Pharmacoeconomics

PHARMACOECONOMICS
SUBMITTED BY
Pavithra.V
M .Pharm-2nd Sem
Department of Pharmacology
SUBMITTED TO
Ms.Sanju.K
Department of Pharmacology
12/10/2018
DEPARTMENT OF PHARMACOLOGY
KMCH COLLEGE OF PHARMACY
1

CONTENTS
Definitions
Cost analysis
Outcomes
Perspectives
Pharmaco-economic models
Applications
Case studies
12/10/2018
2

DEFINITIONS
According to ISPOR (Indian Society for Pharmacoeconomics and
Outcomes Research)
“Pharmaco-economics is the field of study which
evaluates the behaviour of individuals, firms and markets
relevant to the use of pharmaceutical products, services and
programs, and which frequently focuses on the costs (inputs)
and consequences (outcomes) of that use”.
12/10/2018
3

PRICE:
It is the amount a customer pays for a product or
service.
COST:
It is the monetary value of resources consumed in
production or delivery of product or a service.
QOL:
An individual’s perception of their position in life in
the context of the culture and value systems in which they
live and in relation to their goals, expectations, standards
and concerns.
12/10/2018
4

HRQOL:
It is a multi-dimensional concept that includes domains
related to physical, mental, emotional, and social
functioning.
It goes beyond direct measures of population health,
life expectancy, and causes of death, and focuses on the
impact health status has on quality of life.
TIME TRADE OFF (TTO):
It is a tool to help determine the QOL of patient.
12/10/2018
5

QALY:
Quality Adjusted Life Years
DISCOUNTING:
It is a method for time adjustment for costs where the
future costs are brought to the present.
12/10/2018
6

COSTS
• According to ACCP (American College of Clinical
Pharmacy) the costs can be categorized as
• DIRECT COST
• INDIRECT COST
• INTANGIBLE COST
• OPPORTUNITY COST
• INCREMENTAL COST
12/10/2018
7

DIRECT COST
• These are the resources consumed in the prevention,
detection or treatment of a disease or illness.
• It involves transfer of money
A) DIRECT MEDICAL COST:
represents costs that are incurred during provision of
care. Eg) Cost of drugs, lab tests, salaries of health care
professionals
B) DIRECT NON-MEDICAL COST:
Arising due to illness but do not involve purchasing
medical services. Eg) Cost of transportation, cost of special
clothings, etc.,
12/10/2018
8

INDIRECT COST
• External cost or indirect medical cost.
• These are costs of reduced productivity.
• It is the one borne by the patient and family.
• Eg) Wages and salaries lost due to mortality and morbidity
12/10/2018
9

INTANGIBLE COSTS
• These are costs incurred, which represent non-financial
outcomes of disease and medical care, which cannot be
expressed in money value.
• Eg) costs of mental agony, pain, suffering, loss of energy
etc.,
• It is difficult to measure or give monetary value on these
costs.
• Presently these costs are omitted (or) included in indirect
costs.
12/10/2018
10

OPPORTUNITY COSTS
• It is the benefit forgone when selecting one therapy
alternative over the next best alternative.
• It includes the cost of lost opportunity or revenue forgone.
12/10/2018
11

INCREMENTAL COSTS
• It is the cost associated with increasing production by one
unit.
• It represent additional cost that a program or therapy
alternative imposes over another, compared to the additional
effect, benefit or outcome it provides.
• These are extra costs required to produce an additional unit
of effect.
12/10/2018
12

OTHERS
• Average costs
• Fixed costs
• Variable costs
12/10/2018
13

COST DETERMINATION
12/10/2018
14

OUTCOMES
• The outcomes (or) benefits (or) consequences can be
categorized as [ECHO model]
– Economic outcomes
– Clinical outcomes and
– Humanistic outcomes
12/10/2018
15

ECONOMIC OUTCOMES
• Related to direct, indirect and intangible costs of medical
treatment alternatives.
• Expressed in terms of money value.
• Include savings due to treatment (direct) as well as
production gains to return to work (indirect)
12/10/2018
16

CLINICAL OUTCOMES
• These are medical events or results that occur as a result of
disease or its treatment.
• Includes improvement of disease condition, cure of the
disease, no. of lives saved, no. of deaths averted, etc.,
INTERMEDIATE OUTCOME:
• Serves as indicator for more relevant final outcomes.
Eg) Decrease in LDL is an intermediate outcome where the
final outcome is decrease in MI rate and increase in lives
saved.
12/10/2018
17

HUMANISTIC OUTCOMES
• These are the outcomes of diseases or their treatment on the
functions or HRQOL.
• Includes healthy life, general well being, social
compatibility and physical functions.
12/10/2018
18

