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Pharmaeconomics
- 1. PHARMACOECONOMICS PARAMETERS STATISTICS D R .P R E R N A S I N G H J U N I O R R E S I D E N T ( 2 N D Y E A R ) D E PA R T M E N T O F P H A R M A C O LO G Y J N M C A M U
- 2. WHAT IS PHARMACOECONOMICS? •Pharmacoeconomics is a branch of health economics which compares the value of one drug therapy to another • Term first coined in 1986 by Townsend • Economic evaluation of pharmaceuticals • Essential to find the optimal therapy at the lowest price
- 3. WHY PHARMACOECONOMICS? Cost ofdrug therapy is increasing • New drugs • Drug preferred over interventions • Irrational prescribing • Increased technology • Increased life expectancy and standard of living • 1979 – 85% drugs were under price control • Now only 15 % are under price control
- 4. NEEDFUL IN: Industry -deciding among specific research and development alternatives Government – program benefits Private sector – insurance benefit coverage
- 5. PHARMACOECONOMIC ANALYSIS •Involves: oChoosing aperspective oIdentifying and measuring costs oIdentifying and measuring consequences
- 6. PERSPECTIVES Patient perspective– Portion of cost not covered by Insurance Out of pocket expense, indirect cost, Consequence: clinical effect Provider perspective – eg. Hospitals- Direct costs Payer perspective – eg. Insurance companies, employers, or the government Direct cost Society perspective - All direct and indirect costs Mortality morbidity
- 7. COST • The valueof the resources consumed by a program or drug therapy • Not only drug cost • Direct and indirect cost • Direct- fixed: not influenced by treatment level - electricity, rent variable
- 8. COST Direct medical cost • Hospital inpatient • Physician •Outpatient • Emergency department Direct non- medical cost • Transportation • Relocation • Cost of changing diet • Family care Indirect cost • Mortality • Morbidity • Loss of opportunity • Pain • Suffering • Inconvenienc e
- 9. INDIRECT COST ESTIMATION •Willingness to pay method(WTP) UNRELIABLE: subjective
- 10. CONSEQUENCE • Effects, outputs,or outcomes of the program or drug therapy
- 11. • Comparing direct,indirect, and intangible costs with the consequences of medical treatment alternatives Economic outcome • Medical events occur as a result of disease or treatment (e.g., safety and efficacy end points) Clinical outcome • Consequences of disease or treatment on patient functional status such as physical function, social function, general health and well-being, and life satisfaction Humanistic outcome
- 12. • Desired effectof a drug Positive outcome • ADR or toxicity of a drug Negative outcome
- 13. • Proxy forfinal outcome • Lipid lowering agent decreasing LDL Intermediate outcome • Reduced MI rate with lipid lowering agents Final outcome
- 14. M E TH O D S O F P H A R M A C O E C O N O M I C S
- 15. COMPONENTS OF PHARMACOECONOMICS Pharmacoeconomics Economic Costof illness Cost minimization Cost benefit Cost effectiveness Cost utility Humanistic Quality of life Patient preference Patient satisfaction
- 16. COST OF ILLNESSEVALUATION Burden of illness • Estimates overall cost of a particular disease for a defined population – Measuring direct and indirect costs attributable to a specific disease – Not used to compare competing treatment alternatives but to provide an estimation of the financial burden of a disease – Provide baseline to compare prevention or treatment against
- 17. COST MINIMIZATION ANALYSIS(CMA) • Most basic technique • Determination of the least costly alternative • Alternatives should be equivalent in safety and efficacy • Consider physician visit, number of hospital days • If drugs A and B are antiulcer agents equivalent in efficacy and adverse drug reactions (ADRs), then the costs of using these drugs could be compared using CMA • Generic drug
- 18. COST BENEFIT ANALYSIS •Benefits from a treatment compared with cost of providing it • Compare different programs: neonatal care vs cardiac rehabilitation • Expressed as benefit-to-cost ratio • Ratio >1 treatment is of value- benefit overweigh cost • Ratio <1 not economically beneficial • Valuing benefits in monetary terms is difficult
- 19. COST BENEFIT ANALYSIS SERVICEA • Service cost: Rs 100 • Benefit to hospital: Rs 1000 SERVICE B • Service cost: Rs1Lac • Benefit to hospital: Rs10lac Both have B:C ratio 10
- 20. COST EFFECTIVENESS ANALYSIS(CEA) • The most commonly employed method • Measures effectiveness (health benefit) in natural units (eg years of life saved, ulcers healed) and the costs in money • Compares therapies with qualitatively similar outcomes • Guide policymakers • Expressed as a ratio either as an average cost-effectiveness ratio (ACER) or as an incremental cost effectiveness ratio (ICER)
- 21. COST EFFECTIVENESS ANALYSIS(CEA) • Average cost effectiveness (ACER) = Net Cost / Net Health Benefit • Incremental Cost Effectiveness Ratio(ICER)= (Cost of drug A - Cost of drug B) / (Benefits of drug A – Benefits of drug B) ICER = Difference in costs (A-B) / Difference in benefits (A-B)
- 22.
