Agent relationships and information asymmetries in public health

The agent relationship and information asymmetry are two features of healthcare economics – but how do they apply to public health policy around processed foods?

Why is health different to other goods?

Arrow’s 1963 seminal paper helped lay the foundations for health economics as a discipline. The Nobel-winning economist talks about what makes healthcare different to other types of market goods. Two of the principal things are agent relationship – that a clinician often makes choices on behalf of a patient (Arrow calls them a “controlling agent”); and information asymmetry – that a clinician knows more than the patient (“informational inequality”). Whereas if someone is buying a new car, they make their own choices, and they might read up on the extensive information available so that they are reasonably knowledgeable about what to buy. These two factors have evolved and possibly diminished over time, especially among highly educated people in developed countries; people often have more choice over their treatment options, and some people have become ‘expert patients‘. Patients may no longer believe that the Götter in Weiß (Gods dressed in white) always know best.

Agent relationship and information asymmetry are features of healthcare economics but they also apply to public health economics. But where people accept clinicians as having more knowledge or acting as their agent, people don’t always accept advice on food from public health policy makers in the same way. People may think, “well I know how to buy a bottle of beer, or a can of coke, or a pizza”, and may not see any potential information asymmetry. Some of it might be ‘akrasia’ – they know that food is unhealthy, but they eat it anyway because it is delicious! However, few people may be aware that poor diet and obesity are the biggest risk factors for ill health and mortality in England.

People might ask “why should a nanny state agent make my food or drink decisions for me?” Of course, this is ignoring the fact that processed food companies might be making those decisions, and reinforcing them using huge marketing budgets. Consumers see government influences but they don’t always see the other information asymmetry and agent relationship; the latent power structures that drive their behaviours – from the food, drinks, alcohol industry, etc. Unsustainable food systems that promote obesity and poor health might be an example of market failure or a tragedy of the commons. The English food system has not moved on enough from post-world war 2 rationing, where food security was the major concern; it still has an objective to maximise calorie supply across the population, rather than maximise population health.

Some of the big UK misselling scandals like mortgage PPI are asymmetries. You could argue that processed foods (junk food high in salt, sugar and saturated fats) might be missold because producers try to misrepresent the true mix of ingredients – for example, many advertisements for processed foods try to misrepresent their products by showing lots of fresh fruit and vegetables. Even though processed foods might have ingredients listed, people have an information asymmetry (or at least, a deficit around information processing) around truly understanding the amount of hidden salt and sugars, because they may assume that the preparation process is similar to a familiar home cooked method. In the US there have been several lawsuits from consumers alleging that companies have misled them by promoting products as being wholesome and natural when they are in fact loaded with added sugars.

The agent relationship and information asymmetry as applied to food policy and health.

How acceptable are public health policies?

A 2012 UK poll carried out by YouGov, funded by the Adam Smith Institute (a right wing free market think tank), found that 22% of people in England thought that the government should tell people what to eat and drink, and 44% thought the government should not. Does this indicate a lack of respect for public health as a specialism? But telling people what to eat and drink is not the same as enacting structural policies to improve foods. Research has shown that interventions like reducing salt in processed foods in the UK or added sugar labelling in the US could be very cost effective. There has been some progress with US and UK programmes like the sugary drinks industry levy, which now has a good level of public support. But voluntary initiatives like the UK sugar reduction programme have been less effective, which may be because they are weakly enforced, and not ambitious enough.

A recent UK study used another YouGov survey to assess the public acceptability of behavioural ‘nudge’ interventions around tobacco, alcohol, and high-calorie snack foods. It compared four types of nudges: labelling (adding graphic warning labels to products); size (reducing pack size of snacks, serving size for alcohol, and number of cigarettes in packets for tobacco); tax (increasing the price to consumers); and availability (banning sales from corner shops). This study found that labelling was the most acceptable policy, then size, tax, and availability. It found that targeting tobacco use was more acceptable than targeting alcohol or food. Acceptability was lower in people who participated in the relevant behaviour regularly, i.e. smokers, heavy drinkers, frequent snackers.

What should public health experts do?

