Pharmacoeconomics: A Brief Review PDF

PHARMACOECONOMICS- A BRIEF REVIEW. Ojaswi Ghadge* and Anubha Khale Maharashtra Educational Society’s, H.K. College of Pharmacy, Jogeshwari (W), Mumbai, M.S. ABSTRACT: Aim of this review is to make the modern youn...

PHARMACOECONOMICS- A BRIEF REVIEW. Ojaswi Ghadge* and Anubha Khale Maharashtra Educational Society’s, H.K. College of Pharmacy, Jogeshwari (W), Mumbai, M.S. ABSTRACT: Aim of this review is to make the modern young pharmacists aware about the need of an innovative concept called pharmacoeconomics, by understanding the terminologies, method and its role in Indian health care system. The complexity of modern medication dictates that no one person, physician or pharmacist, can be aware of all aspects of drug therapy. The physician is largely clinically trained and the pharmacist scientifically trained. Hence expanding role of pharmacists is expected in medical care. Pharmacoeconomics is a set of methods to evaluate the Economic, Clinical and Humanistic Outcomes (ECHO) of pharmaceutical products and services (or any health care service). It allows us to compare the economic resources consumed (inputs) to produce the health and economic consequences of products or services (outcomes). Five types of pharmacoeconomic analysis (COI, CMA, CBA, CEA and CUA) differ by how we measure the consequences or outcome. Before conducting a Pharmacoeconomic evaluation, clinicians should be familiar with the similarities, differences, and appropriate application of Pharmacoeconomic methods. Pharmacoeconomics and outcome research plays a very important role in drug expenditure management. According to 2010 data from the United Nations Development Programme, an estimated 37.2% of Indians live below the country's national poverty line. Cost of medicines are growing constantly as new medicines are marketed and are under patent law, preference of drug therapy over invasive therapy, and the irrational drug prescription. Many poor people frequently face a choice between buying medicines or buying food or other necessities due to limited resources and high pricing of drug. So medicine prices do matter. The role of pharmacoeconomics in India is in infancy at present, although clinical research organizations are being formed rapidly. Certain methodology, training and initiatives are needed for its development. KEYWORDS: benefit to cost ratio, direct medical cost, intangible cost, pharmacoeconomic evaluation, quality-adjusted life year * Correspondence: Mrs. Ojaswi Ghadge. Lecturer, Dept of Pharmaceutical analysis H.K.College of Pharmacy, Oshiwara Jogeshwari (W), Mumbai - 400102. E-mail: [email protected], [email protected] Contact No. 08600147459 Paper published in INDIAN PHARMACIST November 2012, pg 29-36 1  PHARMACOECONOMICS- A BRIEF REVIEW INTRODUCTION: HISTORY The term Pharmacoeconomics was Pharmacoeconomics (PE) has been defined as first time used in public forum was the description and the analysis of the cost of drug in 1986, at meeting of pharmacist in therapy to health care systems and society2. More Toronto, Canada, when Ray specifically, pharmacoeconomic research is the Townsend from the Upjohn process of identifying, measuring, and comparing the company, used the term in costs, risks, and benefits of programs, service, or presentation. Ray and few others therapies and determining which alternative produces had been performing studies using the best health outcome for the resource invested3. For the term pharmacoeconomics within most pharmacists, this translates into weighing the cost the pharmaceutical industry since of providing a pharmacy product or service against the the early eighties. Today consequences (outcomes) realized by using the pharmacoeconomics research is a product or service to determine which alternative flourishing industry with many yields the optimal outcome per dollar spent. This practitioners, a large research and information can assist clinical decision makers in application agenda, several journals choosing the most cost-effective treatment options4. and flourishing professional Frequently used terms in pharmacoeconomics are societies including the international Pharmaceutical care and outcome research; let us see society for pharmacoeconomics and the actual meaning: outcomes research. Why did the term catch on? The Pharmaceutical care: The responsible pharmacoeconomics started with a provision of drug therapy for the purposes of study of the cost-effectiveness of achieving definite outcomes16. AZT for the treatment of persons with AIDS1. Outcomes research: Broadly defined as studies that attempt to identify, measure and evaluate the end result of health care services in general20. It is important that pharmacoeconomic concept be