01.05.2010 First steps towards cost-benefit analyses of prevention measures

Evaluation. Are prevention and health-promotion measures necessary and worth the money they cost? Three pioneering studies initiated by the Federal Office of Public Health provide first concrete figures on the cost-benefit ratio of state measures in the areas of traffic accidents, smoking and alcohol. The findings are gratifying but should be treated with caution for the time being.

Pictures First steps towards cost-benefit analyses of prevention measures

TODO CHRISTIAN

The Federal Office of Public Health requires all its activities to have a sound scientific basis. It therefore draws on published data. If such data are lacking, it commissions studies in selected areas of research to produce the necessary scientific bases. A very wide range of data on prevention is available from Switzerland and abroad. It demonstrates that intelligent prevention measures are very effective. But few studies are concerned with whether such measures also make sense in terms of their cost-benefit ratio. Are investments in prevention justified when they are viewed in the context of a full cost-benefit analysis? In order to clarify this question, in 2007 the FOPH commissioned three pioneering studies in the areas of alcohol, smoking and traffic accident prevention. The studies were carried out by the Winterthur Institute of Health Economics and the University of Neuchâtel’s Institute of Economic Research.

Studies show that prevention pays for itself many times over
The studies were carried out in relation to society as a whole, i.e. all relevant costs incurred by prevention measures and the overall benefit to society were examined. This benefit is represented by the sum of all costs avoided by the measure. Specifically, the costs include direct costs (medical costs), lost production due to illness or accident (e.g. loss of pay), and intangible costs of lost quality of life due to illness, disability or premature death. The monetary value given to lost quality of life is calculated using a metric developed by the WHO (DALYs – disability adjusted life years).
The findings now published reveal the following picture: measures taken in all three areas have considerably lowered morbidity, number of premature deaths and the resulting suffering. The return on investment (ROI – see box for an example) is consistently positive. In other words, the benefits of prevention outweigh its costs many times over.
With regard to traffic accidents (ROI: 9) the findings are as follows: state expenditure on road accident prevention between 1975 and 2007 increased by 50%. This rise was associated with a substantial decline in the number of accidents. According to the study, government measures were instrumental in preventing 13 500 traffic fatalities, 17 300 cases of permanent disability, 98 000 cases of serious injury, 82 000 cases of moderately severe injury and 710 000 cases of minor injury. The measures resulted in savings totalling 72.8 billion Swiss francs. The study also shows that measures aimed at promoting safer driving behaviour have a better cost-benefit ratio than the infrastructure measures (roads, safety devices) that account for by far the greater share of the costs.
The figures for smoking prevention (ROI: 41) are even more emphatic. Efforts to combat smoking have been stepped up massively in the last few years: spending on anti-smoking campaigns and other measures quadrupled in just the ten years from 1997 to 2007 – and proved well worthwhile. This additional expenditure generated a 5.3% decline (from 33.2 to 27.9%) in the number of people smoking in Switzerland. This represents 343 000 fewer smokers. Though this success was due primarily to higher taxes on tobacco products, experts estimate that about one third of it (143 000) was the result of prevention measures based on information and education. Smoking causes 11.2% of all years of life lost as a result of illness or premature death in people with otherwise normal health. The economic benefit of smoking prevention measures is correspondingly high, amounting to an estimated 540 to 900 million francs a year. Society benefits 41-fold from every franc spent on preventing smoking.
Though alcohol prevention (ROI: 23) lags behind measures to reduce smoking, it has still chalked up some impressive successes – particularly considering that alcohol is now both cheaper and more readily available than before. Spending on alcohol control doubled between 1997 and 2007. The proportion of the population abusing alcohol fell during this period from 6 to 5.1%, corresponding to 55 000 individuals. According to the study, prevention accounts for half of this decline. In other words, if there had not been any prevention measures, there would now be 25 000 more people with alcohol-related health problems in Switzerland.

FOPH is not jumping to conclusions
Although the research findings are gratifying – benefits outweigh the cost of prevention measures – and are also confirmed by other investigations, the FOPH is treating the figures with caution. The scientific community is aware of the complexity of cost-benefit analyses of preventive and health-promoting measures. Methods of demonstrating the relationship between a prevention measure and its direct impact on health are problematic. The effect of such measures on public health cannot be observed directly and often becomes evident only years later. Moreover, the influence of other factors such as inflation, technical innovations, amendments to legislation, changes in taste, attitudes and fashionable trends, and also the influence of global changes, have to be quantified. Calculating the return on investment represents a further challenge, since investment in preventive measures and the effects they have are difficult to quantify in monetary terms. Viewed in this light, these pioneering studies should be regarded as first steps towards cost-benefit analyses of prevention measures. Additional studies will have to be carried out before such data can be reliably used as a key basis for further improving prevention policies. For this to be possible, the methodo­logical challenges will have to be addressed and the availability and quality of data improved. The FOPH will support such efforts.

Return on investment (ROI) – a simplified example

A prevention campaign (cost: CHF 100 000) persuades 1000 cyclists to wear a helmet. One of them, a 55 year old man, has a cycling accident in which he would have incurred serious head injuries if he had not been wearing a helmet. The injury prevented is a conse­quence of the prevention programme. It has the following monetary value:

1. Medical costs avoided: CHF 100 000
2. Loss of income avoided: CHF 500 000 (the cyclist would have had to stop working at 55 rather than 65)
3. Lost quality of life avoided as a result of the disability avoided*: CHF 500 000

Benefit of prevention (= total costs avoided): CHF 1,100 000

ROI = benefit of prevention – cost of prevention ÷ cost of prevention

In this example: ROI = CHF 1,100 000 – CHF 100 000 ÷ CHF 100 000 = 10

A ROI of 10 means that every franc invested in this prevention programme generates a benefit of ten francs to society.

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Contact

Herbert Brunold, Head of Evaluation and Research, herbert.brunold@bag.admin.ch

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