Perhaps public health experts need to do more to enhance their reputation with the public. But when they are competing with a partnership between right wing think tanks, the media and politicians, all funded by big food, tobacco and alcohol, it is difficult for public health experts to get their message out. Perhaps it falls to celebrities and TV chefs like Jamie Oliver and Hugh Fearnley-Whittingstall to push for healthy (and often more sustainable) food policy, or fiscal measures to internalise the externalities around unhealthy foods. The food industry falls back on saying that obesity is complex, exercise is important as well as diet, and more research is needed. They are right that obesity is complex, but there is enough evidence to act. There is good evidence for an ‘equity effectiveness hierarchy‘ where policy-level interventions are more effective at a population level, and more likely to reduce inequalities between rich and poor, than individual, agentic interventions. This means that individual education and promoting exercise may not be as effective as national policy interventions around food.

The answer to these issues may be in doing more to reduce information asymmetries by educating the public about what is in processed food, starting with schools. At the same time understanding that industries are not benevolent; they have an agent relationship in deciding what is in the foods that arrive at our tables, and the main objectives for their shareholders are that food is cheap, palatable, and with a long shelf life. Healthy comes lower on the list of priorities. Government action is needed to set standards for foods or make unhealthy foods more expensive and harder to buy on impulse, and restrict marketing, as previously done with other harmful commodities such as tobacco.

In conclusion, there are hidden agent relationships and information asymmetries around public health policies, for instance around healthy food and drinks. Public health can potentially learn from economic instruments that have been used in other industries to mitigate information asymmetries and agent relationships. If Government and the food industry had shared incentives to create a healthier population then good things might happen. I would be curious to know what others think about this!

Shilpi Swami’s journal round-up for 9th December 2019

Every Monday our authors provide a round-up of some of the most recently published peer reviewed articles from the field. We don’t cover everything, or even what’s most important – just a few papers that have interested the author. Visit our Resources page for links to more journals or follow the HealthEconBot. If you’d like to write one of our weekly journal round-ups, get in touch.

Performance of UK National Health Service compared with other high-income countries: observational study. BMJ [PubMed] Published 27th November 2019

Efficiencies and inefficiencies of the NHS in the UK have been debated in recent years. This new study reveals the performance of the NHS compared to other high-income countries, based on observational data, and has already caught a bunch of attention (almost 3,000 tweets and 6 news appearances, since publication)!

The authors presented a descriptive analysis of the UK (England, Scotland, Northern Ireland, and Wales) compared to nine other countries (US, Canada, Germany, Australia, Sweden, France, Denmark, the Netherlands, and Switzerland) based on aggregated recent data from a range of sources (such as OECD, World Bank, the Institute for Health Metrics Evaluation, and Eurostat). Good things first; access to care – a lower proportion of people felt unmet needs owing to costs. The waiting times were comparable across other countries, except for specialist care. The UK performed slightly better on the metric of patient safety. The main challenge, however, is that NHS healthcare spending is lower and has been growing more slowly. This means fewer doctors and nurses, and doctors spending less time with patients. The authors vividly suggest that

“Policy makers should consider how recent changes to nursing bursaries, the weakened pound, and uncertainty about the status of immigrant workers in the light of the Brexit referendum result have influenced these numbers and how to respond to these challenges in the future.”

Understandably comparing healthcare systems across the world is difficult. Including the US in the study, and not including other countries like Spain and Japan, may need more justification or could be a scope of future research.

To be fair, the article is a not-to-miss read. It is an eye-opener for those who think it’s only a (too much) demand-side problem the the NHS is facing and confirms the perspective of those who think it’s a (not enough) supply-side problem. Kudos to the hardworking doctors and nurses who are currently delivering efficiently in the stretched situation! For sustainability, the NHS needs to consider increasing its spending to increase labour supply and long-term care.

A systematic review of methods to predict weight trajectories in health economic models of behavioral weight management programs: the potential role of psychosocial factors. Medical Decision Making [PubMed] Published 2nd December 2019

In economic modelling, assumptions are often made about the long-term impact of interventions, and it’s important that these assumptions are based on sound evidence and/or tested in sensitivity analysis, as these could affect the cost-effectiveness results.

The authors explored assumptions about weight trajectories to inform economic modelling of behavioural weight management programmes. Also, they checked their evidence sources, and whether these assumptions were based on any psychosocial variables (such as self-regulation, motivation, self-efficacy, and habit), as these are known to be associated with weight-loss trajectories.

