $37,790 $37,790 Net cost $630,009,848 $465,000,000 Cost of care saved $89,990,152 $255,000,000 Delivery costs $720,000,000 $720,000,000 Development costs $0 $0 b. Immediately available vaccine with likely effect and use (no development cost or time) $/QALY $23,022 $18,656 Net cost $587,256,647 $475,875,000 Cost of care saved $60,743,353 $172,125,000 Delivery costs $648,000,000 $648,000,000 Development costs $0 $0 c. Vaccine available, expected use, and effectiveness with addition of development cost and time $/QALY $16,430 $18,656 QALYs to be gained 25,508 25,508 Net cost $419,089,997 $475,875,000 Cost of care saved $42,604,166 $172,125,000 Delivery costs $454,494,162 $648,000,000 Development costs $7,200,000 $0 NOTE: “C” is the primary analysis reported in the results section

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Vaccines for the 21st Century: A Tool for Decisionmaking QALY saved to $16,000. If the model includes no discounting for either costs or health benefits, the cost per QALY saved (compared to case 1) is approximately $19,000 (see Cases 10 and 11). The committee reiterates, however, that both costs and benefits should be discounted. An Idealized Scenario The committee believes that the model it recommends can and should have far more utility beyond informing research and development priority considerations. For example, a policymaker might want to evaluate and inform decisions about the value of investments in new vaccine delivery programs. Such a policymaker might also wish to evaluate those options in an idealized scenario. Therefore, the committee offers several examples, using the Vaccine X scenarios described above, of results obtained in the idealized scenario; that is, vaccines against disease X-1 through X-9 have just become available, they are all 100% effective, and there is a means to ensure that the entire target population is vaccinated immediately. The following discussion illustrates results that might be important if there is now a desire to find out the cost-effectiveness of an investment in a vaccine program against one of these nine diseases, if that program were to begin today. Because the model includes discounting for both costs and benefits, components of the model with a time factor are particularly affected by this change in analysis. The cost-effectiveness ratios for vaccines X-1 through X-9 in the idealized scenario change in some fairly predictable ways. Vaccine strategies appear more cost-effective when analyzing this “idealized scenario” compared to the primary analysis reported by the committee (less-than-perfect utilization and efficacy, including development costs and time until program is stabilized). The denominator (health benefits) is higher (approximately two-fold) compared to the standard analysis in every case. The factors responsible for this are the positive change by increasing utilization and effectiveness and the absence of the negative impact of discounting the health benefits during the 12 years until the vaccine program is fully implemented (7 years for vaccine licensure and another 5 years for vaccine use to stabilize). The numerator of the cost-effectiveness ratio is changed in the idealized scenario in several ways, and not always in ways that will be intuitively obvious. Costs for vaccine development ($7,200,000 for these vaccines) are zero in this analysis. Delivery costs increase in the idealized scenario because utilization is 100% and, therefore, 10% more vaccine needs to be purchased. Delivery costs are also increased because they do not need to be discounted to account for the time for vaccine licensure and for usage to stabilize. The cost of care saved with a vaccine strategy is higher in the idealized scenario because more people experience health benefits due to higher efficacy and utilization. In addition, the discounting is not applied for the 12-year lag required for licensure and for usage to stabilize. The net costs can be higher or lower in this scenario compared to the

