BASICS OF

PHARMACOECONOMICS

By Dr Ketan Asawalle

JR1,Dept. of Pharmacology

SVNGMC Yavatmal

SCOPE OF

PRESENTATION

1. Introduction

2. Brief History

3. Challenges

4. Pharmacoeconomic Evaluation

5. Methods for Evaluation

SCOPE OF

PRESENTATION

6. Assessment of Results

SCOPE OF

PRESENTATION

7. Limitations of Evaluation

8. Summary

HISTORY

• Economic evaluations in the field of pharmacology started about 30 years ago

Crude parameters were used to evaluate e.g. increased labour production

• The term PHARMACOECONOMICS was used on a public forum for the first time in

INTRODUCTION

• Who Pays for medical bills ?

1.Government

2. Insurance Companies

This NEVER

Happens

This ALWAYS happens

Health care Funders try to make efforts to contain drug costs

By

• Price negotiations

• Patient co-payments

• Dedicated Drug Bills

WHAT IS A DRUG

BILL?

which states the various policies of that government that it has made for health care improvement in the country

percentage of GDP that particular country has allotted for

Generally the health care bill is 10 to 15% of total GDP

In 2013, Indian health care budget was 1.04% of the GDP

In 2014 it is proposed to touch 2.5%

Health Care Funders have to keenly study all these aspects in order to achieve their

SAVE AS MUCH MONEY AS POSSIBLE ALONG WITH PROVIDING ADEQUATE HEALTH CARE

The VERY FIRST aspect of controlling drug costs is

EVALUATION OF EXPENDITURE OF DRUG THERAPY

REASONS for EVALUATION

Size of drug bill

Easy to measure pharmaceutical costs

Evidence of wasteful prescribing

Perception that drug companies work for profits

DEFINITION

PHARMACOECONOMICS

effectiveness, cost-minimization, cost-of-illness and cost

Pharmacoeconomics adopts and applies the principles and methodology of HEALTH ECONOMICS

Pharmacoeconomic evaluation therefore makes use of the broad range of techniques used in health economics evaluation to the s

Pharmacoeconomics is the description and analysis of the costs of drug therapy

BASIC USES

• Make formulary decisions

• Design disease management programs

• Measuring the cost- effectiveness of interventions and programs

NEED FOR

PHARMACOECONOMICS

GOVERNMENT

Determining programme benefits and prices paid

INDUSTRY

Deciding among specific research and development alternatives

PRIVATE SECTOR

Determining the insurance benefit

COMMON MAN

Rising health expenditures have led to the necessity to find the optimal therapy at the lowest price

Pharmaceutical expenditure has increased dramatically

Numerous alternatives for the same disease/condition

Increasing costs of health care products

IMPORTANT

TERMS

PRO i.e. PATIENT REPORTED OUTCOME

HRQL i.e. HEALTH RELATED QUALITY OF LIFE

QALY i.e. QUALITY ADJUSTED LIFE YEARS

PATIENT REPORTED OUTCOME (PRO)

Measured by self-reported questioners

patients own viewpoint about the new product in question

HEALTH RELATED QUALITY OF LIFE

related quality of life" (HRQL) is an individual's satisfaction or happiness with domains of life

variables within the dimension of health (e.g., a disease or its treatment) relate to

disease burden, including both the quality and the quantity of life lived

The quality-adjusted life year QALY

Based on the number of years of life that would be added by the

CHALLENGES

Training and education in ANALYSIS of DATA

Standardizing the methods and establishing GUIDELINES for practice

CONTINUED EDUCATION on relevant features

Stable FUNDS

PHARMACO-ECONOMIC

EVALUATION

ISSUES

INPUT

COSTS PERSPECTIVES

HEALTH CARE

OUTCOME

PERSPECTIVE

Gives the information about from whose point of view the evaluation is considered

1. Health Service Perspective

Two Types

2. Societal Perspective

Generally the societal perspective is considered but the health mangers facing problem of low budget concentrates on health s

Health service perspective contains direct cost

Societal perspective contains indirect cost

COSTS

Two main types

is the benefit foregone when selecting one therapy alternative over the next best alternative

Financial costs=Mandatory costs

Economic costs=Non mandatory costs

MEASUREMENT OF COST

1.cost/unit (cost/tablet, cost/vail)

2.cost/treatment

3.cost/person

4.cost/person/year

5.cost/case prevented

6.cost/life saved

7.cost/DALY

OUTCOME

What is the effect of alternative drug therapies on disease progression, survival, quality of life?

