The simplest models in `hesim`

are cohort discrete time state transitions models (cDTSTMs), which encompass both time-homogeneous and time-inhomogeneous Markov models. cDTSTMs (that can easily incorporate patient heterogeneity and parameter uncertainty) are most conveniently simulated with a four step process specifying:

*Data*consisting of the treatment strategies and patient population*Parameter*objects storing the values of all parameters used in the model*Random number generation*expressions that randomly generate probability distributions for the parameters for probabilistic sensitivity analysis (PSA)*Transformed parameter*expressions that transform the parameter estimates into values used for simulation

We illustrate by replicating the HIV model developed by Chancellor et al. and used for didactic purposes in the *Decision Modeling for Health Economic Evaluation* textbook. The analysis compares two treatment strategies, zidovudine monotherapy and zidovudine + lamivudine combination therapy. The model is time-inhomogeneous because patients are assumed to only use lamivudine for 2 years before switching back to monotherapy.

The model consists 4 health states. Ordered from worst to best to worst, they are: State A (CD4 cells > 200 and < 500 cells/mm3), State B (CD4 < 200 cells/mm3), State C (AIDS), and State D (death). The model assumes that patients can transition to any state that is more severe (i.e., progress) but cannot transition back to a more severe state.

We set up the model for two treatment strategies and one representative patient.

```
library("hesim")
library("data.table")
strategies <- data.table(strategy_id = 1:2,
strategy_name = c("Monotherapy", "Combination therapy"))
patients <- data.table(patient_id = 1)
hesim_dat <- hesim_data(strategies = strategies,
patients = patients)
print(hesim_dat)
```

```
## $strategies
## strategy_id strategy_name
## 1: 1 Monotherapy
## 2: 2 Combination therapy
##
## $patients
## patient_id
## 1: 1
##
## attr(,"class")
## [1] "hesim_data"
```

The model will be simulated for each treatment strategy and patient combination. Such data containing treatment strategy and patient characteristics can be generated using `expand()`

.

```
## strategy_id patient_id strategy_name
## 1: 1 1 Monotherapy
## 2: 2 1 Combination therapy
```

Counts of transitions at yearly intervals between each of the 4 health states were available from a longitudinal dataset from Chelsea and Westminister hospital.

```
trans_mono <- matrix(c(1251, 350, 116, 17,
0, 731, 512, 15,
0, 0, 1312, 437,
0, 0, 0, 469),
ncol = 4, nrow = 4, byrow = TRUE)
colnames(trans_mono) <- rownames(trans_mono) <- c("A", "B", "C", "D")
print(trans_mono)
```

```
## A B C D
## A 1251 350 116 17
## B 0 731 512 15
## C 0 0 1312 437
## D 0 0 0 469
```

The transition probabilities from state \(r\) to each of the 4 states (State A, State B, State C, and State D) can be modeled using Dirichlet distributions, which are parameterized by a vector of concentration parameters \(\alpha = (\alpha_{r1}, \alpha_{r2}, \alpha_{r3}, \alpha_{r4})\). The Dirichlet distribution is particularly useful for modeling uncertainty in the transition probabilities because it is a conjugate prior for the multinomial distribution. The posterior distribution of \(\alpha\) consequently follows a Dirichlet distribution which can be thought of as the “effective sample size” for each transition (see Appendix).

Treatment effects are defined in terms of the relative risk, which is assumed to reduce the probability of all transitions to a more severe health state by an equal amount. We work with the log relative risk since it is approximately normally distributed. The estimated relative risk of disease progression is 0.509 (95% CI 0.365 to 0.710). We can then calculate the mean and standard error on the log scale.

The cost-effectiveness analysis is based on life-years, meaning that each health state is assigned a utility value of 1. The costs of zidovudine and lamivudine are $2,278 and $2,086.50, respectively. Medical costs are split into direct medical and community medical costs.

The parameter estimates are stored in a list.

To perform a PSA, it is necessary to draw samples of the parameters from suitable probability distributions. While the probability distributions could have been drawn manually and stored in the `params`

object above, it can be more easily done by using random number generation functions with `define_rng()`

.