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Vaccines for the 21st Century: A Tool for Decisionmaking standard analysis depending on the change in delivery costs relative to the change in health care costs saved. Summary In summary, the hypothetical cases discussed above illustrate key factors that influence the cost per QALY gained with a new vaccine. These include the following: the number of vaccinees compared to the number of cases, the interval between the time of vaccination and the time at which disease is averted (i.e., the time at which the vaccinee experiences health benefits and savings in costs of care are realized), the number of QALYs to be gained by protection from disease for one age group compared with that for another age group (for the same number of calendar years), and mortality or long periods spent in a disabled state. RESULTS The committee was not charged to recommend which candidate vaccines should be developed. It has focused on developing a conceptual framework and a quantitative model for that framework to aid researchers and policymakers in planning research and development efforts for the plethora of candidate vaccines that have emerged over the last 10 years. As described in a preceding section, this model can aid policymakers in planning for use of new vaccines once licensed. The primary measure used to report these results is a cost-effectiveness ratio of cost per QALY gained based on the annualized present value of the component costs and QALYs. As described in Chapter 3, there were many considerations in choosing these 26 diseases for which a vaccination strategy was considered feasible and appropriate. The committee chose a range of conditions (in terms of factors such as target populations, incidence of disease, and health states) for which a vaccination strategy might be used. The committee expected that the final results of the exercise would range widely. The candidate vaccines fall into four reasonably distinct groupings or levels: candidate vaccines that would save money and QALYs; candidate vaccines that would require small costs (<$ 10,000) for each QALY gained; candidate vaccines that would require modest yet reasonable costs (<$100,000) for each QALY gained; and candidate vaccines that would require large costs (more than and much more than $100,000) per QALY gained.

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Vaccines for the 21st Century: A Tool for Decisionmaking Level I Most favorable Saves money and QALYs Level II More favorable Costs<$10,000 per QALY saved Level III Favorable Costs>$10,000 and<$100,000 per QALY saved Level IV Less favorable Costs>$100,000 per QALY saved. Seven candidate vaccines fall into the most favorable (I) category: those with which a vaccination strategy would save money. The Level I candidate vaccines are as follows (in alphabetical order): cytomegalovirus (CMV) vaccine administered to 12-year-olds, Group B streptococcus vaccine to be well-incorporated into routine prenatal care and administered to women during first pregnancy and to high-risk adults (at age 65 years and to people less than age 65 years with serious, chronic health conditions), influenza virus vaccine administered to the general population (once per person every 5 years, or one-fifth of the population per year), insulin-dependent diabetes mellitus therapeutic vaccine, multiple sclerosis therapeutic vaccine, rheumatoid arthritis therapeutic vaccine, and Streptococcus pneumoniae vaccine to be given to infants and to 65-year-olds. Nine candidate vaccines fall into the more favorable (II) category: those with which a vaccination strategy would incur small costs (less than $10,000) for each QALY gained. The Level II candidate vaccines are as follows (in alphabetical order): chlamydia vaccine to be administered to 12-year-olds, Helicobacter pylori vaccine to be administered to infants, hepatitis C virus vaccine to be administered to infants, herpes simplex virus vaccine to be administered to 12-year-olds, human papillomavirus vaccine to be administered to 12-year-olds, melanoma therapeutic vaccine, Mycobacterium tuberculosis vaccine to be administered to high-risk populations, Neisseria gonorrhea vaccine to be administered to 12-year-olds, and respiratory syncytial virus vaccine to be administered to infants and to 12-year-old females. Four candidate vaccines fall into the favorable (III) category: those with which a vaccination strategy would incur moderate costs (more than $10,000 but less than $100,000) per QALY gained. The Level III vaccine candidates are as follows (in alphabetical order):

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Vaccines for the 21st Century: A Tool for Decisionmaking Group A streptococcus vaccine to be given to infants, Group B streptococcus vaccine to be given to high-risk adults and to either 12-year-old females or to women during first pregnancy (low utilization) parainfluenza virus vaccine to be given to infants and to women in their first pregnancy, and rotavirus vaccine to be given to infants. Seven candidate vaccines fall into the less favorable (IV) category: those with which a vaccination strategy would incur significant costs (more than $100,000 and up to well more than $1 million) per QALY gained. The Level IV vaccine candidates are as follows (in alphabetical order): Borrelia burgdorferi vaccine to be given to resident infants born in and immigrants of any age into geographically defined high-risk areas, Coccidioides immitis vaccine to be given to resident infants born in and immigrants of any age into geographically defined high-risk areas, enterotoxigenic Escherichia coli vaccine to be given to infants and travelers, Epstein-Barr virus vaccine to be given to 12-year-olds, Histoplasma capsulatum vaccine to be given to resident infants born in and immigrants of any age into geographically defined high-risk areas, Neisseria meningitidis type B vaccine to be given to infants, and Shigella vaccine to be given to infants and travelers or to travelers only. The application of the committee’s framework and model are both predictable and surprising. On a pragmatic and qualitative level, the framework developed for the assessment of these vaccines is an advance from that developed in 1985. The spreadsheets will be available for anyone who wishes to experiment with the model and change assumptions or data. The measure of health benefits, QALYs, is being used by many in the health field, so it is a much more familiar concept than that used in 1985. The Level I candidate vaccines include several that were discussed in the 1985 IOM report on vaccine priorities. The four infectious diseases (cytomegalovirus, influenza A/B, Group B streptococcus, and streptococcus pneumoniae) with Level I candidate vaccines continue to have a staggering burden of disease for many reasons: the numbers of infected people, the seriousness of the health states caused by the infection, and the incidence of long-term sequelae (death and permanent impairment) and subsequent loss of quality of life (as measured in QALYs). A common factor in the analysis for these four vaccine strategies is the relatively short interval between vaccine administration and realization of health benefits for many of the affected people. The inclusion in Level I of candidate therapeutic vaccines suggests that vaccine strategies for noninfectious, chronic conditions hold much promise. These results are seen even though the estimated efficacy (40%) is much less than that for the preventive candidate vaccines (75%). The acceptance, however,