PERSPECTIVES
• Refers to the point of view from which the economic
analysis is performed.
• PE study can be conducted from a single perspective or a
group of perspective.
• The generally used perspectives are:
– Patient perspective
– Provider perspective
– Payer perspective
– Society perspective
12/10/2018
19

PE MODELS
• PE models help the authorities to allocate the limited
resources of medicine and health care facilities among the
various stakeholders.
• Three important factors for any economic analysis is
• Identification and choice among alternatives
• Assessment of costs and consequences
• Decision making within the limited/ fixed or
available budgets
12/10/2018
20

12/10/2018
21

COST BENEFIT ANALYSIS
• It compares the total costs of each alternative to resultant
consequences or benefits of the intervention measured in
monetary units
• Benefits are measured using contingent evaluation.
– WTP
– WTA
12/10/2018
22

COST BENEFIT RATIO
CBR = Total benefits / Total costs
• If B/C ratio is > 1
• Benefit outweighs the cost
• Hence such program is of good value
• If B/C ratio is = 1
• Benefit is equal to the cost
• If B/C ratio is < 1
• Cost of providing treatment outweighs the benefits
• Hence not economically beneficial
12/10/2018
23

APPLICATIONS
• Useful in comparing two or more alternatives with different
outcomes
• Helpful in deciding implementation of projects by
government or funding agencies.
LIMITATIONS:
• Converting benefit into monetary value is difficult
12/10/2018
24

COST EFFECTIVENESS ANALYSIS
• It is a technique used to aid in decision making between
alternative; when the costs are measured in monetary terms
while the consequences are measured in natural unit
changes in health.
• When the treatment alternatives are not therapeutically
equivalent or when it is not desirable to measure the
outcome in terms of rupees or money value it is used.
12/10/2018
25

ADVANTAGES
• The outputs or the outcomes are measured in natural health
units and need not be converted as in CBA
• CEA compares program or treatment alternatives with
different safety and efficacy profiles
DISADVANTAGES:
• The outcome have to be evaluated in the same clinical unit
• When several outcomes results from a medical intervention
CEA consider these two outcomes only if a common
measure of outcome can be developed.
• Effectiveness should be evidenced and should be reliable,
reproducible and valid
12/10/2018
26

APPLICAIONS
• The health care units are commonly used in clinical trials
and are very much familiar to researchers
• Choose from among the various competing programs or
alternatives.
• It has great use in formulary system, choosing programs or
therapies and comparision of drugs or devices.
• It also helps to identify which treatment alternative
represents the best outcome for the rupees spent.
• CEA can provide valuable data to endorse drug policy,
formulary system and individual patient treatment
decisions.12/10/2018
27

COST MINIMIZATIONANALYSIS
• CMA is a PE method used to compare 2 or more treatment
alternatives that are equal in efficacy.
• Outcomes are not compared because of the underlying
assumption that the treatment alternatives are
therapeutically equivalent.
• The primary objective of the CMA is to identify the least
costly alternative
12/10/2018
28

ADVANTAGES
• CMA is the simple and straightforward method of
evaluation
• The study need not analyse the outcome and can focus on
inputs only for assessing the costs
DISADVANTAGE:
• It can be applied to only limited cases.
12/10/2018
29

APPLICATIONS
• CMA is often applied in formulary decision making
• Best method to compare the various branded products of
same drug
• It can also be used to study the generic versus branded
products.
12/10/2018
30

COST UTILITY ANALYSIS
• CUA is considered to be an extension of CEA
• In CUA both quantity and quality of life, often measured from
the patient’s perspective, are merged into a single unit by
calculating utility or preference for the alternatives and then
calculating QALY.
• Utilities are measured using either the rating scale, TTO or
standard gamble approaches.
• In this evaluation, drug/interventions with different outcomes can
be compared.
12/10/2018
31

ADVANTAGE
• Can be applied to the comparison of different types of
health outcomes and disease with multiple outcomes of
interest using one common unit like QALY.
DISADVANTAGE:
• It is often difficult to determine an accurate utility or QALY
value
12/10/2018
32

APPLICATION
• When QOL is the important health care outcome to be
measured or evaluated CUA is having appropriate
applications.
12/10/2018
33

COST OF ILLNESS
• COI is also known as Burden of Disease (BOD) or Burden of
illness (BOI)
• It is an economic evaluation method used to identify and estimate
the overall cost of a particular disease for a defined population
• It involves measuring the direct and indirect cost attributable to a
specific disease
• The COI studies usually include some metric of ‘health loss’ and
try to measure the resource cost incurred in treating the related
diseases.
12/10/2018
34

