GUEST EDITORIAL I'Iurnocot:eonomaO(5)' 412410, ,_ II 1O-1o<;llJW1OOII.Q4 12/S02.!oOiO

Implementing Pharmacoeconomic Outcomes Management William F. MeGhall and Becky A. Briesacher Institute for Pharmaceutical Economics, Philadelphia College of Pharmacy and Science, Philadelphia, USA

Cost-effectiveness analysis, and specifically pharmacoeconomics. shou ld be at the heart of all outcomes management and outcomes research . Saving lives and managing costs are so integra ll y l inked that the needs and well-being of a pat ient population cannot be adequately met without weigh­ing the benefits of medical intervent ions against concerns about ris ing healthcare expenditures'! 1-51 Unfortunately, this interdependence seems 10 make some people uneasy, perhaps as a result of the his­torica ll y controversial alliance between sound eco­nom ic decisions and the practitioner mandate to do all that is possible for the patient. However. there should not be an uneasy balance between these 2 paradigms, because improved cost effectiveness should be considered a part of the process of select­ing what is best for the patienl. 16 ) The key to the harmonisation and acceptance of these 2 concepts is understanding how to implement cost-effective­ness analysis and pharmacoeconomics into the management of patient outcomes.

The tenn 'outcomes' encompasses concepts such as quality assurance and continuous process con­trol. These tags may sound rhetorical. but in fact they involve a number of practical concepts that relate to cost effectiveness. Outcomes management is an especially useful term (and perhaps more acceptable \0 practitioners) because it has all owed the important issues of eft'iciency, capability. eft'i­cacy and productiv ity (all tenets of cost effective­ness) to be addressed without emphasising costs. Outcomes research is aimed at building t heories and models for evaluating effecti ve drug therapy

protocols, successfu l medical interventions, and optimal therapeutic options. Outcomes researchers translate these theories into models for measuring patient responses or the effec ti veness of drugs and procedures. 171

Outcomes management is the daily application of these models in clinics. pharmacies and hospi­tals. Within these settings, outcomes standards. guidelines and protocols become practical proce­dures, such as setting levels for quality control or identifying clinical data outliers for extra atten­tion. Outcomes management tests the proposed structures and processes of outcomes research and conti nually regenerates therapy standards, protocols and treatment goals for use in healthcare practice.!41

1. The Pharmacoeconomic Outcomes Management Model

The basic model for the cost-effective outcomes approach to healthcare can be depicted as a ci rcle with recurring steps (fig. I). An explanation of the process is as follows:

I. Development of treatme nt protocols, stand­ards or guidelines, perhaps based on clinical liter­ature and/or discussion with expert consultants.

2. The c li nical evaluations should follow a care­fully planned research design (e.g. randomised con trolled trials. postmarketing ep idemiology, careful individual patient monitoring).

3. The patient interventions are implemented following orientation of physicians, pharmacists, nurses and patients.

4. The clinical, social and economic impact of

Implementing Pharmacoe-conomic Outcomes Management

the interventions are measured with appropriate questionna ires and data collection tools.

5. Data analysis is conducted using appropriate stati stical techniques.

6. Feed/)(Ick is provided, leading 10 improved procedures and perhaps rev ised guidelines. The outcomes process continues again at the top of the c ircle wi th conlinual assessment of the protocols and guideli nes.

At the heart of thi s ci rcle are cost effectiveness and other types of pharmacoeconomic evaluation, because costs are inex tricably linked in any out­comes cycle. The inner circle represents the steps in vol ved in pharmacoeconomic research and eval­uation; these are discussed elsew here.12.81 Out­comes managers and practitioners do not always assign monelary val ues to their work . but that does not change the inherent re lationship between effi­cacy and cost effect iveness in patient carc. This connect ion is sometimes obscured because costs and be nefit s are sometimes indirect. and not readily observablc in a cli nic selling. For instance, a drug therapy for arthritis that reduces innamma­tion and pain would also be expected to improve quality of life and. in many instances. decrease the number of days off work because of illness. Like-

Feedback

Pharmacoeconomic oulcomH management model

Guidetines. goalS . protocots

Economic analysis

0 Measurement

Evall,latiorl design

Inte",entiorls: pat,ent pharmacist phySIC,an nUfse

Fig. 1. A basic model of the cost·eflective outcomes approach to healthcare.

