Introduction To Pharmacoeconomics, Objectives, Need of Pharmacoecomics, Four methods of Pharmaeconomics Evaluation, Basic Terminology, Importance of Pharmacoeconomics.

1. Pharmacoecomics
PRESENTED BY
MS. MONIKA P. MASKE
ASSISTANT PROFESSOR
M. PHARM
(PHARMACEUTICAL CHEMISTRY)
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2. Introduction To
Pharmacoeconomics
o Pharmacoeconomics is the branch of economics that
uses cost-benefit, cost-effectiveness, cost minimization,
cost of illness and cost utility analyses for comparing
pharmaceutical products and treatment strategies.
o It’s a part of health economics focusing on economic
estimation of drugs.
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3. o Cost can be measured in following ways cost/unit,
cost/treatment, cost/person, cost/person/year, etc.
o Pharmacoeconomics coined by Townsend in 1986.
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4. Pharmacoeconomics
Humanistic
1. Quality of life
2. Patient preferences
3. Patient satisfaction
Economic
1. Cost benefit
2. Cost effectiveness
3. Cost minimization
4. Cost utility
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5. Objectives
o Outline the issues and theory.
o To show its application to make decision about drug
therapy.
o To show application in decreasing financial burden on
the consumers for effective managing of healthcare
system.
o The limited resources more effective for expansion of
healthcare benefit at lower cost.
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6. Need of
Pharmacoecomics
o To find out the optimal therapy at lowest cost.
o In industry to develop specific research and development
alternatives.
o In public to design health insurance benefits.
o In government the determine programmer benefits and
prices.
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7. Four methods of
Pharmaeconomics Evaluation
1. Cost-Minimization Analysis (CMA)
It involves measuring only costs, of health services
ex. Prescribing generic medicine instead of brand
leader.
2. Cost-Effectiveness Analysis (CEA)
It refers to the whole of economic evaluation but
specifically a particular type of evaluation in which the
health benefit can be defined and measured in natural
units. Ex. Years of life saved, etc.
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8. 3. Cost-Utility Analysis (CUA)
Its similar to cost effectiveness but the outcome is
a unit of utility. Ex. Quality adjusted life years (QALY) is
coronary artery bypass versus cost for erythropoietin in renal
diseases.
4. Cost-Benefit Analysis (CBA)
The benefit is measured as the associated
economic benefit of an intervention. Ex. Monitor value of
returning a worker to employment earlier.
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9. Basic Terminology
o Pharmacoeconomic – It’s the branch of health
economics that deals with the evaluation of the
costs and consequences of therapeutic decision
making.
o Cost of Drugs – It’s the total resources spent in
making the drug or drug preparation.
o Price – It’s the amount a customer pays for a
product or service.
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10. o QOL (Quality of Life) – An individual’s preparation of their
position in life in the context of the culture and value system
in which they live and in relation to their goals, expectations,
standards and concerns.
o Time Trade Off (TTO) – It’s a tool to help determine QOL of
patient.
o QALY – Quality Adjusted Life Years.
o Discounting – It’s a method for time adjustment for costs
where the future costs are brought to the present.
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11. Direct Cost
o These are the resources consumed in the prevention,
detection or treatment of a disease or illness.
o It involve transfer of money.
A) Direct Medical Cost : Represents costs that are
incurred during provision of care.
Ex. Cost of drugs, lab tests, salaries of health care
professionals.
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12. B) Direct Non-Medical Costs : Arising due to illness
but do not involve purchasing medical services.
Ex. Cost of transportation, cost of special clothing's, etc.
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13. Indirect Cost
o It’s the external cost or indirect cost.
o These are costs of reduced productivity.
o It is the one borne by the patient and family.
o Ex. Wages and salaries lost due to mortality and
morbidity.
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14. Intangible Costs
o These are costs incurred, which represent non -financial
outcomes of disease and medical care, which cannot
be expressed in money value.
o Its related to the patients pain, worry and suffering the
patients family.
o Ex. Quality of life for patients of cancer, arthritis.
o Its difficult to measure and presently included in indirect
costs.
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15. Utility Unity & Quality of Life
o Utility Unity :- It evaluates the changes in a patients
satisfaction or sense of safety as an effort to calculate the
approved result from moving from one state to other for
the use of drug therapy.
o Quality of Life :- It involves physical and psycho-social
dimensions of life. physical dimensions include presence
or absence of ache and immobility; while psycho-social
dimensions include level of anxiety, depression and
reduced ability of patient to deal with issues.
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16. Importance of
Pharmacoeconomics
o Pharmacoeconomic analysis helps to achieve
maximum benefit in limited cost.
o Clinicals want their patients to receive best care
and outcome available.
o The payers want to manage rising costs.
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17. o Pharmacoecomics combines the objectives of both
clinics and payers by estimating the value of patient
outcomes for the expenditure spent on medications
and other healthcare services.
o In todys healthcare settings, Pharmacoecomics
methods can be applied for effective formulary
management, individual patient treatment,
medication policy determinations and resource
allocation.
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