APPLICATIONS
• COI studies are frequently used by policy makers and other
government organisations
• The published COI reports are used in law suits to recover
medical insurance claims
• COI are often cited in disease studies that attempt to
highlight the importance of particular disease
• It help authorities to appropriately target specific problems
and policies
12/10/2018
35

LIMITATIONS
• They are limited in determining how resources are to be
allocated because they do not measure benefits
• Studies can vary by perspective, sources of date, inclusion
of indirect cost and the time frame of cost.
12/10/2018
36

MODELS COMPARISON
MODELS
COST
MEASUREMENT
OUTCOME
MEASUREMENT DECISION RULE
Cost Of Illness
(COI)
Monetary Not assessed
-
Cost Minimization
(CMA)
Monetary Assumed to be
equal in groups
Lowest monetary
cost
Cost Benefit
(CBA)
Monetary Monetary Net monetary gain
Cost Effectiveness
(CEA)
Monetary Natural units/
units of effects
CE ratios using
incremental of
marginal analysis
Cost Utility
(CUA)
Monetary Utility like QALY Cost per QALY and
League tables
12/10/2018
37

PE EVALUATION
• The important criteria for construction or conduct of a PE
study can be listed as:
– Study objective
– Study perspective
– PE method
– Study design
– Choice of interventions
– Costs and consequences
– Discounting
– Study results
– Sensitivity analysis
– Study conclusions
– Sponsorship and bias
– Use of a comparator
12/10/2018
38

APPLICATIONS
• It aid in decision making
- Including drug in formulary
- Clinical decision
- Which drug provide net benefits to a particular group of patients
- Which drug is best for pharmaceutical manufacturer to develop and
the right place to market
- What is the expected QOL improvement with a certain drug.
• In drug use policy/guidelines development
• In resource allocation by government or funding agencies or
hospitals etc.,
12/10/2018
39

CASE STUDIES
PROBLEM 1:
From the perspective of a provider, which one of the
following is a direct cost of health care?
a) The rupees paid directly for physicians consultation
b) Fee for CT scan conducted
c) Cost of medicines paid to the hospital pharmacy
d) Salary of the nurse who supervise the therapy
12/10/2018
40

From the perspective of a provider, which one
of the following is a direct cost of health care?
d) Salary of the nurse who supervise the
therapy
12/10/2018
41

PROBLEM 2
Which one of the following is an example of a partial
pharmaco-economic evaluation?
a) A comparison of the costs and consequences of two
alternatives.
b) A cost utility analysis.
c) A comparison of the costs of two equally effective
alternatives.
d) A QOL comparison of multiple treatment
alternatives.
12/10/2018
42

Which one of the following is an example of a partial pharmaco-
economic evaluation?
d) A QOL comparison of multiple treatment
alternatives.
12/10/2018
43

PROBLEM 3
Which one of the following is an example of an intermediate
outcome?
a) Adherence to the prescription.
b) Clinical laboratory investigation results.
c) Total cost of hospitalization.
d) A patient’s physical functioning and mental well
being.
12/10/2018
44

Which one of the following is an example of an
intermediate outcome?
a) Adherence to the prescription.
12/10/2018
45

PROBLEM 4
Which one of the following best describes Economic
outcome?
a) The medical events that occur as a result of a
disease or treatment.
b) The direct, indirect and intangible costs compared
with the consequences of medical treatment alternatives.
c) The consequences of a disease or treatment on a
patient’s functional status or QOL
d) Drug effects on the patient functioning.
12/10/2018
46

Which one of the following best describes
Economic outcome?
b) The direct, indirect and intangible costs
compared with the consequences of medical
treatment alternatives.
12/10/2018
47

PROBLEM 5
You are the chair of the PTC at a hospital. It has been brought
to your attention that many physicians at your hospital are
using ampicillin-sulbactam for intraabdominal infections.
The suggestion was made to substitute cefoxitin, a less
expensive drug, to save the hospital money. The incidence
of side-effects is similar for both therapeutic regimens, but
the cure rate for intra-abdominal infections is higher with
ampicillin-sulbactum than with cefoxitin.
Whose perspective should be adopted?
What are the relevant alternatives?
What should be considered?
Which healthcare evaluation technique should be
used?
12/10/2018
48

a) Provider perspective
b) Cefoxitin or Ampicillin-sulbactam
c) Cost and outcomes
d) CEA
12/10/2018
49

References
• Pharmacoeconomics and epidemiology by Revikumar
• Textbook of clinical pharmacy by Parthasarathi
12/10/2018
50

12/10/2018
51

Pharmacoeconomics

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to Pharmacoeconomics

Similar to Pharmacoeconomics (20)

More from academic

More from academic (6)

Recently uploaded

Recently uploaded (20)

Pharmacoeconomics