costing in vaccine planning and programming

Costing in Vaccine Planning and Programming

Sources, Process And Quality Of Cost Data

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Objectives

• Three steps to estimating costs

• Identify inputs, Measure inputs, Apply Unit costs

• Collecting data on which inputs, how many, unit costs

• Data management, quality assessment and quality control

How Do We Estimate Costs?

Step 1: Identify resources used- What resource use is induced by the treatment or program

either directly or as a result of the treatment or program’s effects

Step 2: Measure resources used- What quantity of each resource is needed per person or per

state?

Step 3: Value resources used- How much does each resource cost in monetary terms?

Step 1Identifying resources

Collecting Cost Data

Step 1: Identify resources usedIdentify streams of healthcare-related events and their

associated resource use• Vaccination

─ Capital inputs─ Recurrent inputs

• Prevented Hospitalizations• Prevented Visits

Sources of Information on Inputs

Input Item Source of Data

Personnel Interview administratorsExamine financial records

Time allocated Interview workers

Capital Interview administrators

Cold chain Interview administrators

Vaccine Records at various levels

Overhead Interview administrators

Other Sources of Data

• Country-level comprehensive multi-year plans (cMYP)

• Published cost and cost-effectiveness studies using empirical data or models to estimate vaccine and non-vaccine program costs

• Primary data collection on costs conducted as stand-alone studies or alongside clinical trials or pilot (demonstration) projects

Sources for Quantifying Resources Used

• Costing studies (example to follow)• Administrative records (e.g. time sheets, drug stock

cards hospital records, patient case notes)• Questionnaires and diaries

• Literature• Expert opinion

Data Collection

• Data collection tools

• Specific tables developed/ tool annexes

• Photocopies/ pictures

DeMTAP pictorial diaries

• Consumption and expenditure data• Health and non-health• 12-month period• Includes home-produced

consumption• Prompts in the form of a

checklist and aide mémoire

How to measure resource use?Level of detail required

• Costing approaches • Bottom-up: • Detailed analysis of resource use due to a particular intervention

(e.g. staff salary, staff time spent vaccinating)• Top-down: • Allocates a total budget to specific services (e.g. staff salary for

vaccination)

• Choice depends on need for specific estimation vs. research costs• Precision vs. pragmatism

Step 2 and 3Measuring and Valuing

Approaches To Measuring/Valuing Resources

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STEP 2 & 3: OTHER APPROACHES TO MEASURING AND VALUING RESOURCES

Micro-costing Gross costing

Primary data collection to build variable and fixed cost estimates and subsequent analysis to build cost per case

Secondary data analysis of clinical, administrative, and financial databases using health services methods, includes use of charge data

Ingredient-based approach using a mix of data sources to populate health resource utilization and unit costs

Allocation methods, distributing budgets or expenditur es down to categories, such as “per ward admission” “per clinic visit”

How to value resource use?Principles involved

• Opportunity cost• Cost is foregone benefit of a resource in its best alternative use• Perfectly competitive market, price = opportunity cost• Prices in health care often unavailable or distorted• Wages for health workers artificially too high/too low• Prices for drugs artificially too high/too low

• In practice, most studies still use unadjusted market prices

Caution: Costs vs. ChargesIf data came from asking what patients were charged---• Charges do not necessarily represent social opportunity costs• In contrast, the amount paid by a payer does represent the cost from the

payer's perspective. Key to note that this may still differ from the amount charged• Need to make adjustments to charges:• Particularly at hospital level

• Cost-to-charge ratio can be used

• In the USA, a common method for estimating the economic cost of medical services is to adjust the charges through the use of cost-to-charge ratios• Cost-to-charge ratios are coefficients developed by expert panels to

convert charges for medical services to their true economic costs• Applying cost-to-charge ratios to medical service charges produces

average estimates of true costs

How to value resource use?Sources for health service unit costs

• Administrative databases (DRGs, reference costs), e.g. www.who.int/choice/cost-effectiveness/en/index.html

•Manuals, e.g. www.pssru.ac.uk/

• Published literature

• Specific estimation

How to analyse and present cost data?

• Present resource use separately from unit cost

• Present distribution of costs

• Despite the usual skewness in the distribution of costs, it is the arithmetic mean that is the most informative measure

•Measures other than the arithmetic mean do not provide information about the cost of treating all patients, which is needed as the basis for health care policy decisions

Presenting Cost Data

Resource List Number of Units

Unit Price Cost

Nurses A B A x B

Refrigerators

Vaccines

Etc.

