This document provides an overview of pharmacoeconomics, including its history, definitions, types of evaluations, and limitations. Pharmacoeconomics developed in the 1970s to analyze the costs of drug therapy. It is concerned with the economic impact of pharmaceutical products and services on individuals, health systems, and society. There are several types of pharmacoeconomic evaluations including cost-effectiveness analysis, cost-utility analysis, and cost-benefit analysis, which are used to compare drug programs and therapies. Pharmacoeconomic studies can be conducted during various phases of drug development and are used by industry, government, and private sectors to make decisions about research, pricing, and insurance coverage.

1. Pharmacoeconomics
Dr.Kavitha
2nd Yr PG
Moderator: Dr.Kamdod
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2. Presentation plan
• Introduction
• History
• Definition
• Perspectives
• Pharmacoeconomic evaluation
• Types
• Pharmacoeconomics and drug development
• Limitations
• Conclusion
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3. Introduction
• Health care funders are struggling
to meet their rising costs.
• Expenditure on drug therapy is a
particular target for their attention for several
reasons
• Economic interest in drug and other
treatments of health problems is much older
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4. History
• Economic evaluation started 30yrs ago-crude
analysis
• In 1970s-Pharmacoeconomics developed
• In 1978 McGhan, Rowland & Bootman introduced
the concepts of cost-benefit & cost-effectiveness
analyses
• The term Pharmacoeconomics was first published
in 1986 by Ray Townsend
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5. Definition-Pharmacoeconomics
• “The description and analysis of the costs of drug
therapy to health care systems and society”
OR
• “The social science concerned with the impact
of pharmaceutical products and services on
individuals, health systems and society, as well as
the description and analysis of the costs”
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6. Need
• In Industry- Decide among specific research and
development alternatives
• In Government- Determining program benefits
and prices paid
• In Private sector- Designing insurance benefit
coverage
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7. Perspectives of Pharmacoeconomics
• Patient perspective
• Provider perspective
• Payer perspective
• Societal perspective
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8. Cost related measurements
• Direct
• Indirect
• Intangible
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9. Health economics
It include three parameters
1. Output of healthcare
2. Cost of producing better health
3. Efficiency
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10. Pharmacoeconomic evaluation
1.Cost minimization analysis (CMA)
2.Cost-effectiveness analysis (CEA)
3.Cost-utility analysis (CUA)
4.Cost-benefit analysis (CBA)
5.Cost of illness evaluation
6.Cost consequence analysis
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11. Method Description Application
Cost minimization
analysis (CMA)
Finds the least expensive cost
alternative
Used when benefits are
the same
Cost-effectiveness
analysis (CEA)
Compares alternatives with
therapeutic effects measured in
natural units
Most commonly applied
form especially in drug
therapy
Cost-utility
analysis (CUA)
Measures therapeutic
consequences in utility units
rather than physical units
Used to compare
drug/programs that are
life extending with serious
side effects or those
producing reductions in
morbidity 11

12. Method Description Application
Cost-benefit analysis
(CBA)
Measures benefit in monetary
units and computes a net gain
Can compare programs
with different objective
Cost-of-illness
evaluation
Pharmacoeconomic evaluation
of new therapies
Establish a baseline for
comparison
Cost-consequence
analysis
Costs and effects are
calculated but not aggregated
into QALYs
Compares the listing of all
relevant costs and
outcomes of drug therapy
or healthcare intervention
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13. Types of Pharmacoeconomic studies
1.Prospective studies
2.Retrospective studies
3.Model studies
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14. Pharmacoeconomics and drug development
Phase of trial Application
Phase I trial Cost of illness studies
Phase II trial Cost of illness studies can begin or continue
Preliminary development of quality of life
Phase III trial Money is spent in new drug development
Patient related costs
Phase IV trial Allow evaluation of the costs & consequences of drug
therapy without the altered interventions that occur in
strictly controlled clinical trials
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15. Pharmacoeconomic guidelines
1.Methodologic guidelines would guide researchers
to appropriately design, conduct, analyze and
report economic and humanistic evaluation
2.Reimbursement and pricing guidelines would
outline the content, presentation and evaluation
of pharmacoeconomic data to determine or justify
the price or reimbursement of a pharmaceutical
product
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16. 3.Approval guidelines would set the standards
acceptable to a particular government to
obtain approval to market a new product.
4.Promotional guidelines would set the criteria
for the use of pharmacoeconomic data in
support of pharmaceutical promotion to
prescribers and consumers
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17. Limitations
Lack of
• Evidence based medicine
• Clinical end point data
• Direct comparator studies
• Situation with incremental, small benefits
• Lack of precedents in case of innovations
• Obvious “efficacy-effectiveness gaps” may pose
challenges in the pricing decision process for
pharmaceuticals
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18. Conclusion
• There is an urgent need to develop a science
based on study of cost and consequences of drug
therapy to healthcare system and society
• Manufacturers-opportunity to demonstrate the
cost effectiveness of their products
• Pharmacoeconomics is also relevant
socioeconomics -relates patients, society and
economy, to drug therapy.
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19. References
• Ahuja J, Gupta M, Gupta A K, Kohli K.
Pharmacoeconomics. Natl Med J India
2004;17:80-3
• Gattani S G, Patil A B, Kushare S S.
Pharmacoeconomics: A review. Asian Journal
of Pharmaceutical and Clinical Research. Vol.2
Issue 3, July-September 2009
• Maiti R. Postgraduate topics in Pharmacology.
Andhra Pradesh. Paras Medical Books; 2013. p
203-8
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20.   THANK YOU  
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