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Mohammed A Mohammed; pharmacoeconomics; Cost effectiveness analysis; pharmacy

Mohammed A Mohammed; pharmacoeconomics; Cost effectiveness analysis; pharmacy

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- 1. Methods of PE Evaluation Mohammed Adem Mohammed B.pharm, M.clinpharm Clinical pharmacist and lecturer Jigjiga University mohzum@hotmail.com Sep 2013 9/11/2013 Mohammed Adem 1
- 2. Methods of PE Evaluation • Four main methods are used in economic evaluations: • cost–effectiveness analysis (CEA) • cost analysis (CMA), • cost–utility analysis (CUA) and • cost–benefit analysis (CBA) 9/11/2013 Mohammed Adem 2
- 3. Types of Pharmacoeconomic Analysis Methodology Cost measurement unit Outcome unit Cost effectiveness Monetary Natural units (life years, mg/dl blood sugar, LDL cholesterol) Cost benefit Monetary Monetary Cost minimization Monetary Various- but equivalent in comparative groups Cost utility Monetary Quality adjusted life years 9/11/2013 3Mohammed Adem
- 4. Cost Effectiveness Analysis 9/11/2013 Mohammed Adem 4
- 5. Cost Effectiveness Analysis Learning Objectives • By the end of this session you should be able to – Describe the steps necessary to perform CEA – Critically evaluate CE studies 9/11/2013 5Mohammed Adem
- 6. Comprehensive Definition of Cost-effectiveness • A therapy is deemed to be a cost-effective strategy when the outcome is worth the cost relative to competing alternatives. • In other words, scarce resources are utilized to acquire the best value on the market. 9/11/2013 6Mohammed Adem
- 7. Cost-Effectiveness Analysis (CEA)) Is a PE analysis where, – cost is measured in money and – consequences are measured in non-monetary/ Natural units. • as measured in physical units like cases cured, lives saved, complications prevented, S/E reduced, or reduced morbidity. • Some times it can be measured in terms of change in an intermediate clinical outcome like cost per night free of pain, night free of wheezing or % change in blood cholesterol level. 9/11/2013 7Mohammed Adem
- 8. Cost-Effectiveness Analysis (CEA)) • compares programs or treatment alternatives with different safety and efficacy profiles. • E.g: Two drugs have different degree of effectiveness, what is the cost per child cured and for antibiotics A Vs antibiotic B. • Compare treatments total costs and total effectiveness. • is useful in balancing cost with patient outcome. • It also helps to identify which treatment alternative represents the best outcome per dollar or ETB. 9/11/2013 8Mohammed Adem
- 9. • During comparison, the new program/ drug therapy may be: – Less costly and at least as effective – less expensive and more effective – More costly and more effective, with the added benefit worth the added cost – Less effective and less costly, with the added benefit of the alternative not worth the added cost N.B: Rx causing less cost with improved or equivalent Rx outcomes can be selected. CE need not be reduction, but rather cost optimization. • Challenge: – Decision as to whether the added benefit worth the added cost CEA… 9/11/2013 9Mohammed Adem
- 10. CEA… • When two options are compared, the ICER is calculated • The cost effectiveness ratio of each intervention is – calculated and the two ratios are compared (e.g. the cost per life saved using each intervention). • ICER yields the additional cost required to obtain the additional effect gained by switching from drug A to drug B. 9/11/2013 10Mohammed Adem
- 11. Incremental Cost-effectiveness/ICER • Makes comparisons to other therapeutic options, standard of care, or “doing nothing” (placebo) • Fundamental ratio Cost optionB – Cost optionA Effect optionB – Effect optionA = Cost to achieve one unit of effect 9/11/2013 11Mohammed Adem
- 12. LOOKING AT EFFECT ON THE COST-EFFECTIVENESS PLANE 12 C E Comparator intervention 9/11/2013 Mohammed Adem
- 13. LOOKING AT COST ON THE COST-EFFECTIVENESS PLANE 13 New treatment more costly New treatment less costly C E Comparator intervention 9/11/2013 Mohammed Adem
- 14. COST-EFFECTIVENESS PLANE Exercise: 1. Assume, the new program / drug therapy falls into the southeast (SE) quadrant of the cost-effectiveness plane. – How could it be interpreted? – Which program/ drug therapy is dominant and should be chosen? Why? 2. What if the new program / drug therapy falls into the SW, NE, NW ??? 3. In which quadrant if it falls, will the existing program/ drug therapy will be more useful than the new program / drug therapy? 9/11/2013 Mohammed Adem 14
