Pharmacoeconomics

PHARMACOECONOMICS
DEFINITION
Compares the value of one pharmaceutical drug or drug therapy to another
It is a sub-discipline of health economics pharmacoeconomic study evaluates the cost (expressed in monetary terms) and effects (expressed in terms of monetary value, efficacy or enhanced quality of life) of a pharmaceutical product
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I.INTRODUCTION
In health care, efficiency may not be the most important objective -we might for instance prioritise caring for dying patients or treating patients with serious disease who have relatively little hope of surviving. Pharmacoeconomics is a branch of health economics that particularly considers drug therapy particular interest to pharmaceutical companies who in developing a new drug and after the traditional hurdles of efficacy, safety and tolerability must now jump over a fourth hurdle of cost effectiveness
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II.KEY CONCEPTS
EFFICIENCY : How to buy the greatest amount of benefit for a given resource use
OPPORTUNITY COST : benefit foregone when selecting one therapy alternative over the next best alternative INCREMENTAL ANALYSIS: what are its added costs and benefits, over and above those of the existing treatment
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RELATED CONCEPT
MARGINAL COST :The only costs which change may be those of having a patient physically occupy the bed -the costs of the patients meals, treatment and perhaps nursing time Incremental analysis is concerned with the marginal and not the average costs
III.COSTS AND BENEFITS

Depend in part on the perspective or viewpoint we choose to take
PERSPECTIVE ASKS FROM : 1.health care payer 2.society In general, the societal perspective is considered the most appropriate. e.g- an expensive drug in an area which previously cost the health service very little was highly undesirable.
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COST CLASSIFICATION
Direct : costs from the perspective of the healthcare funder: including staff costs, capital costs, drug acquisition costs. These should (in theory) be relatively easy to measure Indirect : costs from the perspective of society as a whole: for example, these might include loss of earnings, loss of productivity, loss of leisure time, due to the illness, and cost of travel to hospital etc. Intangible : the pain, worry or other distress which a patient or their family might suffer. These may be impossible to measure in monetary terms, but are sometimes captured in measures of quality of life.
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BENEFITS
Natural units : e.g. years of life saved, strokes prevented, peptic ulcers healed etc.
Utility units : utility is an economists word for satisfaction, or sense of well being, and is an attempt to evaluate the quality of a state of health, and not just its quantity.
MEASURES OF QUALITY LIFE IN DIFFERENT DISEASE STATES

Quality Adjusted Life Year (QALY) : 1. widely used measure 2. integrate both quality & quantity of life assume 1. treatment increases ones life expectancy by 2yrs 2.but causes adverse effects or inconvenience, such that ones quality of life or utility are decreased by 25%
the net gain is 2 x 0.75 = 1.5 QALYs.
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IV. METHODS OF ECONOMIC EVALUATION

Economic evaluation is the formal process of weighing benefits and costs in an incremental analysis. It is essentially a framework which draws up a balance sheet between costs and benefits to assist decision making. Common Types of Study The costs and benefits or outcome measures selected give rise to the four common types of economic evaluation
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TYPES OF PHARMACOECONOMIC EVALUATION
cost-minimization analysis cost-benefit analysis cost-effectiveness analysis and cost-utility analysis
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COST-MINIMISATION
Cost-minimization is a tool used in pharmacoeconomics and is applied when comparing multiple drugs of equal efficacy and equal tolerability An example would be prescribing a generic preparation instead of the brand leader (lower cost but same health outcomes)
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COST EFFECTIVE ANALYSIS

In which the health benefit can be defined and measured in natural units (e.g.: years of life saved, ulcers healed) and the costs are measured in money.
the key measure is the incremental cost effectiveness ratio (ICER). ICER = cost of drug A cost of drug B/ benefits of drug A benefits of drug B ICER = difference in cost(A-B)/ difference in benefits(A-B)
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COST UTILITY ANALYSIS