Issues in analysis of costs

• Costs may not be normally distributed

• So:

• Summarize with both medians and means

• Be careful with comparing medians

• Parametric statistics assume normal distribution Low Cost High

Median Mean

Quality Assessment and Quality Control

• Quality of data may be affected at various stages of the study:• Data Collection

• Interviewers are unclear of the purpose of the questionnaire and collect the wrong information• They make errors in recording information• Information missing at a particular level of the health

system

• Data entry• Person responsible for data entry can mis-enter data

from survey tool

Ways to improve quality• Meet stakeholders to discuss design – purpose and direction of the study• Develop standard questionnaire for various levels – facility, district,

national• Pre-test to customize and contextualize the tool• Check translations• Send notification in advance to facilities, district, regions to allow them to

organize logbooks, registers and be present during interviews• Do a quick review of the tool with the in-charge of the facility to facilitate

data collection and availability of information• Take stock of data collection process after a batch of questionnaire

completed• To identify trends of missing data, understanding of data collectors• Undertake quick check calculations to make sure items adds to 100% - staff

time• Revisit facility to do ‘mop-up’ of missing information and to double check

information• Obtain contact information of facility ‘’in-charge to follow-up on any data

queries

Quality Control – Minimizing Errors During Data Entry

• Use tablets for primary data collection

• If using paper• Incorporate validation checks into any database entry

tool• To catch missing cells, inconsistent numbers• To specify texts compared to numeric• To capture differences in size of numeric values

Summary: Measurement of Cost• Measurement of costs is the foundation for tools of economic analysis

commonly used to guide useful for informing health policy such as vaccine programs.

• Costing process• Describe course of treatment or sequence of events• Be explicit about assumptions and define the perspective adopted• Identify and quantify resources used• Assign unit cost to each type of resource

• Common approaches to cost measurement• Observe market prices (with caution!)• Micro-costing (“ingredients”)• Standard costs (WHO CHOICE)

• Once program costs have been determined, adjustments may be necessary (discounting, inflation, currency)

Further reading

§ Luce BR, Manning WG, Siegel JE, Lipscomb J. Chapter 6: Estimating costs in cost-effectiveness analysis, in Gold M et al. (Eds) (1996) Cost-Effectiveness in Health and Medicine, OUP.

§ Hutton G, Baltussen R. Cost valuation in resource-poor settings. Health Policy Plan. 2005; 20(4):252-9

§ Mattke S, Balakrishnan A, Bergamo G, Newberry SJ. A review of methods to measure health-related productivity loss. Am J Manag Care. 2007 Apr;13(4):211-7.


Costing Methodology And Perspective

Objectives

• Different perspectives in costing and rationale for each

• Discounting

• Annualization

• Time preference, inflation and exchange rates in costing

PerspectiveWhat is the view point for the analysis?

• Perspective (viewpoint) is an important issue in health economics studies: be it a cost analysis or an economic evaluation.

• The study perspective essentially defines the basis of analysis and determines the relevant costs that need to be accounted for.

• An item may be a cost from one perspective but not another.

Perspective

Generally, there are four main study perspectives in health economics evaluations:• Government health service• Health care provider • Patient• Societal

However, studies can be conducted from other perspectives as well, e.g.• Purchaser (payer) • Employer or other sponsor

Perspective and Cost Components

Government health service: all costs incurred by the government to provide a service, e.g. routine immunization. Cost components include salaries, vaccines and supplies, cold chain equipment, and all other expenses related to routine immunization.

Health care provider: all costs incurred by the provider in delivering health service to a patient. Cost components include salaries of health professionals, medicines, equipment, consumables, fixed assets etc.

Patient: All costs that a patient has to bear for seeking health care.

Societal: All costs, regardless of who incurs them. Thus, costs to the health care service, social services, patients and the rest of society (e.g., in the form of production losses) are included.

Influence of viewpoint on resultsItem Community-Oriented

programme ($ per annum)

Hospital based programme ($ per annum)

Diference in programme ($ per annum)

Costs (C) Primary Treatment Costs

4800 3100 1700

Other treatment costs (eg social services)

1800 2100

Wider social costs Eg law enforcement, food, shelter)

1420 2020

Benefits (B) Patient earnings 2400 1200 Net Economic cost (B-C)

5620 6020 400

! Illustration from Drummond, 2005 adopted from Weisbrod et al (1980)

Prospective and Retrospective Data Collection

Data for costing studies can be collected either prospectively or retrospectively.

In case of retrospective data collection, the investigator collects data from past records and does not follow up with patients / program over a long period of time.

In case of prospective data collection, the investigator collects data by following up the patient / program over a long period of time.

In immunization costing studies, retrospective data collection method is generally followed where data are gathered from reports, registers, and through interviews.

Discounting

Time Preference Pick A or B

• A. You receive 100,000 dollars today

• B. You receive my promise to give you 103,000 dollars after 365 days

Time preference

•Would you prefer to have $100 now or in the future?

• Positive rate of time preference

•Why?

• ‘live now, pay later’ attitude

• future is uncertain

•might expect to be wealthier in the future

When do I discount?