41 3

Table I. Outcomes studies tl.lOded by the US Agency tor Heahh Care Policy and Research

Acute myocardial infafCIion

Benign prostatic hypertropl"ly

Bil iary traCl disease

CataraClS

Hip fraclufe repair

Ischaemie heart disease

Low bilthwe!Oht Low back pain

Management 01 childbirttl

Non-insuhn-dependeOl diabetes mellitus

Pneumonia

Schizopl"lrenia

Stroke prevention

Total knee replacement

wise. 2 treatments for Alzheimer 'sdisease may seem clinically equivalent in the s hort term. yet one ther­apy may be more cost effecti ve because it is supe­rior in lessening long term morbidity and prolong­ing the patient's abili ty 10 function independently.

Economical ly evaluating di seases and treat­ments in such a systematic way is valuable because it helps healthcare decision makers 10 measure therapeutic gain objectively. The more precisely we can measure improvements in healthcarc, the eas­ier it is to demonstrate their societal value . How­ever, the most effec tive measures must include direct and indirect economic benefits as well as clini cal benefits. All of these benefit s are inter­linked and must be considered in order to se lect the best therapeuti c interventions. The most effec tive outcomes research recogni ses thi s re lationship.1 21

The Age ncy for Health Care Policy and Re­search (A HCPR) in the US is currently supporting grants in outcomes research on a variety of disease states and other clin ical si tuati ons (table I). These research projects are attempting to identify varia­tions in the diagnosis. treatment and management of each disorder. and determine the most effective way 10 red uce the incidence of death, complica­tions, and hospita l readmission. They will also as­sess the best ways to meet patients' expectations. values and preferences.

Upon completion of thei r work, the AHCPR­funded researchers will creale standards, guide-

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lines and protocol s that wil l hopefully help healthcare professionals select the most appropri­ate treatments for patients. For several diseases, Ih is research should also h elp to identify morccosl­effective methods of treatment. For example, stroke causes a sign ificant number o f deaths in the US. If outcomes research identifies an improved treatme nt for stroke thaI eventually lowers the m OT­

("lity rate and improves recovery. rehabil itation and vocati onal d isabilit y measures, then there should also be a more cost-effective use of. and maybe even a reduction in , the millions of dollars spent on thi s disease. In shoft, outcomes research

should help improve the quality and cost effective­ness of healthcare.l9l

New applications o f outcomes research are spreading into all areas of healthcare. Pharmaceu­tical companies have long been required to conduct basic outcomes research for drug approval, as it relates to the clinical outcomes required by the US Food and Drug Administration (FDA) for safety and efficacy. Now, however, cost-effecti veness and quality-of-life (QOL) issues mu st take i ncreas ing precedence if a new drug is 10 be well accepted in the healthcare marketplace. Government agencies and third-party payers are demanding to see more comprehensive outcomes assessments and therapy protocol s before deciding whether certain medical interventions should be cove red or reimbursed. Healthcare professionals (physicians, pharmaci sts, nurses and others) will need to participate in devel­oping practice guide lines that more full y ut ilise their skill s and the therapeutic tech nologies in their armamentarium. Healthcare institutions will want to use economics and o utcomes measurement pro­cesses to adjust care procedures for maximum ef­ficiency. For exam ple. a cli nic that studies counse l­ling interventions to improve patient satisfaction, and thereby improve therapy compliance, could in­corporate the results into their daily patient inter­ventions and guide lines.

All applications of the outcomes research m eth­odology (even those addressing the classic dimen ­sions of death, disabi lity and discomfort) shou ld also include economic studies for greatest utility.

MeG/lim & Briesac/ler

Each complex aspect of care must be di sti lled into the traditional paradigm of inputs and outputs for analysis, The inputs are the resources consumed (i.e. the cost of therapy or healthcare programme) and the health improvements. The outputs are ef­fectiveness measures, such as changes in b lood pressure or cholesterol levels, and utility scales, which are comparisons between healthy states and patient aSsessments o f care. The difficult part is translating all th is activity into dollar amounts.

There are obvious healthcare costs such as drug costs, hospital costs and clini c costs that translate readily into do llar amounts. But what about the ad­ditional costs that might be incurred as a resul t of deterioration in the patient's condition while wait· ing for treatment. the costs of patient transportation or changes i n life expectancy? Pharmacoeconom­ics encourages us to calculate these costs through econo mic analyses, includ ing cost benefit. cost ef­fect iveness. cost utility and cost minimisation. I2.31 These economic methodologies make it possible 10 ask basic questions about the cost of an illness and the most cost-beneficial drug(s) 10 treat that illness. Yet, these questions arc st ill difficult to answer be­cause the data can be incom plete for many ill nesses and treatments. particularly for experimental drugs or procedures. Outcomes researchers need more economic data to measu re s uch factors as stress on the family, home hea lthcare intervent ion , and li fe extension with steady decli nes in quality of life.