As noted above, we draw the transition probabilities with monotherapy from a dirichlet distribution and the relative risk (of a transition to a worse state with combination therapy relative to monotherapy) from a lognormal distribution. Drug costs and utility are assumed to be fixed while medical costs are drawn from gamma distributions.

Sampled parameters values are stored in a list, meaning that samples for each parameter can be stored as either a vector or matrix. For instance, we sample medical costs for each (non-death) health state from gamma distributions and they a stored in a matrix (one row for each sample and one column for each health state). Likewise, the parameters of each cell in the transition probability matrix are store in a matrix, with parameters of the matrix ordered rowwise across the columns. On the other hand, samples of the relative risk are stored in a vector.

```
rng_def <- define_rng({
lrr_se <- (lrr_upper - lrr_lower)/(2 * qnorm(.975)) # Local object
# not returned
list( # Parameters to return
p_mono = dirichlet_rng(alpha_mono),
rr_comb = lognormal_rng(lrr_mean, lrr_se),
c_zido = c_zido,
c_lam = c_lam,
c_dmed = gamma_rng(mean = c_dmed_mean, sd = c_dmed_mean),
c_cmed = gamma_rng(mean = c_cmed_mean, sd = c_cmed_mean),
u = u
)
}, n = 1000)
```

The next step is to “transform” the parameters for use in the economic model using `define_tparams()`

. This typically involves modeling them as a function of the treatment strategies and patient (i.e., the `data`

). To maximize computational efficiency, all operations are vectorized across the rows in the data. Parameters not include in a transformed parameter function are assumed constant across patients and treatment strategies.

An important helper function is `tpmatrix()`

, which allows users to define transition matrices as a function of other parameters. In this example “vectorized” transition probabilities are defined in terms of the transition matrix for monotherapy (`p_mono`

) and the relative risk (`rr`

). The relative risk is simply 1 for monotherapy (since the corresponding transition matrix is just `p_mono`

) and equal to `rr_comb`

for combination therapy.

The only costs in the model that vary across treatment strategies (rather than just states) are drug costs. The monotherapy treatment strategy include the cost of zidovudine only whereas the combination therapy includes the costs of both zidovudine and lamivudine.

Parameters may depend on time (since the start of the model) by using the package defined `time`

variable. The `time`

variable corresponds to the stopping time of time intervals, which are specified using the `times`

argument in `define_tparams()`

. Since patients are only assumed to use lamivudine for two years, `rr_comb`

and the costs of lamivudine are not applied beyond year 2.

```
tparams_def <- define_tparams({
## The treatment effect (relative risk) is transformed so that it varies by
## strategies and only applies for the first 2 years (Monotherapy is
## the reference strategy).
rr <- ifelse(strategy_name == "Monotherapy" | time > 2, 1, rr_comb)
list(
tpmatrix = tpmatrix(
C, p_mono$A_B * rr, p_mono$A_C * rr, p_mono$A_D * rr,
0, C, p_mono$B_C * rr, p_mono$B_D * rr,
0, 0, C, p_mono$C_D * rr,
0, 0, 0, 1
),
utility = u,
costs = list(
drug = ifelse(strategy_name == "Monotherapy" | time > 2,
c_zido, c_zido + c_lam),
community_medical = c_cmed,
direct_medical = c_dmed
)
)
}, times = c(2, Inf))
```

A economic model (of class `CohortDtstm`

) can be created from a defined model (of class `model_def`

) and data using the generic function `create_CohortDtstm()`

. The economic model is an `R6`

object consisting of a transition model (`trans_model`

) for simulating transition probabilities with `sim_stateprobs()`

, a utility model for simulating quality-adjusted life-years with `sim_qalys()`

, and a set of cost models (for each cost category) for simulating costs with `sim_costs()`

.