•When you have costs/benefits for more than 1 year (into the future)

• Ex 1: HIV+ infants will be treated for their life, not just 1 year

• Ex 2: Treating depression can have a lifetime impact

What�s the formula?

• Cost in year n *1 / (1+r)n• In Excel: can use �NPV�• But note that it assumes cost occur at the end of the

year• See Excel worksheet �discounting�

• For �Math� people only:

ò¥

--

2008

)2008( dtVe tr

Discount factors for present value: discount rate (r) = 5%

Year (1+r)n Discount factor1 / (1+r)n

1 (1 + 0.05)1 = 1.050 0.952

2 (1 + 0.05)2 = 1.103 0.907

3 (1 + 0.05)3 = 1.158 0.864

4 (1 + 0.05)4 = 1.216 0.823

5 (1 + 0.05)5 = 1.276 0.784

Example

• If cost was the only deciding factor, which project would you invest in?

• Assume a 5% discount rate

• Also assume costs are incurred at the beginning of each time period

Y1 Y2 Y3 Y4 Y5 Total

Project A $100 $100 $100 $100 $100 $500

Project B $500 - - - - $500

Project C - - - - $500 $500

Example

Y1 Y2 Y3 Y4 Y5 Total

Discount factor (5%)

1.000 0.952 0.907 0.864 0.823

Project A $100 $95 $91 $86 $82 $455

Project B $500 - - - - $500

Project C - - - - $412 $412

• Project C has the lowest cost in terms of present value• For example, you need $500 today for Project B. Alternatively, you

could put $412 in a bank today and receive the $500 you need in year 5 for Project C• Economists contend you are better off with Project C because you

can do something else with the $88 you did not put in the bank

Which discount rate?

• Interest rate on a risk-free investment

• Rate used by a particular country or agency

• Rate used in literature: range 3-10%

• Rate recommended by guidelines

• Carry out sensitivity analysis

Example question

• “Suppose that the Lugazi (Uganda) Water and Sanitation Project was considering two hypothetical improved sanitation programs for Lugazi. Suppose that the two programs cost the same, but that there was only enough money for one of these programs to be implemented here. I want to ask you which one of these programs you would choose, or which one you would vote for.

• Program A would save 100 lives this year.

• Program B would save B [200, 500, 1000] lives in T [2, 5, 10] years.

•Which of the two programs would you choose?”

Annualization�Annual equivalent costs�

Annualization

• Capital items purchased in previous years have a cost today

• Annualization permits capital costs to be converted to their annual equivalent, or implicit rental value, and thus added to annual recurrent costs

• It involves spreading the cost of the capital item over its life, but also takes into account the possible earnings that the money could have made if it had not been tied up in the purchase of the capital item

When do I annualize?

• Capital items – things you use for more than 1 year• Computers•Microscopes• Lab machines• Buildings• Cars

How do I annualize?

1. Use rental costs2. Calculate annual equivalent cost• Need:• Purchase price• Useful life• Discount rate

• Formula:• (Purchase price) / (1 / (1 + r)n))

How do I know the useful life?

•Manufacturer specifications• Accounting rules• Assumptions:• Electrical: 4-5 years•Mechanical: 8-10 years• Furniture: 7-10 years (depends on material)• Precision/glass (lab): 3-5 years• Buildings: 20-50 years

Question

• Single $5,000 piece of capital equipment (no re-sale value)• useful life of 7 years• discount rate of 5%

•What is the annual financial cost?

•What is the annual economic cost?

Inflation

Adjusting for inflation§ Inflation: process by which general prices increase and money loses value

§When comparing data from different years adjust to constant / real terms

§ Inflate / deflate prices by inflation adjustment factor (IAF)

§ IAF = indicator of inflation in base year / indicator of inflation in past year

§ Examples: CPI (www.bls.gov/cpi/), GDP deflator

www.imf.org/external/pubs/ft/weo/2008/02/weodata/index.aspx, both and more

http://web.worldbank.org/WBSITE/EXTERNAL/DATASTATISTICS/0,,contentMDK:21725423~pagePK:64133150~piPK:64133175~theSitePK:239419,00.html

When do I use inflation?

• To adjust costs observed in the past to the year of your study

• Paper in literature reports costs for year 2003 but I want to present results for year 2009

• (For primary data collection: items purchased in past years)

How do I adjust for inflation?

Multiple items: �Adjust for inflation�

• Price in past year * (indicator of inflation in base year / indicator of inflation in past year)

• Inflate in local currency unit, then use currency conversion rates

Example

• Cost per bed-day in 2003 costs = $45

• How much is this in 2006 costs?

