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# Pharmacoeconomics & Health Outcomes

Stats Overview

## Leon E. Cosler, R.Ph., Ph.D.

Associate Professor of Pharmacoeconomics
Albany College of Pharmacy

## 1. Descriptive Statistics (overview)

• the ‘middle’ and the variation
• DI notes…
> everything you need to know!

2. Inferential Statistics
• hypothesis testing and errors

## 4. Techniques specific to economic studies

Research Methods: ECHO model
1. Clinical
“Intermediate” clinical indicators
versus long term clinical outcomes
• Analytical methods differ
Dx Clinical Outcome Intermediate Clinical Indicator
(long term)

## HTN Fewer deaths due to MI Improved control of BP

Improved control serum
cholesterol

## Diabetes Reduced incidence of Improved control of blood glucose

ESRD; neuropathies, etc. Improved Hgb A1c

## HIV Reduced incidence of OI Improved CD4 counts

Improved survival times Reduced Viral load counts
Research Methods: ECHO model
2. Economic
- all relevant cost categories
- indirect costs include ability to work

3. Humanistic
- Health related quality of life (HRQOL)
- Patient satisfaction
- (Valuing these are difficult & contentious)
• more on this later…
Scales of Measurement
• Four levels of measurement
- Nominal variable→ no implied rank or order.
• Example: presence or absence of a disease

## - Ordinal variable→ an implied order of rank. Discrete

Variable
• Example: pain scale (categories)

## - Interval variable→ defined units of measurement.

• There is an equal distance or interval between values.

• Example: temperature

## - Ratio variable→ defined units of measurement. Continuous

• Same as interval but has an absolute zero. Variable
• Example: No. of cigarettes smoked per day

## Type of variable is a determining factor in selecting the appropriate statistical test

Descriptive Statistics
What does the data look like?

## • Where is the middle?

• How spread out is it?
• Measure of central tendency
- often graphing the data good first step

## • Several measures of “central tendency”

1. Arithmetic mean = xi
N

## 2. Median = 50% of obs. above & below

3. Mode = most common occurring value
Measure of central tendency
• With a “perfect” normal distribution
mean = median = mode !

www.snr.missouri.edu/natr211/examples/sample1.png
Measure of central tendency

## • Many types of data aren’t normal

• Clue: if mean & median are different…
• you have a problem…
• we have already seen an example of this
Income Distribution in the U.S.
Median = \$44,389 US Household Income: 2004
Mean = \$70,402
100% 79.9%

90%
66.5%
80%
70% 54.1%
60%
Percent of US
50%
Households
40%
30%
20%
10%
0%
1
\$100,000 + 20.1%
\$75,000 - \$99,999 13.4%
\$50,000 - \$74,999 20.6%
\$25,000 - \$49,999 25.7%
< \$25,000 20.2%
Source: URL: http://pubdb3.census.gov/macro/032005/faminc/new07_000.htm <accessed 2006 Jan 18>
A “skewed” distribution

mode
median
mean

mode
median
mean
Measures of Variability
• Range
- Different between the highest data value and the lowest data
value
- Ordinal, interval and ratio data
• Inter-quartile range
- Data values within the 25th and 75th quartiles
• Directly related to the median

## - Less likely to be affected by extreme values in the data

- Ordinal, interval and ratio data
• Standard deviation
- Measure of the average amount by which each observation
in a series of data points differs from the mean.
Variation: How spread out is the data?

• Variation:
- ex: the standard deviation

sd = N ∑ x i − ( ∑ xi )
2 2

N ( N − 1)

## - Ex: study reports expenditures

Mean ± sd
\$9,105 ± \$16,415
Variation
www.hemweb.com/library/images/curve.gif
Inferential Statistics
Inferential Statistics

## • Examine associations between variables

- does the intervention make a difference?
- a statistically significant difference?
- contrast to clinical significance…

- there is no difference!
- designated H0
- decision based on probabilities
- sometimes we guess wrong…
Hypothesis Testing: Inferential Statistics

"Reality"
There is NO There IS a
I Decide: Difference; Difference;
Ho is true Ho is false

## There IS a difference; Correct

Error!
(Reject the Ho) Decision

There is NO
Correct
difference; Error!
Decision
Do not reject the Ho
Hypothesis Testing: Inferential Statistics

"Reality"
There is NO There IS a
I Decide: Difference; Difference;
Ho is true Ho is false

