Pharmacoeconomic Final Exam Notes PDF

1. FUNDAMENTALS OF ECONOMICS IN HEALTHCARE a. Basic Concepts: i. Economic studies allocation of limited resources among alternative uses. ii. Three key elements: 1. Choosing between alternatives 2. Assessment of costs and consequences...

1. FUNDAMENTALS OF ECONOMICS IN HEALTHCARE a. Basic Concepts: i. Economic studies allocation of limited resources among alternative uses. ii. Three key elements: 1. Choosing between alternatives 2. Assessment of costs and consequences 3. Decision making within limited budgets b. Pharmacoeconomic Definitions: iii. Scientific discipline evaluating clinical, economic and humanistic aspects of : 4. Pharmaceutical products 5. Healthcare services 6. Programs 7. Other healthcare interventions c. Types of Economic Evaluations iv. Basic Categories: 8. COST MINIMIZATION: a. Assumes equivalent outcomes b. Focus on lowest monetary cost 9. COST BENEFIT: c. Measures both costs and outcomes in monetary terms d. Focuses on net monetary gain 10. COST EFFECTIVENESS: e. Measures outcomes in natural units f. Examines cost-effectiveness ratio 11. COST UTILITY: g. Incorporates quality of life h. Measures outcome in QALYS d. Cost Analysis: v. Cost of illness studies: 12. Purpose: determine total economic burden of disease 13. Methods: i. Incidence-based: calculates lifetime cost of new cases j. Prevalence-based: estimates total cost in given year vi. Type of Costs: 14. Direct Medical Cost: k. Examples: physician fees, diagnostic, medications 15. Direct Non-Medical Cost: l. Examples: transportation, specific diet requirements 16. Indirect Cost: m. Related to productivity loss n. Example: emotional stress, anxiety 17. Intangible Costs: o. Related to pain and suffering p. Examples: emotional stress, anxiety vii. Cost Considerations: 18. Price doesn't always equal cost 19. Capital outlays require special consideration 20. Learning curve effects impact long term costs 21. Timing adjustments needed for multi-year analyses 22. Different costing approaches: q. Average per diem r. Disease-specific per diem s. Case-mix group t. Micro-costing e. Outcome Assessment viii. TYPE OF OUTCOMES: 23. Structure outcomes: u. Example: availability of healthcare providers 24. Process Outcomes: v. Examples: accuracy of prescription labels 25. Clinical Outcomes: w. Focus on safety and efficacy x. May include intermediate measures 26. Economic Outcomes: y. Examples: costs per day or per member per month ix. ECHO MODEL: 27. Integrates three key components: z. Economic outcomes a. Clinical outcomes b. Humanistic outcomes x. Key terms: 28. Efficiency: lowest cost per unit of output 29. Efficacy: product effectiveness in clinical trials 30. Effectiveness: real-world performance f. Perspective in Economic Analysis: xi. Patient: focus on out-of-pocket costs and lost wages xii. Employer: Considers insurable costs and productivity losses xiii. Healthcare Provider: emphasis on variable costs and reimbursement xiv. Third Party Payer: including government perspective xv. Societal: Encompasses all medical and non-medical costs. 2. DISCOUNTING AND CMA POWERPOINT g. COST MINIMIZATION ANALYSIS: xvi. Key Features: 31. Compares cost of interventions with equivalents outcomes 32. Purpose: Identify least costly alternative 33. Primary Focus: Cost efficiency 34. Limited Application due to requirement of equivalent outcomes xvii. Application: 35. Brand vs Generic products comparison 36. Different administration routes for same drug 37. Different settings for drug therapy administration xviii. Limitation: 38. Challenge in establishing true equivalence of outcomes 39. Restricted to specific scenarios where outcomes are genuinely equal 3. COST EFFECTIVENESS POWERPOINT SLIDE h. OVERVIEW: xix. Cost effectiveness analysis is the most used pharmacoeconomic model that measure outcomes in natural unites (lived saved, years of life saved, LDL, mm HG). It focuses on accomplishing objectives at the least cost, emphasizing values or "biggest bang for the buck" i. CRITERIA FOR COST-EFFECTIVENESS: xx. A strategy/treatment/ program is considered cost-effective under four scenarios: 40. At least as effective at less cost 41. More effective at the same cost 42. More effective and more costly, but additional benefits justify the cost 43. Less effective and less costly, but cost reductions offset effectiveness reduction j. SOURCES OF EFFECTIVENESS DATA: xxi. Large Randomized Trials: 44. Multiple sites for better generalizability 45. Better statistical power 46. Clear-cut results xxii. Small Randomized Trials: 47. May have generalizability and power issues 48. Results can be used for meta-analysis xxiii. Observation Studies: 49. Limited in establishing casual relationships 50. Reflect real-world practice outcomes 51. Can have large sample sizes 52. Lower study costs 53. Valuable for economic studies xxiv. Clinical Data: 54. Multiple source complication 55. Better generalizability 56. Trade-off between quality and relevance 57. Requires comprehensive data evaluation k. COST EFFECTIVENESS METRICS: xxv. Cost Effectiveness Ratios. 