- 15. New treatment more costly (+) New treatment less costly (-) New treatment more effective (+) New treatment less effective (-) Existing treatment Existing treatment dominates New treatment more effective and more costly (trade-off) New treatment less effective and less costly (trade-off) New treatment dominates MAKING DECISIONS WITH THE COST-EFFECTIVENESS PLANE 9/11/2013 15Mohammed Adem
- 16. Cost Effectiveness Plane Cost-Effectiveness Analysis (CEA) Cost Effectiveness Plane 9/11/2013 16Mohammed Adem
- 17. • Misuse of CEA – In the absence of data on both cost and effectiveness – When effectiveness is demonstrated in the absence of data on cost – Narrow Definition:- Limiting it to cost saving CEA… 9/11/2013 17Mohammed Adem
- 18. How to conduct CEA? 1. Frame the problem to be analyzed 2. Identify the baseline and options to be analyzed 3. Identify the outcome measure 4. Identify the relevant costs 5. Construct the decision model 6. Analyze and interpret the results 7. Perform sensitivity analysis 8. Prepare presentation of results 9/11/2013 18Mohammed Adem
- 19. Step 1: Framing the Problem • Define the study questions • Determine the perspective of the study • Time Frame and Analytic Horizon 9/11/2013 19Mohammed Adem
- 20. Step 2: Identify the Baseline and Alternative Interventions • Baseline – Reference point for the analysis – Can be placebo, exiting Rx or current standard of care • Alternative intervention – New drug or intervention 9/11/2013 20Mohammed Adem
- 21. Step 3: Selecting Health Outcome Measures • Must be relevant to the study questions • Can be categorized into • Intermediate outcome • Final outcome • Both positive and negative outcomes should be addressed – Positive outcomes: drug’s efficacy measure – Negative outcomes: ADR and treatment failure 9/11/2013 21Mohammed Adem
- 22. Intermediate Measures Final Measures Morbidity Number of persons screened Number of disease cases Mortality Number of hospital re- admissions Number of deaths Disability Number of assisted living days Number of chronic disabilities 9/11/2013 22Mohammed Adem
- 23. Step 4: Identify Relevant costs • Relevant costs include cost of intervention, cost of disease averted, cost of productivity losses averted, and future unrelated health costs • Costs to be included depends on the perspective chosen Controversy: on the inclusion of productivity costs and cost of future unrelated health care costs 9/11/2013 23Mohammed Adem
- 24. HOW TO TREAT FUTURE COSTS Intervention maintains years of life lived anyway Intervention extends life years “Related” medical and non medical costs Include Include “Unrelated” medical and non medical costs Don’t include May be included in sensitivity analysis Source: McGuire and Drummond. (2001). Economic evaluation in health care, Oxford: Oxford University Press.
- 25. Step 5: Decision Model • Critical step • Can use software, decision tree or done by hand • Requires epidemiologic and economic data • Outcome and economic data – RCT – Peer reviewed published literatures • Balance between realism and simplification 9/11/2013 25Mohammed Adem
- 26. Step 6: Analyze and Interpret result • Calculate the summary measure-CE ratio – The basic components of a C/E ratio are: • Numerator: Net cost C • Denominator: Health Outcome • Cost-effective compared to what? – No public health intervention is cost-effective by itself -- it is either more or less cost-effective than another intervention. • The ratio may take either of the following forms – Average C/E ratio (ACER) – Marginal C/E ratio (MCER) – Incremental C/E ratio (ICER)9/11/2013 26Mohammed Adem
- 27. 6.1 Average Cost Effectiveness Ratio (ACER) – Ratio of costs to outcomes for a single intervention (strategy A) – Use to evaluate the average cost per health outcome for a single program – Use to allocate resources between independent programs • Example: HBV vaccination Vs HIV testing – Not used to evaluate mutually exclusive (competing) strategies Cost Strategy A Outcome Strategy A Step 6: Analyze and Interpret result… 9/11/2013 27Mohammed Adem
- 28. Step 6: Analyze and Interpret result…ACER Example: Average Cost-effectiveness • Average cost-effectiveness of Agent A 50.00 ETB 50 units of effect = 1.00 ETB per unit • Average cost-effectiveness of Agent B 150.00 ETB 90 units of effect = 1.60 ETB per unit 9/11/2013 28Mohammed Adem
- 29. Step 6: Analyze and Interpret result… 6.2 Marginal Cost Effectiveness Ratio (MCER) • Ratio of additional costs to outcomes obtained from one additional unit of an intervention. • Examines effects of scale (within a single program) – Does cost per health outcome increase or decrease as program changes size? Cost Strategy A’ - Cost Strategy A Outcome Strategy A’ - Outcome Strategy A 9/11/2013 29Mohammed Adem