• CPI in 2003 = 160.8

• CPI in 2006 = 181.2

Adjusting costs across both time and spacePurchasing Power Parity

Concept of purchasing power parity

• Captures the notion that a dollar should buy the same amount in all countries• Exchange rate should move towards the rate that equalizes the

prices of an identical basket of goods and services in each country• The Economist uses a McDonald’s Big Mac, and more recently a

Starbucks tall-latte, is their ‘basket’• the Big Mac PPP is the exchange rate that would mean Big Macs

cost the same in America as abroad• comparing official exchange rates with PPPs indicates whether a

currency is under- or over-valued

Converting costs into IUS$

•WHO has developed PPPs

•www.who.int/choice/costs/ppp/en/

• An international dollar has the same purchasing power as the US$ has in the United States

• To convert local currency units to international dollars, divide the local currency unit by the PPP conversion factor

When do I need to do this?

• I have data from the past and from a different country…

• Example:• I have a great paper which says that training psychiatrists

cost $200 per doctor in year 2004 in Zambia.•My study is set in Tanzania for the year 2009.

How do I do this?1. Convert to local currency unit of the country where the data

originated (e.g., Zambia) using official exchange rate of year of study (e.g., 2004)

2. Inflate from 2004 (year of study) to 2009 (year of your study)

– Why?

3. Divide by the purchasing power parity rate for Zambia (country of paper) in 2009 (your year)

4. Multiply by the purchasing power parity rate of Tanzania (your country) in 2009 (your year)

5. Divide by the official exchange rate of Tanzania

– Result: Cost of training psychiatrist in Tanzania (in US$), accounting for differences in purchasing power between Zambia and Tanzania

Summary

• Discounting• Costs should be discounted• Benefits less clear• No consensus regarding appropriate discount rate, so use

sensitivity analysis to assess robustness of findings to changes in the rate

• Capital costs• Should be annualised to spread value of item over its

lifetime and to capture opportunity cost of tying-up funds in the purchase of the item

Summary

• Inflation• CPI or GDP deflators can be used to adjust prices for inflation

• Purchasing power parity• IUS$ is a hypothetical currency that has the same purchasing

power that the US$ has in the US at a given point in time• It is used to make comparisons both between countries and

over time

Suggested Readings1. World Health Organization (2008). WHO guide for standardization of economic

evaluations of immunization programmes. Geneva, Switzerland. 2. Dunet DO (2012). Introduction to economic evaluation. Centers for disease

control and prevention, USA.3. Gold MR (eds.) Cost-effectiveness in health and medicine. Oxford University

Press. 1996. 4. Drummond MF, Sculpher MJ, Torrance GW et al. (2005). Methods for the

economic evaluation of health care programmes. Oxford University Press.5. Kobelt G (2013). Health economics: an introduction to economic evaluation, third

edition. Office of health economics, UK.6. Ho A M-H, Nelson EAS, Walker DG (2008). Rotavirus vaccination for Hong Kong

Children: an economic evaluation from the Hong Kong government perspective. Archives of disease in childhood. 93: 52-58.

7. Mogyorosy Z, Smith P (2005). The main methodological issues in costing health care services. A literature review. The University of York, Centre for Health Economics, Research Paper 7, UK.

8. Jamison DT, Jamison JS (2003) Discounting. Bethesda, MD, Fogarty International Center, National Institute of Health. Disease Control Priority Project Working Paper.

9. Walker D, Kumaranayake L. Allowing for differential timing in cost analyses: discounting and annualization. Health Policy Plan. 2002; 17(1):112-118.


Costing of Routine Immunization (RI) Programs

Objectives

• Familiarity with main resource and cost categories in routine immunization programs

• Understand application of general costing processes to immunization programs and services

• Know of various sources of cost and denominator data

Steps in Immunization CostingDefine the scope and perspective: • Routine immunization / supplemental immunization / epidemic, outbreak

response • Government health service / societal perspective• Economic / financial costStep 1: Identify resources used- What resource use is induced by the program; directly or due to program or

treatments effects Step 2: Measure resources used- What quantity of each resource is needed per person or per state?Step 3: Value resources used- How much does each resource cost in monetary terms? Step 4: Allocate shared resources costs

₋ How much of shared resources are used by immunization or specific activities?

Collecting Cost Data - Intervention

Step 1: Identify resources used• Service level - Immunization service component–Difference service models:

– facility based; outreach; mobile; SIA’s/ campaigns; school based….–Urban/ rural health centres; HC/clinics/ health posts;

large vs small? Why might this be important?

• Higher levels: District, Province/ Region and National

• EPI Functions at each level – for activity based costing

• Line items at each level

Collecting Cost Data – Routine Immunization (Common Approach , 2014)

Step 1: Identify resources used

Identify healthcare events and their associated resource use• Service level

– Immunization service– Difference service models:

– facility based; outreach; mobile; SIA’s/ campaigns; school based….– Urban/ rural health centres; HC/clinics/ health posts; large vs small? WHY?