- 23. COST UTILITY ANALYSIS(CUA) • Drugs/ interventions with different outcomes can be compared • Most appropriate for life extending therapy or serious ADR therapy (cancer chemotherapy) • Modalities decreasing morbidity: arthritis • Cost is measured in rupees and outcome in patient weighted utilities Quality adjusted life year gained One year of health in a disease free patient = 1 QALY DISEASE : lower value
- 24. COST UTILITY ANALYSIS(CUA) With treatment X Estimated survival = 10 years Estimate quality of life = 0.7 QALY = 10x 0.7= 7 With treatment Y Estimated survival = 5 years Estimate quality of life = 0.5 QALY = 5x 0.5= 2.5 QALY gained form treatment X 7-2.5 = 4.5 QALY
- 25. COST UTILITY ANALYSIS(CUA) • Results of CUA expressed in C:U ratio • Translated to Cost per QALY gained • Preferred treatment is one with low ratio
- 26. APPLICATION OF PHARMACOECONOMICS •Policy decision making • Support clinical decision
- 27. LIMITS OF PHARMACOECONOMICS •Young science, slowly developing • Process open to bias, in the choice of comparator drug, the assumptions made, or in the selective reporting of results • Studies are conducted or funded by pharmaceutical companies who are interested in the results • Misused as a marketing play
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Editor's Notes
- #3 Identify measure and compare the cost of drug therapy to society and healthcare system
- #8 Cost and consequence depend on it Assessed on single or multiple perspective For example, if comparing the value of alteplase (tissue plasminogen activator, or t- PA) with that of streptokinase from a patient or societal perspective, t-PA may be the best-value alternative because a 1% reduction in mortality rates is observed in this large population. Yet, from a small community hospital's perspective, streptokinase may represent a better value because it provides similar outcomes for less money. Patient: ultimate consumer so paramount Provider : indirect cost not imp. Society broadest of all
- #9 Direct: paid for the health service (including staff costs, capital costs, and drug acquisition costs). Direct nonmedical costs. Indirect: cost experienced by patient (family, friends).
- #10 Direct medical cost: products to treat or diagnose prevent disease Indirect: reduced productivity Mortality: year lost due to premature productivity Morbidity: lost productivity
- #11 Patients are asked how much money they would be willing to spend to reduce the likelihood of illness.
- #19 Measuring direct and indirect costs attributable to a specific disease such as diabetes, mental disorders, or cancer
- #20 If drugs A and B are antiulcer agents equivalent in efficacy and adverse drug reactions (ADRs), then the costs of using these drugs could be compared using CMA
- #23 Like compare h2 blocker and ppi for peptic ulcer
- #29 Cost utility ratio CUA is employed less frequently than other economic evaluation methods because of a lack of agreement on measuring utilities, difficulty comparing QALYs across patients and populations, and difficulty quantifying patient preferences