Decision Analysis
Group Assignment 2: Decision AnalysisInstructionsPlease write your first name and last name on the header of the document. Number every page consecutively. Use a Word document, single, 1.5 lines, or double-spaced. Typeface should be Times New Roman, Arial, or Georgia. Use 11 or 12 point font size. Any margin is allowed. Questions that require explanation should not be more than 100 words. Decision Analysis ExerciseA hospital P&T Committee is interested in comparing the costs and outcomes over 1-year time-period of preventative strategies for postmenopausal women with osteoporosis. They plan to compare three options: (1) Oral Cal-More, (2) Nasal Cal-More, and (3) Long-acting Cal-More. The following costs per year are available for the drugs. Costs were derived from the average wholesale price (AWP) obtained from the RED BOOK.1. Oral Cal-More: 10mg daily, $6002. Nasal Cal-More: 200IU daily, $8003. Long-acting Cal-More: 70mg once a week, $1,000The main outcomes measure is the effectiveness of the drugs to prevent incidence of bone fracture. However, adverse effects (GI complications for Oral and Long-acting Cal-More, and nasal irritation or bleeding for Nasal Cal-More) is another outcomes measure of interest which is associated with the use of the drugs. Both outcomes measure (effectiveness and adverse effects) were measured in a common unit called the quality adjusted life years (QALYs). Each year, the following rates of bone fracture and GI/nasal complications occur with drug use:Drug Rate of bone fracture (%) Rate of GI/nasal complication (%)Oral Cal-More 5 5Nasal Cal-More 10 10Long-acting Cal-More 5 22The cost of treatment of a bone fracture is $3,000 and this reduces QALY by 0.5.The costs of treatment of GI/nasal complications and the reduction of QALY as a result of the complications are as follows:Oral Cal-More: $200 (GI complication), QALY decreases by 0.2Nasal Cal-More: $100 (nasal complication), QALY decreases by 0.1Long-acting Cal-More: $200 (GI complication), QALY decreases by 0.23Exercises:1. Draw the decision tree.HINT: there are 12 total paths. Therapeutic effectiveness (no bone fracture) or failure (occurrence of bone fracture) is followed by occurrence of complications (yes or no) in sequence.2. Fill in the blanks in the table below.Bone fracture (yes/no) GI/nasal complications(yes/no)Cost ($) Probability (p) Expected cost($ x p)Oral Cal-MoreNo bone fracture No 600 $541.50No bone fracture Yes 600+200=800 $38.00Bone fracture NoBone fracture Yes 600+3,000+200=3,800 0.05 x 0.05=0.0025 $9.50Total 1.00Nasal Cal-MoreNo bone fracture No 800 0.90 x 0.90=0.81 $648.00No bone fracture Yes $81.00Bone fracture No 800+3,000=3,800Bone fracture Yes 0.10 x 0.10=0.01 $39.00Total 1.00Long-acting Cal-MoreNo bone fracture No 0.95 x 0.98=0.931 $931.00No bone fracture YesBone fracture No 1,000+3,000=4,000 0.05 x 0.98=0.049Bone fracture Yes $4.20Total 1.00Average (or expected) cost: Oral Cal-More = Nasal Cal-More = Long-acting Cal-More = 43. Fill in the blanks in the table below.Bone fracture (yes/no) GI/nasal complications(yes/no)QALY Probability (p) Expected outcome(QALY x p)Oral Cal-MoreNo bone fracture No 0.95 x 0.95=0.9025No bone fracture Yes 0.03800Bone fracture No 1.0-0.5=0.50 0.05 x 0.95=0.0475Bone fracture Yes 1.0-0.2-0.5=0.30Total 1.00Nasal Cal-MoreNo bone fracture No 1.0No bone fracture Yes 0.90 x 0.10=0.09 0.0810Bone fracture No 1.0-0.5=0.50Bone fracture Yes 1.0-0.5-0.1=0.40 0.10 x 0.10=0.01Total 1.00Long-acting Cal-MoreNo bone fracture No 1.0 0.95 x 0.98=0.931 0.9310No bone fracture Yes 1.0-0.2=0.80Bone fracture No 0.0245Bone fracture Yes 1.0-0.5-0.2=0.30Total 1.00Average (or expected) outcome: Oral Cal-More = Nasal Cal-More = Long-acting Cal-More = 4. Based on the cost and QALY data:a) Which is the cheapest alternative? b) Which is the most effective alternative?