• Higher levels: District, Province/ Region and National Line items: labour; vaccines; supplies; transport; vehicles; cold chain equipment etc

• Functions: Cold chain + vaccine logistics; programme management; supervision; training; surveillance/ HIS; social mobilisation; service delivery

Identification of activities related to immunization at different levels

Facility level - staff time and other resources for:• Routine facility based service delivery: administering vaccines to

children within facilities• Outreach service delivery: for traveling and vaccinating children

at outreach sites • Supervision: by facility staff of immunization related activities.• Record-keeping, HMIS: data entry and analysis, including stock

registers, records of children vaccinated etc.• Training and meetings: attending and/or training and meetings


Facility level (2) - staff time and other resources for:

• Vaccine collection, distribution and storage: collection from higher cold chain points, distribution to facilities and sites• Social mobilization and advocacy: mobilizing community and

households• Cold chain maintenance: maintaining the cold chain.• Surveillance: post-vaccination events; vaccine preventable

diseases•Waste management: waste disposal after vaccination

sessions


District, regional and national level - staff time & other resources for:• (Service delivery – some items budgeted/ expended at district level)• Program management: planning, budgeting, managing the EPI e.g.

forecasting vaccine needs and procuring vaccines.• Supervision: of immunization-related activities• Record-keeping, HMIS: data entry, analysis, vaccine stock records• Training and meeting: attendance or provision• Vaccine collection, distribution and storage: from higher cold chain

points to facilities• Cold chain maintenance• Surveillance: of post-vaccination events & cases of vaccine preventable

diseases• Other

Understanding Costs of Routine Immunization –Activity-Based Costing (Zambia)

Urban Health Centre: Rural Health Centres: • What are the main features of interest? sHow do cost contributions differ?

Understanding Costs of Routine Immunization –Activity-Based Costing from Six Countries (EPIC)

Identification of Cost Line ItemsRecurrent costs

1. Paid labour: Portion of salaried time to immunization-related activities

2. Volunteer labor: Estimation of the market value of volunteer labour used for immunization related activities

3. Per diem and travel allowances: Allowances for paid or volunteer workers for immunization-related activities

4. Vaccines: Cost of vaccines including wastage

5. Supplies: Cost of syringes, diluent, safety boxes, other immunization supplies

Recurrent Cost Line Items6. Transport & fuel: fuel for immunization related transport;

travel (taxi or other) to sites

7. Vehicle maintenance: share of maintaining vehicles, motor cycles etc for immunization-related activities

8. Printing costs: immunization cards, training and IEC materials, other materials

9. Utilities & communication: portion of building maintenance, utilities, telephone, internet connections

10. Other recurrent: Other immunization-related recurrent costs not included above

Identification of Cost Line ItemsCapital Cost line items

1. Cold chain equipment: used to store and transport vaccines

2. Vehicles: share of value of all vehicles, motorbikes etc used

3. Laboratory equipment: any specific equipment used for surveillance tests

4. Other equipment: e.g. computers, printers, peripherals, furniture, other medical equipment for immunization-related activities

5. Buildings: share of building space used for services and store vaccines

6. Other capital: Any other capital investments related to immunization.

Understanding costs by line item –Costs at the primary health centres in India (2013-14)

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Cold chain room equipment

Immunization room equipment

Miscellaneous

ANM / Supervisor travel expenses

Waste management

Building maintenance

Electricity

Alternative vaccine delivery

Vaccine transport

ASHA incentives for immunization

Vaccines and supplies

Labour cost

Distribution of facility cost drivers – Line ItemsUrban vs. Rural HF Economic costs (Zambia)

- What are the main features of the costs that can be useful to planners or understanding how best to cost new vaccine for CEA?

Steps 2 & 3: Measure and Value Resources Used

• Step 2:Measure resources used

• Line items

• Which are most important?

• Activity costs

• Which are most important

Step 3: Value resources used

• Unit costs from

— Previous costing studies

— Cost accounting data

— Micro-costing

— Billing data adjusted by

revenue center codes

• Salary scales and data;

cost/km

• Quantities and costs from

— Questionnaires, diaries,

logs

Data Source Options: Program CostsVa

riabl

e Co

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Item Source and Method

Vaccines

• Country procurement records; UNICEF/ GAVI/ Revolving Fund

prices; include insurance & freight

• Stock management records or WHO norms for wastage

Supplies• Procurement records; WHO GPRM; MSH Drug Price Guide;

Drug Topics Red Book

Labor• Staff and manager surveys; Time-motion; time diaries

• Public service remuneration packages

Patient time• Survey for time amount

• Value with average gross wages

Maintenance, Fuel • District or facility accounts

Subsistence/ other

Allowances• District or facility accounts

Data Source Options: Program Costs (2)Fi

xed

Cost

s

Item Method

Clinic space • Market price, annualize, allocate based on minutes used

Overhead • Step-down allocation of facility-level costs?