For economics to be added to the ou tcomes ap­proach, we must encourage practitioners to hel p measure the direct and indirect costs and benefits of their care. Direct costs shou ld be more routinely collated and monitored through clinic accounting systems. These d irect costs inc lude hospital or clinic costs, health professional time costs, product costs and administrative costs. These costs are usu­ally targeted for reductions in healthcare budgets. More difficult to co llate are, o f course. ind irect costs which are more intangible, such as the days that the patient is too sick to work, time spent away from work waiti ng in a doctor's office , or prema­ture death that red uces lifelong wage earnings. These societal expenses are not extractable from

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Implementing Pharmacoeconomic Outcomes Management

hospital records. yet indirect costs can account for as much as 50 to 60% of the total costs of an ill ­ness.l21 Morbidity, reflected in the time lost from work. generally accounts for aboul22% of the lotal costs (direct and indirect). and premature mortal­ity. which is permanent loss from the workforce. is about 38% of the total costs of illness. 121 These percentages significantly affect the tOlal COSI of ill ­ness in society. yel <Ire rarely fully collaled and considercd in hea lthcare budgeting and debates.

2. Quality of Life

The increasing importance of QOL measure­ment is also be in g acknow ledged in outcomes management and paticnt care. Although we recog­nise the physical, mental and social impai rments of disease, there is not as much agreement on how to quantify these facto rs universally. The concepts of satisfaction with care and quality of life are often overlooked in cost-effectiveness studies_ and even in the governmental drug approval process. How­ever. outcomes research should consider quality of life to be a significant predictor in creating full models of survival and improvement. In ou r opi n­ion. quality oflife is just as important 10 theclinical outcome as drugs, practitioners . sell ings and types of disease. The question is: how can instruments for measuring quali ty of life be created and effec­tively utilised in a meani ngfu l way. during the health professional's dai ly practice or throughout the patient's life?

A currently debated aspect of QOL research is the number of healthy years with in life extension_ In an average US lifespan of73 or 74 years. people generally have about II or 12 years wi th limi ted physical or mental ability. Therefore, whenever consideri ng the impact of pharmaceuticals, it could be argued that we might adj ust any QOL measure­ment to reflect whether life extension occurs dur­ing the healthy or 'dysfu nctiona l' phase of life. Likewise. if adj ustments are not made for concur­rent disease states, the resulli ng health profi le may be skewed. For example. hypertension may escape a QOL measurement because it docs not overtly affect daily li fe. However. a myocardial infarc ti on

() Adis Ioterr.olior.allimile<:!. AI rights reserved.

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wi)) almost certainly lessen quali ty of life. The FDA has been wary of drugs that make patients fee l beller but do not affect the underly ing disease pro­cess. Nevertheless, we must be able to infonn pa­tients of the probabilities of perfect health and death, and the compromises associated with di ffer­ent treatments.

3. Decision Support Systems

To assess the probabilities of a successful inter­vent ions. we must monitor what happens to pa­tients during cl inica l treatments over time and col­late data on the utili ties of those treatments. This means that we shou ld ask patients how they feel about thei r therapy options. wh ich therapies they prefer. and how therapy affects their quality of life. Pharmaceutical companies have already sponsored research that projects probabilities, util ities and cost-effectiveness factors onto time charts and de­cision trees. Usi ng decis ion analysis concepts. re­searc hers and practit ioners could also construct decision trees and Markovian models of what hap­pens to patients from diagnosis to cure to cessation of normal life. As a resu lt of such analytica l ap­proaches. healthcare professionals and patients could more clearly discern not only the costs of treatment . but also the probability of entering one health state over another.

Using computer modelling, we can also develop treatment protocols. in which each branch of a de­cision tree represents specific treatments and spe­cific health stales. In a simpl ified format, such a tree can also act as an educational tool for present­ing avail able therapy options and probable conse­quences to the patient . Wennbergl91 has explored ways to involve patients in this type of decision­making process. His more recent work, an interac­tive computer program on prostate surgery. ex­plains to patients the probability of success, the pain involved at each step. and the details of each procedure. After viewi ng this program with graphic depictions of the surgery, many patients changed their decision from surgery to watchful waiti ng. This reduct ion in a major procedure came fro m a greater focus on q uali ty of life and patient

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satisfaction. However, funher study is needed to test the hypothesis that patients based their decisions on short term discomfort and fear of surgery, rather than the long term outcomes of treatment. With furt her evaluation and perhaps modification. this computer program should a lso be able 10 help the pal ient understand the potential cost effectiveness of various medical treatment options. Wennberg'S workl91 is an application of outcomes research that can help the patient understand and weigh the costs, uti lities and quality of life of various diseases.