POSITIVE and NEGATIVE outcomes are to be considered

Positive outcomes = Drug Efficacy

Negative outcomes = Side Effects, Treatment failure and Drug Resistance

METHODS OF

PHARMACO-ECONOMIC

EVALUATION

COST-MINIMIZATION

ANALYSIS

• Measures only costs

• Mainly of Health Services

• Applicable only when outcomes are identical and need not be considered separately

EXAMPLE

Comparing prescriptions containing generic drug and leading branded drug

Amoxicillin-clavulenic acid and Augmentin™

The purpose is to project the least costly drug or treatment modality

Reflects cost of preparing and administering a drug

COST-EFFECTIVENESS

ANALYSIS

It refer to a particular type of evaluation, in which the health benefit can be defined and measured in natural units (e.g. years of life saved, ulcers healed) and the

Compares the relative costs and outcomes (effects) of two or more courses of action

Assigns a monetary value to the measure of effect

CEA is

Cost associated with health measureGain of health from a measure

Compares therapies with qualitatively similar outcomes in a particular therapeutic area

QALY is the most common outcome measure

In severe reflux oesophagitis, we could consider the costs per patient relieved of symptoms using a

EXAMPLE

COST-UTILITY

ANALYSIS

Similar to Cost-effectiveness analysis

Costs are measured in Money

Outcome is Defined

Outcome is a Unit of Utility e.g. QALY

End point of disease is not directly dependent in disease state

Can look into more than one area of medicine

Cost per QALY of coronary artery bypass grafting versus cost per QAL Y for erythropoietin in renal disease

EXAMPLE

difficult than measuring the monetary value of life through health improvements

This is because in CUA you need to measure the health improvement effects for every remaining year of life

DRAWBACK

COST-BENEFIT

ANALYSIS

The benefit is measured as the associated economic benefit

E.g. monetary value of returning a worker to employment earlier

Both costs and benefits are expressed in money

Allows comparisons to be made between very different areas, and not just medical

(benefits of improved education and hence productivity) compared to establishing a back pain service

but very important benefits not measurable in money terms, e.g. relief of anxiety

CBA may also seem to discriminate against those in whom a return to productive employment is unlikely

DRAWBACKS

SUMMARY

RESULTS OF

EVALUATION

FOUR POSSIBILITIES

New treatment is

More effective and more expensive

More effective less expensive

Less effective less expensive

Less effective more expensive

RESULTS OF ECONOMIC EVALUATION

I

IIIII

IV

This would be the case in which only TWO treatment regimens or drugs are considered

But what if multiple regimens are considered at once

Beta Slope

MARKOV’S POPULATION TREE FOR DECISION ANALYSIS

OTHER METHODS OF DECISION MAKING

AMOUNT NEEDED TO TREAT/NUMBER NEEDE TO TREAT

LIMITATIONS

BIAS

• Choice of comparator drug

• The assumptions made

• Selective reporting of results

WHY IS THIS BIAS?

less well understood by doctors and others, bias needs to be minimised

Doctors may tend to equate health economics with rationing or cost cutting, and therefore may reject the whole process as

MAIN PROBLEMS

• A short term outlook

• Many budgets operate in isolation, and it is not easy to move money between them

• A new intervention may simply not be affordable no matter how cost effective it might be

• Young sciences

• Need of proper guidelines

THANK YOU

REFERENCES

1. A Practical Guide To Clinical Audit, Quality and Patient Safety(QPSD-D-029-1 V.1)

2 Pharmacoeconomics: basic concepts and terminology T. Walley & A. Haycox (Department of Pharmacology and Therapeutics, Univers

3. Pharmacoeconomics and Economic Evaluation of Drug Therapies Tom Walley, M.D. (Professor of Clinical Pharmacology Departmen

4. PHARMACOECONOMICS: A REVIEW SURENDRA G. GATTANI, Department of Pharmaceutics, R.C.Patel college of Pharmacy, Karwand naka, Sh

ABASAHEB B. PATIL, Lecturer Department of Pharmaceutics , R.C.P.E.R. Malegaon,

SACHIN S. KUSHARE, Department of Pharmaceutics R.C.Patel college of Pharmacy, Shirpur

5. THE THEORY OF COST-BENEFIT ANALYSIS JEAN DREZE AND NICHOLAS STERN (London School of Economics)

6. DRUG UTILIZATION AND THERAPEUTIC AUDIT, British journal of clinical pharmacology (1980), 9, 227