Surveillance • Proportion of EPI budget? allocate based on vaccine type?

Cold chain• Country records; UNICEF & WHO product information sheets• Refrigerators alloc. based on vaccine volume (‘semi-fixed’)

Social mobilization • One-time push at launch - annualize; child health weeks etc

Training • Large training at launch treated as capital, plus recurrent amount linked to staff turnover

Data Source Options: Program Output Data And Allocation Factors (2)

Item Method

EPI program outputs • Program records at various levels

Outpatient numbers • HIS at various levels

Denominator populations

• Central Statistics, Census and MoH catchment population estimates

Staff numbers • Facility and District offices

Km • Log books or Google?

Space – m2 • Measure directly; plans

EPI and HIS statistics, denominator populations and coverage estimates can be larger source of uncertainty and inaccuracy than cost data

Cost Analysis: Recurrent Costs• Cost of labour: • estimate of salary & benefits X % of time spent on

immunization

• Cost of vaccine: • value of vaccine doses administered + value of vaccine doses

wasted

• Cost of injection supplies: • number of syringes used (+ 10% wastage) X price of syringes

• Cost of training: • initial training is capital cost; ongoing, routine training is

recurrent• Training costs include the cost of venue, per diem for

participants, cost of trainers, and reproduction of training materials.

Cost Analysis: Recurrent Costs• Cost of social mobilization: • community meetings, printing flyers and materials, events; other

sensitization (per diem, staff time, materials).

• Vehicle maintenance: • total vehicle maintenance costs per facility (per district) and (x) the share

of mileage (km) made for routine immunization related activities.

• Cold chain maintenance: • fuel and energy costs required to run the cold chain as well as the cost of

repairs and spare parts.

• Surveillance cost: • proportion of time spent, transport cost, cost of laboratory materials etc.

Cost Analysis : Capital Cost

• Cold chain equipment: number X replacement price X % capacity used by particular vaccine

• Vehicles: number X replacement price by type X % use by the routine EPI

• Building: m2 X cost/m2 X % allocation to immunization

• Computers and office equipment: discounted annual value of these inputs

Examples of Allocation of Shared CostsLine item Tracing factor (total to immunization)

Staff time % of time spent on immunization

Vehicle % used for routine immunization (share of km travelled

for routine immunization)

Building % of facility area used for immunization

Overhead Electricity / housekeeping: % of facility area used for

immunization

Telephone: number of full time equivalent (FTE) in

immunization compared to total FTE at the facility

Waste

management

share of vaccine load to total load in the incinerator

The more important the cost item is for the analysis, the greater the

effort that should be made to estimate it accurately.

Understanding Unit Costs - Ghana

Understanding costs of Routine Immunization –Average Unit cost per dose from six countries

What does this suggest that we should think about when assessing and modelling cost effectiveness?

Understanding Effects Of Scale (India)

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As # goes up, avg. $ goes down

If we draw an imaginary curve for each center type, and see the cost/dose when each facility serves say 1,000, we see that at the same scale up level, community health centers are more costly (less efficient, more crowded). As we scale-up the efficiency gap between the sub-centers and Community Health Centers shrinks.

Aggregation of costs from facility to national level

Source: Common approaches for the costing and financing of routine immunization and new vaccines. Working Paper. Brenzel L. 2013. Available at: https://static1.squarespace.com/static/556deb8ee4b08a534b8360e7/t/55970258e4b03cf942da51ac/1435959896232/WEBSITE_Common+Approach.pdf

Should studies consider aggregate national costs of different interventions?

Understanding Total national program costsZambia EPI economic cost by health system level & line item (Zambia $2011 ‘000)

Description Facility District Prov. Nat. Total

Total cost 31m 5.4m 0.9m 0.7m 38.16m

Percentage of total 82% 14% 2% 2% 100%

When to Sample Facilities

If goal is to:

•Measure nationally representative average cost for routine immunization

• Observe variation in costs among • Facilities• Marginal cost of vaccinating a child

Approach to Sampling in Routine Immunization Programs

• Common approacho Not possible to collect data from all facilities in each country

§ Use a sample of facilities§ Select facilities that will represent the range of variation§ Use two-stage sampling approach

• Define what is the primary sampling unito Public facilities or Private facilities (Non-governmental organization)o Include secondary hospitals if believed important source of immunization

activity

• Define the geographical areas of focus in the study (i.e. region, province, etc.)• Suggested to select areas that reflect range of costs (high performance,

medium performance, low performance)

Example of the Proposed Sampling Frame

Source: Common approaches for the costing and financing of routine immunization and new vaccines. Working Paper. Brenzel L. 2013. Available at: https://static1.squarespace.com/static/556deb8ee4b08a534b8360e7/t/55970258e4b03cf942da51ac/1435959896232/WEBSITE_Common+Approach.pdf