58. Average cost- effectiveness (CER) 59. Incremental cost effectiveness ratio (ICER) c. Measures change in costs divided by change in outcomes d. Used to determine added cost per unit of health improvement xxvi. Threshold Consideration: 60. Compared against pre-specified threshold values 61. National Institute for Health and Clinical Excellence Guidelines 62. Determination Methods: e. Previous decisions f. Optimal healthcare budget g. Society's value attachment to health h. Budget exhaustion principles xxvii. Problem with ICER: 63. Doesn't account for estimation uncertainty 64. Difficult computation of confidence intervals 65. Problematic interpretation with small denominators 66. Challenging for regression analysis l. NET BENEFIT APPROACH: SOLUTION TO ICER xxviii. Types: 67. Net monetary benefit (NMB) 68. Net Health Benefit (NHB) xxix. Decision Rules: 69. Intervention is cost-effective if NMB \> 0 70. For NHB \> 0 xxx. Practice Examples: 71. Adult Asthma Patients Treatment: i. ICS alone: cost \$320, 45 symptom free days j. ICS + Drug A: cost \$537, 90 symptoms free days k. ICER: \$4.82 per additional symptom free day l. Cost Effectiveness depends on threshold value m. LIMITATION OF CEA: xxxi. Limited usefulness across different healthcare areas xxxii. Doesn't account for **quality of life** xxxiii. Doesn't incorporate all intervention consequences xxxiv. Dependent on effectiveness data quality xxxv. Should not be sole decision-making criterion xxxvi. Requires **sensitivity analysis** for variations/error n. NET BENEFIT REGRESSION FRAMEWORK: xxxvii. Allows regression tool usage in CEA xxxviii. Uses person-level cost and effectiveness data xxxix. Positive regression coefficient indicates treatment cost-effectiveness 4. COST UTILITY POWERPOINT: o. OVERVIEW: xl. Cost-utility analysis is an extension of cost effectiveness analysis that focuses on measuring QOL outcomes. It addresses healthcare payers' concerns about value for money in term of health outcomes, emphasizing patient experience over disease metrics p. KEY COMPONENTS: xli. General Outcomes Indicators (5 D'S) 72. Death 73. Disease 74. Disability 75. Discomfort 76. Dissatisfaction xlii. These are categorized into: 77. Mortality indicators: life vs death (easily measurable) 78. Morbidity indicators: disability, discomfort, and dissatisfaction (more challenging to measure) xliii. Advantages: 79. Enable comparison of different health outcomes and diseases with multiple outcomes: 80. Incorporates both morbidity and mortality into common units 81. Does not require monetary valuation of health outcomes xliv. Disadvantages: 82. Difficulty in determining accurate utility or preference weight values 83. Slow adoption by US decision makers and providers q. QUALITY-ADJUSTED xlv. Basic Concepts: 84. Measures QOL adjusted for time 85. Utility scale: 0 (death) -- 1 (perfect health) 86. Example: 1 year with utility of 1.0 QALY = 2 years with utility r. ULTILITY MEASUREMENT METHODS: xlvi. Rating Scale: 87. Simple visual scale 88. Multiple diseases stated can be evaluated 89. Can be done via questionnaire 90. Limitation: m. No time element incorporated xlvii. Standard Gamble: 91. Considered the GOLD STANDARD: 92. Two alternatives presented: n. Treatment with possibility of normal health or death o. Certain chronic disease state 93. Example: kidney transplant scenario with 80% success rate vs guaranteed dialysis xlviii. Time Trade-Off: 94. Compares certain diseases stated for specific time vs shorter period of perfect health 95. Example: choice between 40 years with diabetes vs 30 years of perfect health xlix. Discrete Choice Experiment: 96. Ordinal choice-based approach 97. Respondents choose between health scenarios 98. Uses regression-based modeling s. When QOL Information is Most Useful: l. Palliative rather than curative therapy li. Effective but toxic treatment lii. Lifelong preventative therapy liii. Comparing treatments with different side effect profiles 5. COST BENEFIT AND DECISION ANALYSIS POWER POINT: t. OVERVIEW OF COST BENEFIT ANALYSIS (CBA) liv. Places dollar values on both inputs and outcomes (benefits) lv. Challenges include placing monetary value on human life lvi. Allows comparison of different programs with different natural units lvii. Requires precise definition of objectives, variables, and result criteria u. KEY COMPONENT: lviii. Program Consideration: 99. Type of intervention to be evaluated 100. Alternative Options: p. Do nothing q. Similar programs at different scales r. Completely different