This is similar to cost effectiveness in that the costs are measured in money and there is a defined outcome. But here the outcome is a unit of utility (e.g. a QALY).
Since this endpoint is not directly dependent on the disease state, CUA can in theory look at more than one area of medicine, e.g. cost per QALY of coronary artery bypass grafting versus cost per QALY for erythropoietin in renal disease
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CALCULATING QALYS - A SIMPLE EXAMPLE

with treatment X Estimated survival = 10 years Estimated quality of life (relative to perfect health) = 0.7 Without treatment X Estimated survival = 5 years Estimated quality of life (relative to perfect health) =0.5
QALY gain from treatment X = 7 - 2.5 = 4.5 QALYs If the cost of treatment X is 18,000 then the cost per QALY is 4,000 per QALY (18,000 divided between 4.5 additional QALYs)
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COST BENEFIT ANALYSIS

the benefit is measured as the associated economic benefit of an intervention (e.g. monetary value of returning a worker to employment earlier), and hence both costs and benefits are expressed in money.
CBA may ignore many intangible but very important benefits not measurable in money terms, e.g. relief of anxiety.
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COMPARISION
METHOD
COST MINIMISATION ANALYSIS
MEASUREMENT OF OUTCOME(HEALTH BENEFITS)
SYNTHESIS OF COSTS AND BENIFITS
Assumed to be equivalent and can take Additional costs of any form (e.g. therapy A relative to B number of cases detected, reductions in cholesterol levels, years of life saved Health benefits across therapies are measured in similar natural units Health benefits across therapies are valued in similar units based on individual preferences Measured in similar or different units and are always valued in monetary units (e.g., amount willing to pay to prevent a death, amount willing to pay to reduce exposure to a hazard) 17 Cost per life year gained Cost per patient cured, Cost per life saved, etc Cost per QALY gained
COST EFECTIVENESS ANALYSIS COST UTILITY ANALYSIS COST BENEFIT ANALYSIS
Net benefits = Benefits minus costs Benefit- cost ratio = benefits/costs
V. HANDLING THE RESULTS OF ECONOMIC EVALUATIONS

4.THE NEW TREATMENT IS LESS EFFECTIVE AND MORE EXPENSIVE
WORSE
1.THE NEW TREATMENT IS MORE EFFECTIVE AND MORE EXPENSIVE

BETTER
CHEAP
3. THE NEW TREATMENT IS LESS EFFECTIVE AND LESS EXPENSIVE
COST
2.THE NEW TREATMENT IS MORE EFFECTIVE AND LESS EXPENSIVE

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LIMITATIONS
Health economics is therefore sometimes misused as a marketing ploy. The same problems may however arise in studies funded by health care payers. To a specialist, this is not such a problem since the almost inevitable biases are usually clear. But since economic evaluation is less well understood by doctors and others, bias needs to be minimized
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FUTURE
Economic evaluations of drug therapy are increasingly important in decision making.
Clinical pharmacologists should welcome this as a means to promote efficiency and effectiveness of prescribing.
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THANKYOU
BY SANTHOSH KUMAR SARAH KHALID SHAIMA
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PHARMACOECONOMICS

III.COSTS AND BENEFITS

MEASURES OF QUALITY LIFE IN DIFFERENT DISEASE STATES

IV. METHODS OF ECONOMIC EVALUATION

TYPES OF PHARMACOECONOMIC EVALUATION

cost-minimization analysis cost-benefit analysis cost-effectiveness analysis and cost-utility analysis

COST EFFECTIVE ANALYSIS

COST UTILITY ANALYSIS

CALCULATING QALYS - A SIMPLE EXAMPLE

COST BENEFIT ANALYSIS

MEASUREMENT OF OUTCOME(HEALTH BENEFITS)

SYNTHESIS OF COSTS AND BENIFITS

COST EFECTIVENESS ANALYSIS COST UTILITY ANALYSIS COST BENEFIT ANALYSIS

Net benefits = Benefits minus costs Benefit- cost ratio = benefits/costs

V. HANDLING THE RESULTS OF ECONOMIC EVALUATIONS

1.THE NEW TREATMENT IS MORE EFFECTIVE AND MORE EXPENSIVE

3. THE NEW TREATMENT IS LESS EFFECTIVE AND LESS EXPENSIVE

2.THE NEW TREATMENT IS MORE EFFECTIVE AND LESS EXPENSIVE

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