At the start of the model, all patients are assumed to be in State A (the default setting of the transition model of class `CohortDtstmTrans`

). State occupancy probabilities are generated by simulating the discrete time Markov chain; as expected, patients survive longer with combination therapy.

```
econmod$sim_stateprobs(n_cycles = 20)
# Plot
library("ggplot2")
theme_set(theme_bw())
stateprob_summary <- econmod$stateprobs_[, .(prob_mean = mean(prob),
prob_lower = quantile(prob, .025),
prob_upper = quantile(prob, .975)),
by = c("strategy_id", "state_id", "t")]
stateprob_summary[, strategy_name := factor(strategy_id,
labels = strategies$strategy_name)]
ggplot(stateprob_summary, aes(x = t, y = prob_mean)) +
geom_line(aes(col = strategy_name)) +
geom_ribbon(aes(x = t, ymin = prob_lower, ymax = prob_upper,
fill = strategy_name), alpha = .3) +
facet_wrap(~factor(state_id, labels = LETTERS[1:4])) +
xlab("Year") + ylab("Probability") +
scale_fill_discrete("Strategy") + scale_color_discrete("Strategy")
```

Costs and quality-adjusted life-years (QALYs) are computed by integrating the previously simulated state probabilities. To maintain consistency with Chancellor et al., we approximate the integral with a right Riemann sum, which is simply a sum of costs and QALYs measured at the right endpoint of each interval (e.g., costs during model cycle 1 are measured at time 1 (rather than at say, time 0)).

A decision analysis is performed by comparing combination therapy to monotherapy.

```
ce_sim <- econmod$summarize()
wtp <- seq(0, 25000, 500)
icea_pw_out <- icea_pw(ce_sim, comparator = 1, dr_qalys = 0, dr_costs = .06,
k = wtp)
```

The incremental cost-effectiveness ratio (ICER) estimated using means from the PSA is $6,210, which is very close to the estimate from the deterministic analysis from Chancellor et al.

```
## 1 2
## Incremental QALYs "-" "0.94 (0.55, 1.24)"
## Incremental costs "-" "5,823 (2,441, 10,052)"
## Incremental NMB "-" "41,065 (22,123, 56,320)"
## ICER "-" "6,210"
## Conclusion "-" "Cost-effective"
```

A cost-effectiveness acceptability curve shows that the probability that combination therapy is more cost-effective than monotherapy increases quickly with the willingness to pay (WTP) for a QALY. At $10,000, the probability is 0.947 and approaches 1 at slightly higher WTP values.

```
ggplot(icea_pw_out$ceac,
aes(x = k, y = prob,
col = factor(strategy_id, labels = strategies$strategy_name[-1]))) +
geom_line() + xlab("Willingness to pay") +
ylab("Probability cost-effective") +
scale_x_continuous(breaks = seq(0, max(wtp), 5000), label = scales::dollar) +
theme(legend.position = "bottom") + scale_colour_discrete(name = "Strategy")
```

The multinomial distribution is a discrete probability distribution for the number of successes for each of k mutually exclusive categories in n trials. The probabilities of the categories are given by \(\pi_1,\ldots, \pi_k\) with \(\sum_{j=1}^k \pi_j=1\) and each \(\pi_j\) defined on \([0,1]\). The Dirichlet distribution is parameterized by the concentration parameters \(\alpha_1,\ldots, \alpha_k\) with \(\alpha_j > 0\). Letting \(x_1,\ldots, x_k\) denote the number of successes in each category, the prior distribution and likelihood are,

\[ \begin{aligned} p(\pi_1,\ldots,\pi_k |\alpha_1,\ldots, \alpha_k) = \text{Dirichlet}(\alpha_1,\ldots,\alpha_k) \\ p(x_1,\ldots,x_k | \pi_1,\ldots,\pi_k) = \text{Multin}(n, \pi_1,\ldots,\pi_k). \end{aligned} \]

The posterior distribution for \(\pi_1,\ldots,\pi_k\) is then given by,

\[ p\left(\pi_1,\ldots,\pi_k| x_1,\ldots,x_k, \alpha_1,\ldots,\alpha_k \right) = \text{Dirichlet}\left(\alpha_1 + x_1, \ldots, \alpha_k + x_k\right). \]