## There IS a difference; Type I Error; Correct Decision;

Reject the Ho prob. = alpha

## There is NO Correct Type II Error;

difference; Decision prob. = beta
Do not reject the Ho
Hypothesis Testing: Inferential Statistics
"Reality"
There is NO There IS a
I Decide: Difference; Difference;
Ho is true Ho is false

## There IS a difference; Type I Error; Correct Decision;

Reject the Ho prob. =
alpha "p"

## There is NO Correct Type II Error;

difference; Do Decision prob. = beta
not reject the Ho
HYPOTHESIS TESTING: THE MEANING OF ALPHA

## • Alpha (α): The probability of making a type I error

- accept the research hypothesis when it is incorrect
(false-positive result)

## • When a statistically significant difference is found

between treatment groups at a significance level
of 0.05 (P=0.05), there is a 1 in 20 probability that it
was a chance finding
HYPOTHESIS TESTING: THE MEANING OF BETA

## • Power is the ability to detect a difference if a

difference actually exists
- Power = 1 – beta

## • By convention, β should be less than 0.20, and

ideally less than 0.10, to minimize the chance of
making a type II error
Graphical relationship of α & β errors
Sample Size Calculations
• One of the most important areas to critique when
evaluating clinical studies is sample size

## • Investigators should state how the sample size was

determined for the study
- No magic number

## • Sample size was adequate

- number of patients who complete the study =
investigators’ initial sample size calculations presented
in the methods
Statistical Methods: Sample Sizes

## • you will need:

- what level of “alpha” will you accept ?
- What level of power do you want?
- what’s your data look like?
> the standard deviation ?
> A minimum difference to be able to detect

## • there are tables already prepared

Statistical Methods: Sample Sizes

sd
n=
αD 2

## • for differences in proportions:

2
1  Z (α / 2 ) 
n=  
4 d 
Detecting effects of different sizes
Statistical Methods: Sample Sizes
2
• Ex: 1  Z (α / 2 ) 
n= 
You want to be 95% sure that 4  d 

## the difference in cure rates between

2 drugs is at least 5%
- alpha = 0.05 alpha / 2 = 0.025
- Z(0.025) = 1.96

2
n = 384.16 or 385 Pts. 1  1.96 
n= 
4  0.05 
Inappropriate Sample Size Risks

## Sample size too small False-negative results

(type II error)
Sample may not represent
population
Overestimation of
treatment effects

## Sample size too large Results may lack clinical

significance
Descriptors of statistical significance
P VALUES
• Nothing magic about p < 0.05
• Controversies in interpretation…

## • Statistical significance does not imply that the

new treatment offers a real clinical advantage
• Statistical significance is related to sample size
• Confidence intervals can help the clinician
assessment of clinical significance
Confidence Interval
Interpretaion:
• Range of values that includes the true value for the
population parameter being measured
• 95% or 99% confidence interval

## - For differences: CI should not include “0”

- For Hazard or Risk Ratios:
• CI shouldn’t include “1”

## • Assist in making decisions concerning the clinical

relevant of study data

variability

## • Confidence intervals make clear the role of

sample size
- Reflects magnitude of difference
- Clinical vs. statistical significance
Overview of Statistical Tests
Type of Two Two Related Three or More Three or More
Data Independent Samples Independent Related Samples
Samples (Paired/Matched) Samples (Paired/Matched)

(McNemar) Wallis

## Ordinal Mann-Whitney Sign test Kruskai- Friedman

U Wilcoxon signed Wallis
ranks

## Interval or Parametric Parametric Parametric Parametric

ratio T-test Paired t-test ANOVA ANOVA

## Non- Non-parametric Non- Non-parametric

parametric Wilcoxon signed parametric Friedman
Mann-Whitney ranks Kruskai-
U Wallis
Overview of Statistical Tests

## Continuous (interval or ratio) and

Nominal (binary)
Nominal (binary) and Nominal
Parametric (binary)
Ordinal and Nominal (binary)
T-test (student T-test)
Compare Means Chi-square test
Mann Whitney U test
Compare frequencies/proportions
Compare medians
Non-parametric
Mann-Whitney Relative risk/ odds ratio
Compare Medians

## Continuous (interval or ratio) and

Nominal (binary)
Nominal (binary) and Nominal
Parametric (binary)
Ordinal and Nominal (binary)
Paired T-test
Compare Means Chi-square test (McNemar)
Wilcoxon Signed Ranks
Compare frequencies/proportions
Compare Medians
Non-parametric
Wilcoxon Signed Ranks
Compare Medians
Overview of Statistical Tests