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Vaccines for the 21st Century: A Tool for Decisionmaking was estimated to be very high, and the interval from vaccination to realization of health benefits is very short. In the absence of experience with therapeutic vaccine strategies, it is not clear that the results obtained were predictable at the outset of this analysis. The committee hopes that the results will encourage continued research into the use and benefits of this relatively new class of vaccine strategies. As mentioned, the results presented above are based on the full analysis described at the beginning of the chapter. Readers might question the effects of changing certain assumptions or components of the model, and the committee tested the effects of changing certain assumptions. To illustrate how the model could be used by vaccine program planners, the committee assumed that the vaccines are currently available (i.e., requiring no more time or costs for development). There was no change in the assignment of vaccines to Levels I-IV. When the committee further assumed that the vaccines are currently available, 100% effective, and utilized by 100% of the target population (i.e., the ideal scenario; an analysis requested of the committee by the project sponsor, NIH), five vaccines shifted into an adjacent category. Specifically, four vaccines in Level II—chlamydia, melanoma (therapeutic), mycobacterium tuberculosis, and respiratory syncytial virus—moved into Level I. A fifth vaccine, against Coccidioides immitis, moved from Level IV to Level III. Challenges Licensure of the Level I candidate vaccines poses several challenges for vaccination programs and health care providers. For example, the committee believes that a CMV vaccine would best be administered during puberty to protect neonates from CMV infection. This would require acceptance by parents, children, and health care providers that the potential for sexual activity among young adolescents argues for ensuring that the vaccine is administered to 12-year-olds (the proxy age used in the modeling). This also will require a health care milieu that is more capable than it is now of routine vaccination at ages other than infancy. Factors such as health beliefs, health care practices, performance measurements for health plans, and school entry laws have contributed to relatively successful childhood immunization efforts. Similar incentives are not yet as widespread for the newly emerging “adolescent” or “pubertal” vaccination visits that are now recognized as being important for protection against measles and rubella, for example. Another challenge will be immunization of pregnant women against Group B streptococcus. Previous chapters discussed the barriers, particularly the legal barriers, to the development of vaccines to be administered during pregnancy. The committee’s analysis assumes that these barriers have been overcome. The analysis also assumes that immunization of pregnant women can become a standard part of prenatal care. With an alternative assumption that few pregnant