approaches lix. Benefit Valuation Methods: 101. Human Capital Approach: s. Values health benefits based on economic productivity t. Measures: i. Wage rates (from bureau of labor statistics or self-reported data) ii. Missed time due to illness iii. Can be calculated yearly or daily u. Advantages: iv. Easy to calculate productivity loss v. Disadvantages: v. Biased against unemployed individuals, children, and elderly vi. Does not capture pain and suffering vii. May miss quality of life impacts 102. Willingness to Pay (WTP): w. Measures both indirect and intangible aspects x. Uses contingent valuation methods y. Bidding vehicles include: viii. Open ended questions ix. Close ended question questions (binary choice) x. Bidding game approach xi. Payment-card method z. Advantages: xii. Can values intangible benefits xiii. Incorporate patient preferences a. Disadvantages: xiv. Hypothetical nature of response xv. Potential response bias v. PRESENTING CBA RESULTS: lx. THREE MAIN METHODS: 103. Net Benefit/Cost b. NB = total benefits -- total costs c. Intervention is beneficial if NB \> 0 104. Benefit- to- Cost Ratio: d. Divide total benefits by total costs e. Beneficial if ratio \> 1 105. Internal Rate of Return (IRR): f. Compares present value of benefits to cost g. Accept if IRR exceeds hurdle rate 106. PRACTICAL EXAMPLE: h. Comparison of flu shot program vs allergy education program: xvi. Flu Shot Program: 1. Cost: \$40000 for 2000 employees 2. Benefit: 200 reduced missed days 3. Benefit -- to -- Cost Ratio: 5: (\$5 gained per \$1 spent) xvii. Allergy Education Program: 4. Cost: \$25000 for 2000 employees 5. Benefit: 150 reduced missed days 6. Benefit -- to -- Cost Ratio: 6:1 (\$6 gained per \$1 spent) w. DECISION ANALYSIS: lxi. KEY COMPONENTS: 107. Uses decision trees to model option 108. Three Type of Nodes: i. Decision Node (square): points where decision is made j. Chance Node (circle): points where probability determines outcomes k. Terminal Node (triangle): outcome states x. CHARACTERISTICS: lxii. Systematic method for comparing decision options lxiii. Uses probabilities form clinical literature lxiv. Advantages: time and cost efficient lxv. Costs calculated by multiplying probability of occurrence by associated costs 6. MISCELLANEOUS TOPICS POWERPOINT: y. PHARMACOECONOMICS GUIDELINES BY COUNTRY lxvi. Australia: 109. First country to publish mandatory evaluation guidelines 110. Overseen by pharmaceuticals Benefit Advisory Committee 111. Requires pharmaceutical companies to submit pharmacoeconomic data 112. Operates through pharmaceutical benefits scheme lxvii. Canada: 113. No universal prescription coverage mandate 114. Provinces determine eligibility and coverage rules 115. Canadian Agency for Drugs and Technology (CADTH) oversees common drug reviews lxviii. United Kingdom: 116. National Institute for Health and Care Excellence (NICE) provides NHS recommendations 117. Uses advisory groups 118. Conducts independent data collection and analyses z. HEATH-RELATED QUALITY OF LIFE: lxix. Concepts and Definitions: 119. HRQOL is more specific than general QOL 120. Focuses on functional effect of illness and therapy from patient perspective 121. Represents part of overall QOL related to health impacts lxx. Measurement Types: 122. Non-utility/non-preference measures: l. Based on patient's self-assessment m. Uses health status assessment surveys n. Can be generic or disease-specific lxxi. General/Generic Advantages and Disadvantages: EXAM 123. Advantages: o. Broadly applicable p. Summarizes range of concepts q. May detect un-anticipated effects 124. Disadvantages: r. May not be responsive to changes in health s. May not be relevant for specific populations t. Results may be difficult to interpret lxxii. Disease- Specific Advantages and Disadvantages: EXAM 125. Advantages: u. More relevant for specific population v. More responsive to changes in health 126. Disadvantages: w. Cannot compare across population x. Less likely to detect unanticipated effects lxxiii. General HRQOL Measure: 127. Medical outcome study short-form health surveys 128. Quality of Well-being scale 129. Sickness Impact Profile 130. Dartmouth Cooperative Functional Assessment Charts lxxiv. Health Status Domains: 131. Physical functioning 132. Psychological (mental functioning) 133. Social (role) Functioning 134. General Health Perception a. MARKOV MODELING: lxxv. Key Features: 135. Extension of decision analysis 136. Analyzes complex outcomes and disease states 137. Enables analysis of transitions between health states lxxvi. Disadvantages 138. More complex and less transparent than other methods 139. Memoryless system- transition probabilities don't consider previous experiences 140. Limited by availability of long-term data 141. May not be practical for individual patient treatment