- 30. Step 6: Analyze and Interpret result… 6.3 Incremental Cost Effectiveness Ratio/ ICER • Ratio of additional costs to outcomes obtained when one intervention is compared to the next most effective intervention • When comparing 2 therapies, ICA assesses what the added cost per net effect for alternative therapy would be • ICA is the difference in total costs of 2 therapies divided by difference in effectiveness of the 2 therapies Cost Strategy B - Cost Strategy A Outcome Strategy B - Outcome Strategy A 9/11/2013 30Mohammed Adem
- 31. Step 6: Analyze and Interpret result…ICER Example: Therapy A: costs 2500 ETB and saves 10 lives C/E ratio = 250 ETB /life saved Therapy B: costs 5000 ETB and saves 15 lives C/E ratio = 333 ETB /life saved ICA: 5000 ETB - 2500 ETB 500 ETB /life saved 15 -10 9/11/2013 31Mohammed Adem
- 32. • When to Use?? – between mutually exclusive (competing) interventions • Mutually Exclusive Interventions – Patient-level • e.g., ANC Visits – Global-level • e.g., targeted vs. universal routine HIV testing Step 6: Analyze and Interpret result…ICER 9/11/2013 32Mohammed Adem
- 33. • Exclusion of Dominated Alternatives – Strongly Dominated and be eliminated : • If intervention is both less effective and more costly than the next most effective alternative- – Extended or Weak Dominance : • An intervention can also be dominated when its ICER is higher than that of the next most effective intervention. NE Step 6: Analyze and Interpret result… ICER 9/11/2013 33Mohammed Adem
- 34. Step 7: Sensitivity Analysis • Conduct sensitivity analysis on the variables that have uncertain values • How sensitive are the results to different values of key variables • “What if” scenarios, e.g., a. Assume different cost of drug or outcome b. Assume different probability of an outcome • Types and approaches for undertaking SA will be discussed separately 9/11/2013 34Mohammed Adem
- 35. Step 8: Presenting CEA results • Guide: Panel on CEA in Health and Medicine of the US public Health Services (Gold et al 1996) • Presentation of a CEA should include the following (Haddix et al 2003) – The study perspective, time frame and analytic horizon – The study question – The assumptions used to build the model – A description of the intervention – Evidence of the effectiveness of the intervention – Identification of all relevant costs • Inclusion or exclusion of productivity costs • Discount rate • Results of incremental analysis • Results of sensitivity analysis • Discussions 9/11/2013 35Mohammed Adem
- 36. Group Assignment on CEA • Group I: Low-Molecular-Weight Heparins Compared with Unfractionated Heparin for Treatment of Acute Deep Venous Thrombosis • Group II: A cost-effectiveness analysis of artemether lumefantrine for treatment of uncomplicated malaria • Group III: Cost-Effectiveness of Treating Multidrug-Resistant Tuberculosis 9/11/2013 Mohammed Adem 36
- 37. Exercise : CEA calculations 9/11/2013 Mohammed Adem 37
- 38. Ovarian cancer Facts : • 70% responses to first-line therapy • 60–80% of these patients have been found to experience persistence/recurrence and finally die of the disease. • The median overall survival of ovarian cancer is 5 yr (60 mo). 9/11/2013 Mohammed Adem 38
- 39. Ovarian cancer 1. platinum refractory : – patients with a treatment-free interval of < 6 months were designated as – Suggestion supportive care or recurrence regimen 2. platinum sensitive : – patients with a treatment-free interval of > 6 months – Suggestion carboplatin + paclitaxel • Clinically low-volume or focal recurrence after disease-free interval > 6- 12 mo – consider secondary cytoreductive surgery then carboplatin +paclitaxel or carboplatin + gemcitabine or recurrence regimen 9/11/2013 Mohammed Adem 39
- 40. Developing countries Policy of treating EOC • Usually, the national policy of developing countries in treating EOC stresses on first-line therapy due to its cost-effectiveness, while salvage therapy is not. 9/11/2013 Mohammed Adem 40
- 41. Drug cost = 1000ETB/cycle Number of cycles are 6 times Therefore, total drug cost of treatment is equal to 6x1000ETB 6,000 ETB , Cost-effectiveness Ratio: Cost of Rx /Overall survival time = 6,000 ETB/ 60m = 100 ETB /mo , CEA of First-line Therapy Assume the following scenario in TAH • Treatment CP: carboplatin Drug cost = 1000ETB/cycle Number of cycles are 6 times • Overall survival time = 60 months – What is the Cost-effectiveness Ratio?
