Pharmacoeconomics (PDF)

I. PHARMACOECONOMICS Asmaa A. Elsayed Lecturer of clinical pharmacy  Concepts & Terms of Pharmacoeconomics The roots of Pharmacoeconomics are in health economics – a specialized aspect of economic developed in the 1960s. The concepts involved in Pharmacoeconomics,...

I. PHARMACOECONOMICS Asmaa A. Elsayed Lecturer of clinical pharmacy  Concepts & Terms of Pharmacoeconomics The roots of Pharmacoeconomics are in health economics – a specialized aspect of economic developed in the 1960s. The concepts involved in Pharmacoeconomics, such as cost effectiveness and Cost Benefit analysis, have been developed from the late 1970s. Beginning in the 1980s, measurement tools for health and clinical outcomes assessment were created and have subsequently been improved. Pharmacoeconomics has been defined as the description and analysis of the cost of drugs and pharmaceutical services and their effects on individuals, health care systems, and society. Pharmacoeconomic research is the process of identifying, measuring, and comparing the costs, risks, and benefits of programs, services, or therapies and determining which alternative produces the best health outcome for the resource invested. For most practitioners, this translates into weighing the cost of providing a pharmacy product or service against the consequences (outcomes) realized by using the product or service to determine which alternative yields the optimal outcome per dollar spent. This information can assist clinical decision makers in Outcom choosing the most cost-effective treatment Costs options es Outcomes research is defined as studies that attempt to identify, measure, and evaluate the results of health care services in general. Pharmacoeconomics is a division of outcomes research that can be used to quantify the value of pharmaceutical care products and services. Pharmaceutical care has been defined as the responsible provision of drug therapy with the purposes of achieving definite outcomes. Pharmacoeconomics is not synonymous with outcomes research. Rising health expenditures have led to the necessity to find the optimal therapy at the lowest price. Pharmacoeconomics is an innovative method that aims to decrease health expenditures, whilst optimizing healthcare results. Health economics is the science of assessing cost and benefits, not to make decisions about resource use, but to inform those decisions.  Application of Pharmacoeconomics 1. Formulary management a. Inclusion of newly marketed or other target drugs b. Exclusion of newly marketed drugs c. Deletion of medications from the formulary d. Limiting the use of nonformulary items e. Affecting physician or provider prescribing patterns 2. Clinical guidelines, policies, or protocols – Help influence prescribing and promote the most cost-effective and desirable use of drugs in the context of safety and efficacy 3. Drug use policy – Policies implemented to promote the most efficient use of health care products and services. Drug use policies can influence providers’ prescribing practices to provide high-quality care, given the resources available. 4. Services or program evaluations – Pharmacoeconomics can help determine the value of an existing medical or pharmacy service or the potential worth of starting a new service, in addition to guiding the establishment of key business objectives or metrics of growth, adoption, or process control. 5. Population health analytics Costs and benefits Cost is defined as the value of the resources consumed by a program or drug therapy of interest. Consequence (Outcome) is defined as the effects or outputs of the program of drug therapy of interest. Assessing the costs and consequences – the value of a pharmaceutical product or service – depends heavily on the perspective of the evaluation. A pharmacoeconomic evaluation can assess the value of a product or service from single or multiple perspectives. Clarification of the perspective is critical as the results of a pharmacoeconomic evaluation depend heavily on the perspective taken. For example, if comparing the value of alteplase (tissue plasminogen activator, tPA) Vs. streptokinase from a patient or societal perspective. tPA may be the best-value alternative because a 1% reduction in mortality rates. Yet, from a small community hospital’s perspective, streptokinase may represent a better value because it provides similar outcomes for less money. 1. Patient perspective Costs from the patient perspectives mainly seeks what the patients pay from their pocket (that is the portion not covered by the insurance, indirect costs such as loss of wages). Consequences from the patient’s perspective are the clinical effects, both positive and negative, of a program or treatment alternative. E.g.: insurance copayments and out of-pocket drug costs/expenses for a health care service, as well as indirect costs, such as lost wages. 