Province (or Region )

District 1 (high volume)

Rural PHCs

Urban PHCs

District 2 (middle volume)

Rural PHCs

Urban PHCs

District 3 (low volume)

Rural PHCs

Urban PHCs

Approach To Samplingin Routine Immunization Programs

• 1st Stage: List all the districts in these areas & order these by number of doses administered and population density• Randomly selected 3 to 5 districts

• 2nd Stage: List all the facilities in each district & order these rural/urban• Randomly select 2 to 4 facilities (or more if you can afford to

survey more) from each district• Recommendation is to over-sample rural (remote) facilities

compared to urban (near-urban facilities)

Sampling Procedure Example• The sampling procedure determines the weights used in reporting of

average facility cost• Weights: Are the inverse of the probability of being selected

• Example: Data:Province X has 12 Districts. Randomly select 3 Districts

District 1 has 20 facilities. Randomly select 4 facilities from each District

• What is the probability of selecting a facility in District 1?

Prob. of selecting a district: !"#=

"%

Prob. of a HF in district 1: %#&=

"'

"%*

"'=

"#&

• What is the weight? 20• How to use the weights? To get nationally representative values estimate average weighted facility cost

Summary: Measurement of Vaccine Program Costs

• Measurement of vaccine program / intervention costs is core to economic evaluation of new options for vaccines or implementation models

• General costing process and methods relevant to costing of implementation: • Describe intervention -> identify resources ->quantify resources ->

value resources -> allocate costs to immunization or specific service• Direct/ micro-costing; ingredients based; step down; secondary

data?

• Structure costing around immunization 1) activities and then 2) line items

Suggested readings

1. Common approaches for the costing and financing of routine immunization and new vaccines. Working Paper. Brenzel L. 2013. Available at: https://static1.squarespace.com/static/556deb8ee4b08a534b8360e7/t/55970258e4b03cf942da51ac/1435959896232/WEBSITE_Common+Approach.pdf2. World Health Organization (2008). WHO guide for standardization of economic evaluations of immunization programmes. Geneva, Switzerland. 3. Gargasson JBL, Nyonator FK, Adibo M, et al. Costs of routine immunization and the introduction of new and underutilized vaccines in Ghana. Vaccine. 2015 May; 33S, A40–46. 4. Janusz CB, Orjuela CC, Aguilera IBM et al. Examining the cost of delivering routine immunization in Honduras. Vaccine. 2015 May; 33S, A53–59.5. Geng F, Suharlim C, Brenzel L, et al. The cost structure of routine infant immunization services: a systematic analysis of six countries. Health Policy and Planning. 2017. Available at https://doi.org/10.1093/heapol/czx067

Exercise:

Estimation of Total and Unit Routine Immunization Costs from Facility to National Level


Costing New Vaccine Introduction (NUVI)Application & Illustration of Costing Methodology

Importance of Costing NUVI• Understanding the full scope of the cost and implications of

introducing a new vaccine is essential to ensure adequate planning and resource mobilization.

• In the medium to long-term introducing new vaccines requires a commitment of significant resources over a long period of time. These costs, having implications for the nation’s fiscal space, ought to be carefully assessed.

• NOTE: Incremental costing approach is commonly used when costing NUVI. • Only additional costs relating to the introduction of the new

vaccine are considered. Costs of pre-existing resources / inputs with extra capacity are excluded, implying that the full economic costs of NUVI are usually not estimated.

Incremental Cost Focus – Economic Or Fiscal?

Source: Common Approach 2014

Line item Economic Costs Financial Costs Fiscal Costs

Paid labour P Time of existing or new staff

P/O Only extra staff hired

P/O Only extra staff hired

Volunteers P Economic Value O O Per diems P P P

Vaccines P Full economic value P Purchase cost P Purchase cost

Injection supplies

P Full economic value P Purchase cost P Purchase cost

Fuel & other transport

P Full economic value P Purchase cost P Purchase cost

Cold storage P Economic value of current and new space used by new vaccine – discount & annualise

P Purchase cost of extra storage equipment - depreciated

P Full Purchase cost of extra storage equipmen

Vehicles P Economic value of vehicle use for new vaccine + activities – discount & annualise

P Value of vehicles used for NUVI - depreciated

P Full Purchase cost

• CEA need full incremental economic costs not just financial or fiscal costs• Financial costs (depreciated) and fiscal (full purchase cost) for government planning and

donor budgeting

Costing Considerations for NUVI1. Prospective or retrospective costing?

• Prospective: usually ingredients-based, plus secondary data needed -what could possibly go wrong…..?