- 42. Drug cost = 1800ETB/cycle Number of cycles are 6 times Therefore, total drug cost of treatment is equal to 6x1800 ETB 10,800 ETB , • Cost-effectiveness Ratio: Cost of Rx /Overall survival time • 10,800 ETB/ 60 months = 180ETB/mo , CEA of First-line Therapy • Treatment TP: carboplatin + paclitaxel Drug cost = 1800ETB/cycle Number of cycles are 6 times • Overall survival time = 60 months – What is the Cost-effectiveness Ratio?
- 43. Cost-effectiveness Ratio = 3,000/45= 67 ETB/mo Cost / Effectiveness Ratio= 3,000/ 20= 150ETB/mo , CEA of First-line Therapy • Let , the Cost of cyto-reductive surgery = 3,000 ETB and – No residual: overall survival time = 45 months What is the Cost-effectiveness Ratio? • Residual : overall survival time = 20 months • What is the Cost-effectiveness Ratio?
- 44. Cost/Effectiveness Ratio: Cost of Rx /Overall survival time = 2,500/36 mo = 70 ETB/ mo , CEA of First-line Therapy • Let, Hospital cost for supportive care = 2,500 ETB and – Overall survival time = 36 months • What is the Cost-effectiveness Ratio?
- 45. total drug cost of treatment is equal to 6x1,120 ETB 6,720 ETB Cost / Effectiveness Ratio = 6,720 ETB/ 29 = 232 ETB/mo CEA of TP Regimen in Platinum-sensitive EOC • Treatment TP: – Drug cost = 11,200 ETB/cycle – Number of cycles are 6 times • Overall survival time = 29 months • What is the Cost-effectiveness Ratio? –
- 46. total drug cost of treatment is equal to 5x1,600 ETB 8000 ETB Cost / Effectiveness Ratio = 8,000 ETB/ 14.5 = 552 TB/mo CEA of L.doxorubicin in platinum refractory • Liposomal doxorubicin: : – Drug cost = 1,600 ETB/cycle – Number of cycles are 5 cycles • Overall survival time = 14.5 months • What is the Cost-effectiveness Ratio?
- 47. total drug cost of treatment is equal to 4 x2 00 ETB 800 ETB Cost / Effectiveness Ratio = 800 ETB/ 6 = 133 ETB/mo Megestrol acetate in platinum refractory • Megestrol acetate: – Drug cost = 200 ETB/cycle – Number of cycles are 4 cycles • Overall survival time = 6 months • What is the Cost-effectiveness Ratio?