## Continuous (interval or ratio) and

Nominal (>2 categories )
Nominal (binary) and
Nominal (>2 categories) Ordinal and
Parametric
Nominal (>2 categories)
Analysis of Variance (ANOVA)
Chi-square test
Compare Means
Compare frequencies/proportions Kruskal-Wallis
Compare medians
Non-parametric
Kruskal-Wallis
Compare Medians

## Continuous (interval or ratio) and

Nominal (>2 categories)
Nominal (binary) and
Nominal (>2 categories) Ordinal and
Parametric
Nominal (>2 categories)
ANOVA Repeated Measures
Chi-square test (McNemar)
Compare Means
Compare frequencies/proportions Friedman
Compare Medians
Non-parametric
Friedman
Compare Medians
Data Analysis Issues
Types of Blinding

## Single-blind Either subjects or investigators are

unaware of assignment of subjects to
active or control groups

## Double-blind Both subjects and investigators are

unaware of assignment of subjects to
active or control groups

## Triple-blind Both subjects and investigators are

unaware of assignment of subjects to
active or control groups; another group
involved with interpretation of data is
also unaware of subject assignment
INTENTION TO TREAT ANALYSIS

## • Data for all subjects who qualify…

- Expecting some Pts will not finish…
• Imputation of outcomes
- PT’s last measurement (LOCF)
- Average score or measurement for the entire group
- Multivariate analysis to predict most likely outcome
• Significant loss to follow up negatively affects intention to
treat analysis.
PER PROTOCOL ANALYSIS
• Only Pts who finish the protocol…
• Problems with the “per protocol efficacy” analysis:
- Estimate of treatment effect likely to be flawed (i.e., overestimated),
since reasons for non-adherence to protocol may be related to
patients’ prognosis
- Empirical evidence suggests that participants who adhere tend to
do better than those who do not, even after adjustment for all
known prognostic factors, and irrespective of assignment to
treatment or placebo
- Excluding non-adherent participants from the analysis leaves those
who may be destined to have a better outcome, and destroys the
unbiased comparison afforded by randomization
Confounding Variables
Methods of Coping with Confounding

• Design Phase
- Specification
- Matching

• Analysis Phase
- Stratification
Statistical Methods: Linear Regression

Yi = Β0 + Β1 X 1 + Β2 X 2 + ... + Βn X n + e
25
Dependent Variable: "Y"

20

15

10

0
13
1

11

15

17

19
Independent Variable(s): "X"
Statistical Methods: Linear Regression

• Key assumptions:
• the “independent” variables really are!
• the relationship is linear; not curved
• the variables are normally distributed
• Key output:
• “Beta weights” or Parameter Estimates
• Confidence intervals
• R2 value
- % of variation explained (higher is better)

## • Sub-types: Logistic regression

Statistical Methods: Linear Regression
Regression output predicting total cost for 1-year treatment
with Flolan (Epoprostenol)
PARTIAL OUTPUT!

## Variable Parameter Sig. 95% CI

Estimate (\$)
Intercept \$11,644.00 p < 0.10 (-392, 23680)
Epoprostenol \$5,159.00 p < 0.05 (959, 9359)
NYHA class IV \$1,176.00 ns (-3434, 5786)
Employed -\$12,363.00 ns (-28110, 3384)
Disabled -\$15,047.00 p < 0.05 (-26740, -3354)
Retired -\$11,572.00 p < 0.05 (-23128, -16)
Rales at entry -\$364.00 ns (-4992, 4264)
Creatinine > 2.0 at entry \$2,813.00 ns (-1499, 7125)
Diabetes at entry \$755.00 ns (-4084, 5594)

2
R = 0.13

## Source: Schulman et al. Results of the Economic Evaluation of the F.I.R.S.T.

International Journal of Technology Assessment, 12:4 (1996), 698-713
Techniques for Economic Data

## • Transform the data

• use the log10(costs)
• Then use parametric tests

## • Use ‘special’ techniques

• non-parametric tests (e.g. Mann-Whitney)
• ‘bootstrapping’
- taking multiple samples from the data
- complex process; yields decent results
Total cost of asthma discharges
LOG (total cost)
Things to Remember
• The wrong test can give the wrong results!
• Statistical significance ≠ clinical significance
• Significant associations may not always be a cause-effect
relationship
That’s all for today… !