The authors conducted a systematic literature review of economic models of weight management interventions that aimed at reducing weight. In the 38 studies included, they found 6 types of assumptions of weight trajectories beyond trial duration (weight loss maintained, weight loss regained immediately, linear weight regain, subgroup-specific trajectories, exponential decay of effect, maintenance followed by regain), with only 15 of the studies reporting sources for these assumptions. The authors also elaborated on the assumptions and graphically represented them. Psychosocial variables were, in fact, measured in evidence sources of some of the included studies. However, the authors found that none of the studies estimated their weight trajectory assumptions based on these! Though the article also reports on how the assumptions were tested in sensitivity analyses and their impact on results in the studies (if reported within these studies), it would have been interesting to see more insights into this. The authors feel that there’s a need to investigate how psychosocial variables measured in trials can be used within health economic models to calculate weight trajectories and, thus, to improve the validity of cost-effectiveness estimates.

To me, given that only around half of included studies reported sources of assumptions on long-term effects of the interventions and performed sensitivity analysis on these assumptions, it raises the bigger long-debated question on the quality of economic evaluations! To conclude, the review is comprehensive and insightful. It is an interesting read and will be especially useful for those interested in modelling long-term impacts of behavioural support programs.

The societal monetary value of a QALY associated with EQ‐5D‐3L health gains. The European Journal of Health Economics [PubMed] Published 28th November 2019

Finding an estimate of the societal monetary value of a QALY (MVQALY) is mostly performed to inform a range of thresholds for accurately guiding cost-effectiveness decisions.

This study explores the degree of variation in the societal MVQALY based on a large sample of the population in Spain. It uses a discrete choice experiment and a time trade-off exercise to derive a value set for utilities, followed by a willingness to pay questionnaire. The study reveals that the societal values for a QALY, corresponding to different EQ-5D-3L health gains, vary approximately between €10,000 and €30,000. Ironically, the MVQALY associated with larger improvements on QoL was found to be lower than with moderate QoL gains, meaning that WTP is less than proportional to the size of the QoL improvement. The authors further explored whether budgetary restrictions could be a reason for this by analysing responses of individuals with higher income and found out that it may somewhat explain this, but not fully. As this, at face value, implies there should be a lower cost per QALY threshold for interventions with largest improvement of health than with moderate improvements, it raises a lot of questions and forces you to interpret the findings with caution. The authors suggest that the diminishing MVQALY is, at least partly, produced by the lack of sensitivity of WTP responses.

Though I think that the article does not provide a clear take-home message, it makes the readers re-think the very underlying norms of estimating monetary values of QALYs. The study eventually raises more questions than providing answers but could be useful to further explore areas of utility research.


Meeting round-up: ISPOR Europe 2019

For many health economists, November is ISPOR Europe month, and this year was no exception! We gathered in the fantastic Bella Center in Copenhagen to debate, listen and breathe health economics and outcomes research from the 2nd to the 6th November. Missed it? Would like a recap? Stay tuned for the #ISPOREurope 2019 round-up!

Bella Center

My ISPOR week started with the fascinating course ‘Tools for reproducible real-world data analysis’ by Blythe Adamson and Rachael Sorg. My key take-home messages? Use an interface like R-markdown to produce a document with code and results automatically. Use a version control platform like Phabricator to make code review easy. Write a detailed protocol, write the code to follow the protocol, and then check the code side by side with the protocol.

Monday started with the impressive workshop on translating oncology clinical trial endpoints to real-world data (RWD) for decision making.

Keith Abrams set the scene. Electronic health records (EHRs) may be used to derive the overall survival (OS) benefit given the observed benefit on progression-free survival (PFS). Sylwia Bujkiewicz showed an example where a bivariate meta-analysis of RCTs was used to estimate the surrogate relationship between PFS and OS (paper here). Jessica Davies discussed some of the challenges, such as the lack of data on exposure to treatments in a way that matches the data recorded in trials. Federico Felizzi presented a method to determine the optimal treatment duration of a cancer drug (see here for the code).

Next up, the Women in HEOR session! Women in HEOR is an ISPOR initiative that aims to support the growth, development, and contribution of women. It included various initiatives at ISPOR Europe, such as dinners, receptions and, of course, this session.

Shelby Reed introduced, and Olivia Wu presented on the overwhelming evidence on the benefits of diversity and on how to foster it in our work environment. Nancy Berg presented on ISPOR’s commitment to diversity and equality. We then heard from Sabina Hutchison about how to network in a conference environment, how to develop a personal brand and present our pitch. Have a look at my twitter thread for the tips. For more information on the Women in HEOR activities at ISPOR Europe, search #WomenInHEOR on twitter. Loads of cool information!