- 48. Summary of Cost-effective EOC therapy Patients receiving salvage therapy 1. Supportive care 2. Platinum-sensitive EOC 3. Platinum-refractory EOC 9/11/2013 Mohammed Adem 48
- 49. 2. Surgery: with residual + TP + supportive care 150 + 332 + 70 = 552 ETB/ mo 3. TP + supportive care 332 + 70 = 402 ETB/ mo , Summary of Cost-effective EOC therapy Platinum-sensitive EOC : options 1. Surgery: no residual + TP + supportive care 67 + 332 + 70 = 469 ETB/ mo
- 50. 2. Lip doxorubicin + megestrol acetate + supportive care 552 + 133 + 70 = 755 ETB/ mo 3. Megestrol acetate + supportive care 133 + 70 = 203 ETB/ mo , Summary of Cost-effective EOC therapy Platinum-refractory EOC: options 1. Liposomal doxorubicin + supportive care 552 + 70 = 622 ETB/ mo
- 51. Summary of Cost-effective EOC therapy Salvage therapy • Supportive care Platinum-sensitive Platinum-refractory 70 (ETB /mo) 402- 552 (ETB /mo) 203-755 (ETB /mo) 9/11/2013 Mohammed Adem 51
- 52. Exercise 1: Calculate the ICER Mutually Exclusive Interventions Total Outcomes (Life Years) Total Costs (ETB) ICER Treatment A 11 110,000 Treatment B 9 90,000 9/11/2013 52Mohammed Adem
- 53. Exercise 1: Calculate the ICER… Mutually Exclusive Interventions Total Outcomes (Life Years) Total Costs ICER Treatment B 9 $ 90,000 Treatment A 11 $110,000 Step 1: Arrange in order of increasing effectiveness Mutually Exclusive Interventions Total Outcomes (Life Years) Total Costs (ETB) ICER Treatment B 9 90,000 Treatment A 11 110,000 9/11/2013 53Mohammed Adem
- 54. Exercise 1: Calculate the ICER… Mutually Exclusive Interventions Total Outcomes (Life Years) Change in Effectiveness Total Costs Change in Cost (ETB) ICER Treatment B 9 90,000 Treatment A 11 2 110,000 20,000 Step 2: Check and Exclude dominated Alternatives 9/11/2013 54Mohammed Adem
- 55. Exercise 1: Calculate the ICER- Cont Mutually Exclusive Interventi ons Total Outcomes (Life Years) Change in Effectiveness Total Costs Change in Cost ICER Treatment B 9 90,000 Treatment A 11 2 110,000 20,000 10,000 Step 3: Calculate the ICER 9/11/2013 55Mohammed Adem
- 56. Exercise 2 Suppose you work for ministry of health as a program director/ supervisor. You have some budget available for 3 independent national programs. The costs and benefits of each programme, compared to a relevant alternatives are presented in the following table. 1. How do you decide the most cost effective program for your organization? 2. Which program should you choose to maximize total benefits? 9/11/2013 Mohammed Adem 56
- 57. Exercise 2: Results of a C-E Study Averted Cases Cost Program A 100 50,000 ETB Program B 150 130,000 ETB Program C 110 170,000 ETB 9/11/2013 57Mohammed Adem
- 58. Step 1: Order by Increasing Effectiveness Averted Cases Cost Program A 100 50,000 ETB Program C 110 170,000 ETB Program B 150 130,000 ETB
- 59. Step 2: Check for Dominance Averted Cases Increm. Effec. Cost Increm. Cost ICER Program A 100 50,000 ETB Program C 110 10 170,000 ETB Program B 150 40 130,000 ETB
- 60. Step 2: Check for Dominance Averted Cases Increm. Effec. Cost Increm. Cost ICER Program A 100 50,000 ETB Program C 110 10 170,000 ETB 120,000 ETB Program B 150 40 130,000 ETB (-40,000) ETB
- 61. Step 2: Check for Dominance Averted Cases Increm. Effec. Cost Increm. Cost ICER Program A 100 50,000 ETB Program C 110 10 170,000 ETB 120,000 ETB 12,000 Program B 150 40 130,000 ETB (-40,000) ETB -1,000
- 62. Step 3: Eliminate Dominated Programs Averted Cases Increm. Effec. Cost Increm. Cost ICER Program A 100 - 50,000 ETB - Program C 110 10 170,000 ETB 120,000 ETB 12,000 Program B 150 40 130,000 ETB (-40,000) ETB -1, 000
- 63. Step 4: Re-Calculate ICER without dominated programs Averted Cases Increm. Effec. Cost Increm. Cost ICER Program A 100 50,000 ETB Program B 150 50 130,000 ETB 80,000 ETB
- 64. Step 4: Calculate ratios without dominated programs Averted Cases Increm. Effec. Cost Increm. Cost ICER Program A 100 - 50,000 ETB - - Program B 150 50 130,000 ETB 80,000 ETB 1,600 ETB