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Vaccines for the 21st Century: A Tool for Decisionmaking women will be immunized, the development of a Group B streptococcus vaccine becomes much less favorable (see Level III). A third challenge will be acceptance of vaccines using DNA-based technologies. The committee has not factored into the analysis the effect that fear or reluctance might have on the extent to which this emerging technology might be used. The final challenge relates to therapeutic vaccines. Their effectiveness will depend on the early detection of an incipient disease; the committee has not envisioned how this might be done, especially for the therapeutic vaccine for insulin-dependent diabetes mellitus (IDDM). The committee assumes that, during the 15 years of development that remain until the expected licensure of these candidate vaccines, clinical research will provide a better understanding of the population at risk of IDDM and a means of screening for early signs of pancreatic ϑ-cell destruction. The Level II candidate vaccines include many of the candidate vaccines from the 1985 IOM report on vaccine priorities. This set includes candidate vaccines for sexually transmitted diseases, important pediatric viral infections, bacterial and viral infections associated with long-term chronic disease states, and a therapeutic vaccine directed against a cancer, melanoma. The challenges posed by the licensure of these candidate vaccines are similar to those discussed above for the most favorable set. Vaccines to be administered during puberty require health care delivery systems and practices not yet adequately developed. The placement in Level II of a vaccine directed against tuberculosis illustrates an interesting point. Although tuberculosis is a very serious disease with high associated health care costs, the number of new cases of tuberculosis is much lower than the number of new cases of many of the other diseases considered in the committee’s analysis. However, the assumption by the committee that the vaccine would be given to high-risk populations in a very targeted manner means that program costs are low compared with the cost of annual immunization of the birth cohort of almost 4 million infants. The Level III candidate vaccines include vaccines to be given during puberty (or during pregnancy, but with a low utilization rate) to protect newborns and infants and vaccines to be administered during infancy to prevent diseases in infants and all others. Challenges related to immunization of pregnant women and of adolescents were discussed above. The committee has assumed that utilization of all vaccines during puberty will be in a midrange of approximately 50%. A Group B streptococcus vaccination strategy that targets girls during puberty or pregnant women with an assumption of a 10% utilization rate falls into Level III. An assumption of a high rate of utilization during pregnancy moves the Group B streptococcus vaccination strategy into the cost-saving set (Level I) of candidate vaccines, as discussed above. The committee began its deliberations before the licensure of a rotavirus vaccine in 1998. The committee finalized its analysis of rotavirus vaccine with two separate assumptions. One analysis assumed that licensure was imminent in 3 years and required development costs. The other analysis assumed that licen-

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Vaccines for the 21st Century: A Tool for Decisionmaking sure had occurred and that there were no more development costs. Both analyses place rotavirus vaccine in Level III. The Level IV candidate vaccines include those whose development might seem less compelling because of limited disease burden, primarily because of low numbers of cases. Several of the candidate vaccines in this category would be used by restricted populations. These populations are limited by geography (e.g., Borrelia burgdorferi, Histoplasma capsulatum, and Coccidioides immitis vaccines) or by occupation or activity. For example, the shigella and enterotoxigenic Escherichia coli vaccines are targeted to overseas travelers, including members of the military. As stated several times in the report, the committee has not recommended which vaccines should be accorded development priority, nor will it recommend which vaccines should not be developed. Research and development efforts related to Level IV candidate vaccines can be justified in several ways. Research on these vaccines can lead to fundamental discoveries important to other candidate vaccines in the future or to other areas of basic research. Disease patterns could change, increasing the disease burden and making the need for these vaccines more compelling. The discussion of the development of the polio vaccine (Chapter 2) demonstrates that disease epidemiology can indeed change in a relatively short time, making what once seemed like a minor disease a much bigger concern; in this case, ongoing research on poliovirus and poliovirus vaccines contributed greatly to the speedy development of two complementary vaccine strategies once the need was recognized. These Level IV candidate vaccines could also be important due to the burden of disease in other countries, which is not factored into this analysis. The committee argued in Chapter 3 that the inclusion of a candidate vaccine for malaria or for dengue hemorrhagic fever in a report focused on U.S. public health problems was less compelling than inclusion of other candidate vaccines. An analysis of international disease burden would be likely to result in a more favorable cost-effectiveness result for such candidate vaccines. As this chapter illustrates, a cost-effective analysis is an important tool available to policymakers concerned with vaccine research and development, as well as with vaccine program implementation. Not every scenario could be analyzed and presented, but an important tool has been developed and recommended for use. Prominent candidate vaccines have been used to illustrate the model. The availability of the software and spreadsheets used in the analysis of Vaccine X and of the 26 candidate vaccines means that dialogue around vaccine research and development priorities can continue with a common tool and a common language.

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