2. Need for clear description of the intervention • Information from: EPI managers; Pilot sites; well informed service

managers and staff; Gavi New Vaccine Application guide• Develop common, detailed understanding of practicalities of vaccine (e.g,

storage, reconstitution, administration), additional workload implications etc.

• Clarify scale-up strategy (Gavi assumption of 2 years for 60% coverage; some costs e.g. cold chain may be incurred in years before)• May affect cost and effectiveness estimates

3. Startup and once-off costs- Once-off costs e.g. planning, vaccine distribution, training, systems- Capital items e.g. cold chain

Which incremental costs do you expect to be the largest for new vaccine introduction?

1) Which Activities?2) Which Line items?

Why? (and which vaccine do you have in mind?)

QUIZ

EXAMPLE: Distribution of total economic PCV and Rota introduction costs by function (Zambia)

Ongoing economic cost for 90% PCV coverage would add 27% to total RI cost of +/- $38 million

Incrementatal NUVI cost/dose higher than average RI cost/dose ($7.56 vs. $7.18); Cost/child is an additional 42% of total RI cost/ child ($24.91 vs $59.32)

EXAMPLE: PCV and Rota Fiscal costs –start-up vs. on-going by function (Zambia)

This graph highlights the fact that what we should be concerned about is not the start-up costs but the on-going implementation costs.

Some Specific Considerations For New Vaccine Introduction

4. Cold chain costs• Identifying true incremental needs vs opportunistic

replacement• WHO EPI Logistics tool & WHO volume calculator for

capacities and volumes

5. Budget impact, sustainability and fiscal space• Often a key issue when translating evaluation into decisions• Consider costs at each level in the health system

Exercise: Which costs to include in incremental cost of new vaccines? (Adapted from WHO 2002)

1. Review vaccines and costs in groups – share team technical and economic expertise!2. Identify costs NOT relevant to each of the new vaccines

New Monovalent vaccine Combination vaccine with 1) fewer doses per vial than older vaccine and/or 2) extra vials for diluent

Combination vaccine with no change in vial size and no extra vials for diluent

Vaccines Vaccines Vaccines Reconstitution syringes Reconstitution syringes Reconstitution syringes Additional safety boxes Additional safety boxes Additional safety boxes Vaccine distribution and

storage Vaccine distribution and


storage System to transport & store

new vaccine System to transport & store


new vaccine Waste management costs Waste management costs Waste management costs Additional staff time Additional staff time Additional staff time Disease surveillance

related to new vaccine Disease surveillance

related to new vaccine Disease surveillance

related to new vaccine Initial training Initial training Initial training Social mobilization Social mobilization Social mobilization Extra printing & other costs Extra printing & other costs Extra printing & other costs

New Monovalent vaccine Combination vaccine with fewer doses per vial than older vaccine and/or extra vials for diluent

Combination vaccine with no change in vial size and no extra vials for diluent

ü Vaccines ü Vaccines ü Vaccines Reconstitution syringes ü Reconstitution syringes Reconstitution syringes

ü Additional safety boxes Additional safety boxes Additional safety boxes ü Vaccine distribution and

storage ü Vaccine distribution and


storage ü System to transport & store



new vaccine ü Waste management costs Waste management costs Waste management costs ü Additional staff time Additional staff time Additional staff time ü Disease surveillance

related to new vaccine ü Disease surveillance

related to new vaccine ü Disease surveillance

related to new vaccine ü Initial training ü Initial training ü Initial training ü Social mobilization ü Social mobilization ü Social mobilization ü Extra printing & other costs ü Extra printing & other costs ü Extra printing & other costs

Suggested readings1. Common approaches for the costing and financing of routine immunization and new vaccines. Working Paper. Brenzel L. 2013. Available at: https://static1.squarespace.com/static/556deb8ee4b08a534b8360e7/t/55970258e4b03cf942da51ac/1435959896232/WEBSITE_Common+Approach.pdf2. World Health Organization (2008). WHO guide for standardization of economic evaluations of immunization programmes. Geneva, Switzerland. 3. Gargasson JBL, Nyonator FK, Adibo M, et al. Costs of routine immunization and the introduction of new and underutilized vaccines in Ghana. Vaccine. 2015 May; 33S, A40–46. 4. Janusz CB, Orjuela CC, Aguilera IBM et al. Examining the cost of delivering routine immunization in Honduras. Vaccine. 2015 May; 33S, A53–59.5. Geng F, Suharlim C, Brenzel L, et al. The cost structure of routine infant immunization services: a systematic analysis of six countries. Health Policy and Planning. 2017. Available at https://doi.org/10.1093/heapol/czx0676. Griffiths Kalesha et al. Costs of introducing pneumococcal, rotavirus and second dose measles vaccine into the Zambian Immunization program: are expansions sustainable? Vaccine (2016)

costing in vaccine planning and programming

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