2. Provider perspective Costs are the actual expense of providing a product or service, regardless of what the provider (hospitals or private practice physicians) charges. From this prospective, Direct costs such as drugs, hospitalization, laboratory tests, supplies, salaries of the healthcare professionals may be identified, measured, and compared. Indirect costs are of less importance to provider. When making formulary management or drug-use policy decisions, the viewpoint of the health care organization should dominate. 3. Payer perspective Payers include insurance companies, employers, or the government. Costs represents charges for health care products and services allowed, or reimbursed, by the payer. The 1ry cost for payer are direct in nature. Indirect costs – such as loss of workdays and decreased productivity, can contribute for the total cost to the payer. 4. Societal perspective Broadest of all perspectives. Theoretically all direct and indirect costs are involved. Costs includes patient morbidity and mortality and the overall costs of giving and receiving medical care.  Types of Costs 1. Costs versus charges a. Charges are often reported in the literature and are called costs. However, charges are costs plus profit. c. Ratio of cost to charge used to estimate costs from charges 2. Total cost of care – Extends beyond the acquisition cost of a drug and includes waste cost, preparation cost, distribution cost, administration cost, toxicity cost, monitoring cost. I. Direct costs Resources consumed in the prevention, detection, or treatment of a disease. These costs can be medical or nonmedical. a. Medical – Costs associated with medical care i. Fixed costs – Overhead costs; costs remain constant and do not change. Not typically included in a pharmacoeconomic analysis Examples: Cost of electricity, rent, lighting, building maintenance, salaried workers (particularly administrators) ii. Variable costs – These costs depend on the volume of use; the more services used, the greater the expense. Examples: Medications, hospitalization, laboratory testing, procedures. b. Nonmedical – Costs as a result of the disease that do not involve the purchase of medical services Examples: Transportation to health care, child-care, specialty diets, clothing Patient travel costs, costs of informal care. While these costs are relevant when adopting a societal perspective, they may be considered irrelevant when adopting a healthcare perspective. II. Indirect costs Costs as a result of morbidity or mortality. Relate to the change in productivity of patient/ caregiver as a result of the disease or illness. Sometimes a challenge to assign dollar values Examples: Income lost because of premature death, inability to work III. Intangible costs Costs that represent nonfinancial outcomes of the disease and medical care Examples: Costs from pain and suffering, grief, other nonfinancial outcomes of disease IV. Incremental costs Extra costs needed to purchase an additional benefit or effect of the medical care. Often used in cost-effectiveness analysis a. Example: Additional medications to control hypertension above standard therapy Costs and charges considered always depend on the perspective (providers, payers, patients, and society) taken for the analysis.  Outcome Types  Medical Outcome = The end result of medical care Could be positive Using the right antibiotic to treat an infection Could be negative Using the wrong antibiotic to treat an infection  Indicator (Surrogate marker) is a measurable unit that provides information regarding the outcome of interest Like costs, the outcomes of medical care also can be categorized to economic, clinical, and humanistic. Economic outcomes are the direct, indirect, and intangible costs compared with the benefits of medical treatment alternatives. Clinical outcomes are the medical events that occur as a result of disease or treatment (e.g., safety and efficacy end points). Humanistic outcomes (patient reported outcomes) are the consequences of disease or treatment on patient functional status or quality of life along several dimensions (e.g., physical function, Quality of life, social function, general health and well-being, and life satisfaction). Benefits (outcomes) : The benefits we expect from an intervention might be measured in: A) Natural units- e.g., years of life saved, strokes prevented, peptic ulcers healed. B) Utility units- utility is an economist’s 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. Utility estimates can be obtained through direct measurement.They are often informed by measures of quality of life in different disease states  Outcome Measures Disease Indicator Clinical Humanistic Economic Hypertension Bp Renal failure QOL Cost/ mmHg BP Stroke Cost/stroke avoided MI Cost/life year saved Death Hyperlipidem LDL Angina QOL Cost/MI avoided ia MI Cost/point in LDL Death Diabetes A1c Retinopathy QOL Cost/change in A1C Cost/kidney nephropathy transplant avoided Death Asthma FEV, peak Exacerbatio QOL Cost/symptom free flow n day  Characteristics of a Pharmacoeconomic Evaluation An evaluation that considers both the effects (consequences, outcomes) and costs of Two or more alternative choices Defined as: “the comparative analysis of alternative courses of action in terms of both their costs and consequences” Comparing the costs and consequences (outcomes) of two or more alternatives