My Monday afternoon started with the provocatively titled ‘Time for change? Has time come for the pharma industry to accept modest prices?’. Have a look here for my live twitter thread. Kate Dion started by noting that the pressure is on for the pharmaceutical industry to reduce drug prices. Sarah Garner argued that lower prices lead to more patients being able to access the drug, which in turn increases the company’s income. Michael Schröter argued that innovative products should have a premium price, such as with Hemlibra. Lastly, Jens Grueger supported the implementation of value-based price, given the cost-effectiveness threshold.

Keeping with the drug pricing theme, my next session was on indication-based pricing. Mireia Jofre Bonet tackled the question of whether a single price is stifling innovation. Adrian Towse was supportive of indication-based pricing because it allows for the price to depend on the value of each indication and expand access to the full licensed population. Andrew Briggs argued against indication-based pricing for three reasons. First, it would give companies the maximum value-based price across all indications. Second, it would lead to greater drug expenditure, leading to greater opportunity costs. Third, it would be difficult to enforce, given that it would require cooperation of all payers. Francis Arickx explained the pricing system in Belgium. Remarkably, prices can be renegotiated over time depending on new entrants to market and new evidence. Another excellent session at ISPOR Europe!

My final session on Monday was about the timely and important topic of approaches for OS extrapolation. Elisabeth Fenwick introduced the session by noting that innovations in oncology have given rise to different patterns of survival, with implications for extrapolation. Sven Klijn presented on the various available methods for survival extrapolation. John Whalen focused on mixture cure models for cost-effectiveness analysis. Steve Palmer argued that, although new methods, such as mixture cure models, may provide additional insight, the approach should be justified, evidence-based and alternatives explored. In sum, there is no single optimal method.

On Tuesday, my first session was the impressive workshop on estimating cost-effectiveness thresholds based on the opportunity cost (twitter thread). Nancy Devlin set the scene by explaining the importance of getting the cost-effectiveness threshold right. James Lomas explained how to estimate the opportunity cost to the health care system following the seminal work by Karl Claxton et al and also touching on some of James’s recent work. Martin Henriksson noted that, by itself, the opportunity cost is not sufficient to define the threshold if we wish to consider solidarity and need alongside cost-effectiveness. The advantage of knowing the opportunity cost is that we can make informed trade-offs between health maximisation and other elements of value. Danny Palnoch finished the panel by explaining the challenges when deciding what to pay for a new treatment.

Clearly there is a tension between the price that pharmaceutical companies feel is reasonable, the opportunity cost to the health care service, and the desire by stakeholders to use the drug. I feel this in every session of the NICE appraisal committee!

My next session was the compelling panel on the use of RWD to revisit the HTA decision (twitter thread). Craig Brooks-Rooney noted that, as regulators increasingly license technologies based on weaker evidence, HTA agencies are under pressure to adapt their methods to the available evidence. Adrian Towse proposed a conceptual framework to use RWD to revisit decisions based on value of information analysis. Jeanette Kusel went through examples where RWD has been used to inform NICE decisions, such as brentuximab vendotin. Anna Halliday discussed the many practical challenges to implement RWD collection to inform re-appraisals. Anna finished with the caution against prolonging negotiations and appraisals, which could lead to delays to patient access.

My Wednesday started with the stimulating panel on drugs with tumour agnostic indications. Clarissa Higuchi Zerbini introduced the panel and proposed some questions to be addressed. Rosa Giuliani contributed with the clinical perspective. Jacoline Bouvy discussed the challenges faced by NICE and ways forward in appraising tumour-agnostic drugs. Marc van den Bulcke finished the panel with an overview of how next generation sequencing has been implemented in Belgium.

My last session was the brilliant workshop on HTA methods for antibiotics.

Mark Sculpher introduced the topic. Antibiotic resistance is a major challenge for humanity, but the development of new antibiotics is declining. Beth Woods presented a new framework for HTA of antibiotics. The goal is to reflect the full value of antibiotics whilst accounting for the opportunity cost and uncertainties in the evidence (see this report for more details). Angela Blake offered the industry perspective. She argued that revenues should be delinked to volume, to be holistic in the value assessment, and to be mindful of the incentives faced by drug companies. Nick Crabb finished by introducing a new project, by NICE and NHS England, on the feasibility of innovative value assessments for antibiotics.

And this is the end of the absolutely outstanding ISPOR Europe 2019! If you’re eager for more, have a look at the video below with my conference highlights!