4. Role of Health Professionals

How can healthcare professionals use the out­comes process and protoco ls to their best advan­tage? Once national outcomes research studies have produced guidelines, they are di stri buted to various practitioners and facilities for implementation in clin ical setti ngs . Even if new governmental guide­lines are developed through randomised clinical and pharmacoeconomic trials, these guideli nes will re­quire follow-up eval uations 10 validate their effi­cacy and effectiveness in all settings and situations. If the clinical implementations of these procedures are careful1y monitored and measured. the new in­formation should be fed back into the outcomes ci rcle to produce further analysis, more feedback and improved protocol s (fig. I). Thi s is a continu­ous cl inical and economic process, requiring long­itudinal designs.

Practitioners should be involved in the collation and evaluation of economic data at each step in the outcomes circle. because cost is a cri tical compo­nent of the outcomes cycle. Physic ians. pharma­cists and nurses may be hes itant about participating fully in economic outcomes evaluations, since they may feel that th is comprehensive approach is time consuming and potenti ally li mits indiv idual flexi­bi lity. Yet. govern ment agencies and third-party payers who reimhurse healthcare costs want evi­dence of cost effectiveness, appropri ate care, ob­served protocol s and patient d iagnoses that match uti lisation review expectations. In the fu ture, reim­bursement will increasingly require accountabili ty as well as restrictions on acceptable therapeutic

McGhal! & 8riesadrer

interventions. The purpose of these demands s hou ld be to deliver healthcare that is more cost effective, and to improve the quality of patients' lives.

5. Conclusion

In melding the concepts of phannacoeconomies, cost effectiveness and outcomes research. we must re­member that more care does not necessari ly guamn­tee better care. At the same time. eliminating all 'ex­pensive' procedures wil1 not necessarily lower total healthcare costs. Health professionals must also con­sider the cost benefit of their own activities. They must use more appropriate practice management technol­ogy, team approaches and assistants in order to ad­vance to more comprehensive and cost-effective pa­tient care.18.IO.lll lf we carefully choose meaningful outcomes that incorporate patients' short lenn and long tenn health status. rather than just the structure and process of care, we will fi nd ourselves with more appropriate procedures and more resources for more people.

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maceu1ical Produc1s and Phannacy Services. Washington. DC: American Pharmaceutical A,,<;oeiatiOfl. 1989

2. Bootrnan JL. Townsend RJ. McGhan WF. Principles of pharo moc"OeConomics. Cincinnati: Har.·ey Whitney Booh. 1991

3. McGhan WF. Ro .... ·land CR. BOOIO"'1I JL. Cosl ·bc""fl! and coSt­effecl j,'cnc!<S: methodologies for evaluating innovati ve pharma­ceutical ,;",,·ices. Am J Hosp Phaml 1978: 35: 133-40

4 Ellwood PM. Outcumes management a tcchnologyofpaticnt cx­pene""". N Ellgi J Me<! 1988: 318: 1549·56

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6. McGhan WF. Cost-crfl'Clivc drug therapy. Heallh Care Execmi\"e 1993: 8: 27

7 T:ulov AR. Ware JE. Greenfield S. The medical outcomes study. JAMA 1989: 262: 925·30

8. McGhan WF. PhanllOCQt:conomics and the evaluati on of drugs and services. Hosp Formulary 1993; 28, .165-78

9. Wennbcr!!J E. The paradox of appropriatccarc. JAMA t987; 258: 2568-9

10. Le ..... is NJ . Briesacher BA. McGhan WF. Patiemotncomes: the drug monitoring challenge. US PhaslOatist 1993: November: 64-82

I I. Reiman AS. Assess!llCnt and accou ntabi lity: the third revolut ion ill medical Care . N Engl J Mcd 1988: 319: 1220_2

Correspondence and reprints: Dr Willimn F McCJu!1I, Insti ­tule for Pharm,lceutical Economics, Philadelphia College of Pharmacy and Science, 6OOSouth 43rd Street, Philadelphia, PA 19104-4495, USA.

PhonnocoEconomiCs 1.>(5) 1994