- 65. Step 5: Choose program with ICER <= perceived value Interpretation: – Program B costs you 1,600ETB per cases averted. – 1,600 ETB is the unit of cost of additional case averted as a result of program B use than program A. Choice: depends on willingness-to-pay and its threshold budget, …….. • If perceived value of an averted case >= 50,000 and < 1,600, choose Program A; • If perceived value of an averted case >= 1,600, choose Program B. 9/11/2013 65Mohammed Adem
- 66. Exercise 3 anticoagulant • Suppose you work for a hospital as a ward pharmacist in oncology clinic. • During a major MD ward round, chief oncology resident asked you about CEA of low molecular weight heparin (LMWH) compared with warfarin for the secondary prevention of venous thromboembolism /VTE in patients with cancer. • The costs and benefits of each drug therapy are presented in the following table. • Perform cost-effectiveness analysis and interpret the result? 9/11/2013 Mohammed Adem 66
- 67. Exercise 3… CE of LMWH Compared with Warfarin for the 2ry Prevention of VTE 9/11/2013 Mohammed Adem 67 Strategy Life expectancy (Yrs) Total Costs (ETB) LMWH 1.442 15,329 Warfarin 1.377 7,720
- 68. Exercise 4 Influenza mgt stratagies • Assume you are a practicing pharmacist in internal medicine ward and a member of DTC at TAH . • As a member of the committee, you are expected to perform CEA of testing and antiviral treatment strategies for adult influenza to forward your recommendation for the hospital administration. • You have obtained the over all costs and benefits of each strategies as presented in the following table. • Perform cost-effectiveness analysis for both strategies and interpret the ICER of strategy/ies in your analysis? 9/11/2013 Mohammed Adem 68
- 69. Exercise 4… Influenza mgt stratagies Strategy Illness Days Avoided Cost (ETB) No testing or treatment 0 92.70 Amantadine 0.54 97.50 Rimantadine 0.59 119.10 Zanamivir 0.74 137.10 Testing then amantadine 0.44 115.00 Testing then rimantadine 0.48 125.50 Treating then zanamivir 0.60 134.30 9/11/2013 Mohammed Adem 69
- 70. Exercise 5 • Perform cost-effectiveness analysis for the drug therapies presented in the table (next slide) and interpret the ICER after analysis? 9/11/2013 Mohammed Adem 70
- 71. Exercise 5… 9/11/2013 Mohammed Adem 71 Mutually Exclusive Intervention Total Outcomes (QALYs ) Total Costs (ETB) Drug therapy A 35 250,000 Drug therapy B 40 350,000 Drug therapy C 35 300,000 Drug therapy D 10 50,000
- 72. Exercise 6 Assume you have some budget available for 4 independent investment programs. The costs and benefits of each programme, compared to a relevant alternative are presented in the following table. Perform CEA for your program and choose the program which is cost-effective for your organization? 9/11/2013 Mohammed Adem 72
- 73. Exercise 6 Mutually Exclusive Intervention Total Outcomes (Life years) Total Costs Program A 30 $ 200,000 Program B 10 $ 50,000 Program C 15 $ 130,000 Program D 11 $170,000 9/11/2013 73Mohammed Adem
- 74. Exercise 6 Mutually Exclusive Intervention Total Outcomes (Life years) Total Costs Program A 30 $ 200,000 Program B 10 $ 50,000 Program C 15 $ 130,000 Program D 11 $170,000 9/11/2013 74Mohammed Adem
- 75. Exercise 6 Mutually Exclusive Intervention Total Outcomes (Life years) Total Costs Program B 10 $ 50,000 Program D 11 $170,000 Program C 15 $ 130,000 Program A 30 $ 200,000 Step 1; Arrange in increasing order of effectiveness 9/11/2013 75Mohammed Adem
- 76. Exercise 6 Mutually Exclusive Intervention Total Outcomes (Life years) Change in Outcome Total Costs Change in cost Program B 10 $ 50,000 Program D 11 1 $170,000 $120,000 Program C 15 4 $ 130,000 (-$40,000) Program A 30 15 $ 200,000 $ 70,000 Step 2; Calculate change in outcome and cost 9/11/2013 76Mohammed Adem
- 77. Exercise 6 Mutually Exclusive Intervention Total Outcomes (Life years) Change in Outcome Total Costs Change in cost ICER Program B 10 $ 50,000 Program D 11 1 $170,000 $120,000 120,000 Program C 15 4 $ 130,000 (-$40,000) (-10,000)) Program A 30 15 $ 200,000 $ 70,000 4,667 Step 3; Calculate the ICER 9/11/2013 77Mohammed Adem
- 78. Exercise 6 Mutually Exclusive Intervention Total Outcomes (Life years) Change in Outcome Total Costs Change in cost ICER Program B 10 $ 50,000 Program D 11 1 $170,000 $120,000 120,000 Program C 15 4 $ 130,000 (-$40,000) (-10,000)) Program A 30 15 $ 200,000 $ 70,000 4,667 Step 4; Remove dominated program 9/11/2013 78Mohammed Adem
