Judging the cost effectiveness of public health activities

The overall aim of cost-effectiveness analysis of public health activities is to help decision makers choose those that maximise the health benefits, given the resources available – and ensure no resources are wasted in the process. However, a balance must be struck between ensuring resources are allocated efficiently, on the one hand, and an equitable allocation of those resources, on the other.

NICE's approach to assessing public health interventions

Cost–utility analysis

Up to 2012, based on Methods for the development of NICE public health guidance (2nd edition), cost–utility analysis was NICE's main method of determining the cost effectiveness of public health interventions. This considers someone's quality of life and the length of life they will gain as a result of an intervention. The health benefits are expressed as quality-adjusted life years (QALYs).

Generally, we consider that interventions costing the NHS less than £20,000 per QALY gained are cost effective. Those costing between £20,000 and £30,000 per QALY gained may also be deemed cost effective, if certain conditions are satisfied. (see section 6.4.1 of 'Methods for the development of NICE public health guidance' 3rd edition).

NICE does not accept or reject interventions on cost effectiveness grounds alone, but assessing effectiveness and cost effectiveness is an integral part of the way we develop guidance.

Cost–consequences and cost–benefit analyses

Drawing on experience gained from producing public health guidance, the latest (3rd edition) of 'Methods for the development of NICE public health guidance', published in 2012, places more emphasis on cost–consequences and cost–benefit analyses when assessing public health interventions.

This dual approach aims to ensure all relevant benefits (health, non-health and community benefits) are taken into account. The idea is to help local authorities (and other organisations interested in improving people's health) better judge whether or not a public health intervention represents value for money

Cost–utility analysis is also used, when needed, to make comparisons with previous economic analyses, as well as to compare treatment and prevention programmes.

Timeframes

It may take several years before the health benefits of some public health interventions start to have an impact, although the costs may need to be incurred 'up front'.

Such interventions may be cost effective or even cost saving over the medium to long term and so would be recommended for funding on that basis, using the cost effectiveness threshold. However, they may not be deemed to be value for money in the short term in a simple return on investment analysis (cost savings minus cost of intervention).

Where possible, we report on costs and benefits over the short, medium and long term time horizon.

For further advice and information see How NICE measures value for money in relation to public health interventions.

NICE's analyses show that public health interventions are a good use of public money

We analysed 200 cost-effectiveness estimates of various interventions that informed public health guidance published by NICE between 2006 and 2010 (see figure 1 and table1 below). We found that:

  • 30 (15%) were cost saving

  • 141 (70.5%) were good value for money. In other words, they cost less than £20,000 per QALY gained (The cost-effectiveness of public health interventions)

  • 7 (3.5%) cost between £20,000 and £30,000 per QALY gained (see figure 1 below).

The remainder either exceeded the threshold for what is considered cost effective for the NHS or were more costly and less effective than the comparator.

These figures do not take into account the monetary gains from the employee being able to go back to work (or able to work longer).

Figure 1 Percentage of ineremental cost per QALY estimates falling into different ranges for public health interventions

* 'Comparator dominates' means the comparator (or control) is more effective and less expensive than the intervention against which it was compared.

Although most interventions were aimed at adults, action aimed at children and young people was also good value for money.

Overall, of the interventions NICE has assessed, we found that those aimed at a whole population, such as mass-media campaigns to promote healthy eating and legislation to reduce young people's access to cigarettes, were among the most cost effective. Nevertheless, some targeted approaches to tackle health inequalities, such as interventions to reduce substance misuse among vulnerable young people or to help people return to work following long-term sickness absence, were also found to be cost effective.

Table 1 below provides examples of specific initiatives assessed by NICE. For more examples please see The cost-effectiveness of public health interventions (Owen et al. 2012).

Table 1 Median and range of values of incremental cost-effectiveness estimates for some public health interventions assessed by NICE

Guidance topic classification

Comparator

Median cost/QALY

Range (min–max)

No. of estimates included in median

PH1 Brief interventions and referral for smoking cessation

Brief intervention only (5 minutes)

Background quit rate

£732

£577
to £1,677

8

Brief intervention (5 minutes plus nicotine replacement therapy [NRT])

Background quit rate

£2,110

£1,664
to £4,833

8

Brief intervention (5 minutes plus self-help)

Background quit rate

£370

£292
to £847

8

PH2 Four commonly used methods to increase physical activity[a]

Interview

Advice

£84

NA

1

Exercise prescriptions

Advice

£77

£20
to £159

4

Interviews with exercise voucher

Advice

£227

NA

1

Intensive interviews

Advice

£105

NA

1

Exercise prescription and exercise information

Advice

£425

NA

1

Exercise prescription with intensive GP training

Advice

£437

NA

1

Intensive interviews with exercise voucher

Advice

£430

NA

1

PH3 Prevention of sexually transmitted infections and under 18 conceptions

Tailored skill session

Usual care – didactic messages

£3,200

NA

1

Accelerated partner therapy – doxycycline

Patient referral

£14,025

£9,350
to £18,700

2

Accelerated partner therapy – azithromycin

Patient referral

£19,425

£12,950
to £25,900

2

Brief counselling

Didactic messages

£12,194

£12,080
to £12,308

2

Extract from The cost-effectiveness of public health interventions (Owen et al. 2012).

[a] This refers to the title of the guidance and not the number of interventions assessed.

Smoking cessation interventions: Bury - a case study in cost-effectiveness

To illustrate the costs of smoking – and the savings that can be achieved by tackling tobacco use, we ran an analysis for Bury Metropolitan Borough Council using NICE's return on investment tobacco model. This tool was developed to help local decision-making on tobacco control.

Bury has an adult population of around 141,000. Roughly 23% smoke and 33% are ex-smokers. The model estimated the total annual cost of smoking at £10.7 million, broken down as follows:

  • business – £3.7 million

  • NHS – £6.8 million

  • second-hand smoke – £110,000.

Investing £751,692 in smoking cessation interventions for 1 year (equivalent to current practice) would achieve estimated gross savings of £321,579 overall in the first 2 years (this does not include the cost of implementation). Cost savings were broken down as follows:

Sector

Item

Number of events saved

Cost saving (£)

Business

Days lost from smoking (excludes smoking breaks)

1272

113,162

NHS

GP and other consultations, hospital admissions and prescriptions

2135

205,004

Passive smoking-related treatment

148

3322

The proposed package of interventions was compared with a range of background activities to combat tobacco use. Below are a selection of the outputs calculated using the tobacco return on investment tool.

Taking implementation into account, it was estimated that the package would:

  • Lead to a return of 63p, £1.46, £2.82 and £9.35 over 2 years, 5 years, 10 years and a lifetime respectively, for each pound spent on the package of interventions. (This takes both NHS savings and the value of health gains into account.)

  • Cost an additional £21, £19, £15 and £1 per smoker over 2 years, 5 years, 10 years and a lifetime respectively, after deducting the costs of the package. (Only NHS savings are considered here.)

  • Cost an additional £9 per smoker over 2 years but lead to a saving of £11, £43 and £199 per smoker over 5 years, 10 years and a lifetime respectively, net of the costs of the package. (This takes both NHS savings and the value of the health gains into account.)

  • Cost an additional £34,199 per QALY gained over 2 years, £12,574 per QALY gained over 5 years, £5040 per QALY gained over 10 years and £80 per QALY gained over a lifetime.