- 79. Exercise 6 Mutually Exclusive Intervention Total Outcomes (Life years) Change in Outcome Total Costs Change in cost ICER Program B 10 $ 50,000 Program C 15 5 $ 130,000 $ 80,000 16,000 Program A 30 15 $ 200,000 $ 70,000 14,000 Step 5; Calculate the ICER by removing strongly dominated program 9/11/2013 79Mohammed Adem
- 80. Exercise 6 Mutually Exclusive Intervention Total Outcomes (Life years) Change in Outcome Total Costs Change in cost ICER Program B 10 $ 50,000 Program C 15 5 $ 130,000 $ 80,000 16,000 Program A 30 15 $ 200,000 $ 70,000 14,000 Step ; Remove Program C as there is weak dominance 9/11/2013 80Mohammed Adem
- 81. Exercise 6 Mutually Exclusive Intervention Total Outcomes (Life years) Change in Outcome Total Costs Change in cost ICER Program B 10 $ 50,000 Program A 30 20 $ 200,000 $ 150,000 $ 7,500 Step Recalculate the ICER 9/11/2013 81Mohammed Adem
- 82. Example of CEA: Medicine Costs Cost/unit (USD)* No. of units No. of patients Total cost (USD) Medicine A Medicine cost 40 12 100 48,000 Lab cost 20 1 100 2,000 Adverse event 50 2 100 10,000 Physician 25 2 100 5,000 Total 65,000 Medicine B Medicine cost 25 12 100 30,000 Lab cost 20 2 100 4,000 Adverse event 50 3 100 15,000 Physician 25 3 100 7,500 Total 56,500 *USD equals U.S. dollar
- 83. Example of CEA: Benefits Drug B Cost of drug = $44.50 Cost of drug $56.00 Effectiveness of drug = Average decrease in A1C = 1.5 Effectiveness of drug = Average decrease in A1C = 0.8 Cost-effective ratio $29.33/1 unit of A1C Cost-effective ratio $70.00/1 unit of A1C Effectiveness Medicine A Medicine B 25/100 patients 19/100 patients Clinical outcome: number of patients with ≥ 1% decrease in glycosylated hemoglobin over one year
- 84. Example of CEA: Incremental Cost-Effectiveness Comparison between medicines A and B for 100 patients for 1 year Medicine A Medicine B Net costs USD* 65,000 56,500 Effectiveness No. patients with ≥ 1% decrease in glycosylated hemoglobin 25 19 Incremental Cost Effectiveness Ratio = (65,000-56,500)/(25-19) = USD1,416.67 per extra patient with ≥ 1% decrease in glycosylated hemoglobin.
- 85. Common Misconceptions When Applying Pharmacoeconomic Principles • Cost-effective care is initially the cheapest alternative in a manner similar to other investments, least cost option may lead to greater costs downstream • Cost-effective care is outcome that generates “biggest” effect in a manner to similar investments, smaller increments of outcome may be achieved at a lower overall cost 9/11/2013 85Mohammed Adem
- 86. Average Cost-effectiveness • Specifies the cost of an agent required to achieve each unit of effect. No comparison is made to alternative agents. Average cost-effectiveness Cost of drug Resulting effect = Cost per unit of effect achieved 9/11/2013 86Mohammed Adem
- 87. Steps to Pharmacoeconomic Literature Evaluation • Evaluate: – The quality of the journal – Qualifications of authors – Title and abstract- unbiased? – Study methodology • Perspective, study design, outcomes and appropriate alternatives, costs and appropriate discounting, sensitivity analysis, & data sources – Sponsorship- could bias be introduced? – Incremental results • What is the conclusion and does it differ between subgroups? How much does allowance for uncertainty change conclusion? 9/11/2013 87Mohammed Adem
- 88. Cases for Development • Formulary decision making (policy) – Appropriate place for eplerenone (Inspra®) and spironolactone (generic) on Inpatient formulary of tertiary care academic medical center • Clinical decision making for acute therapy (bedside) – Choosing between low molecular weight heparin or unfractionated heparin for the treatment of acute proximal deep vein thrombosis • Clinical decision making for chronic therapy (bedside) – Choosing between selective cyclooxygenase inhibitor and traditional non-steroidal anti-inflammatory agent for management of osteoarthritis pain • Other suggestions? 9/11/2013 88Mohammed Adem
- 89. Thanks 9/11/2013 Mohammed Adem 89

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