understood not only by policy-makers, health administrators and health managers, but also by primary care providers. Nowadays, in India, various new drugs, usually of the same family having properties similar to the available (older) drugs are available. This makes it difficult for the treating physician to judiciously decide which drugs to use. Before prescribing any new drug therapy, two questions must be answered (i) Whether the new drug is equally or more efficacious in the said disease as compared to the 2 standard treatment; and (ii) Does the new drug have any economic advantage over the existing drugs5, 6, 20. All over the world patients are affected by high price of medicines. In a developing country like India 85% of total health expenditure is financed by house-hold out-of–pocket expenditure. According to 2010 data from the United Nations Development Programme, an estimated 37.2% of Indians live below the country's national poverty line7. Many poor people frequently face a choice between buying medicines or buying food or other necessities due to limited resources and high pricing of drug. So medicine prices do matter8, 23. There is distinct relationship between pharmacoeconomics, outcome research, and pharmaceutical care. Pharmacoeconomics is not synonymous with outcomes research. Outcomes research is defined more broadly as studies that attempt to identify measures and evaluate the results of health care services in general8, 9, 13. 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 for the purpose of achieving definite outcomes. Cost of drug: Cost is defined as the value of the resources consumed by a program or drug therapy of interest. It is the Figure 1 Cost of drug amount paid to the suppliers. Consequence is defined as the effects, outputs, or outcomes of the program of drug therapy of interest. Consideration of both costs and consequences differentiates most pharmacoeconomic evaluation methods from traditional cost containment strategies drug- use evaluations7, 9,10,13,22. Assessing costs and consequences-the value of pharmaceutical product or service- depends heavily on the perspective of the evaluation. To evaluate the economics of drug therapy, cost is categorized into (Fig.1): i. Direct cost. ii. Indirect cost. iii. Intangible cost. Direct cost a. Direct medical cost b. Direct non-medical cost. 3 Direct medical cost: This is what is paid for specialized health resources and services. It includes the physician’s salaries; the acquisition cost of medicine; consumables associated with drug administration; staff time in preparation and administration of medicines; laboratory costs of monitoring for effectiveness and adverse drug reactions. Direct non-medical cost: This includes cost necessary to enable an individual receive medical care such as lodging, special diet and transportation; lost work time (important to employers) such as acute Otitis media in pediatric patients with professional parents who lost work time during the treatment of their kid. Indirect cost This is the cost incurred by the patient, family, friends or society. Many of these are difficult to measure, but should be of concern to society as a whole. This includes productivity loss in the society; unpaid care givers; lost wages; expenses of illness borne by patients, relatives, friends, employers and the government and; loss of leisure time. Intangible costs These are costs related with the patient’s pain and suffering; worry and other distress of the family members of a patient; effect on quality of life and health perceptions. For example patients of rheumatoid arthritis, cancer or having terminal illnesses in which quality of life is suffered due to adverse reactions of the drug treatment. These are difficult to measure in monetary terms but represent a considerable concern for both doctors and patients. Quality adjusted life year (QALY) is one method by which intangible costs can be effectively integrated in PE analysis7, 9, 10, 13, 21, 22. METHODS OF PHARMACOECONOMICS The pharmacoeconomic methods or tools can be separated into two distinct categories: economic (Cost consequence, Cost benefit, Cost effectiveness, Cost minimization, Cost utility) and humanistic (Quality of life, Patient preferences, Patient satisfaction) evaluation techniques25. These methods have been used in variety of fields and are being applied increasing to health care. Those most commonly used by pharmacists are discussed in the next sections and briefly summarized Fig 2. COST OF ILLNESS EVALUATION A cost of illness (COI) evaluation identifies and estimates the overall cost of particular disease for a defined popualtion11, 14, 15, 24. This evaluation method is often referred to as "burden of illness" as involves measuring the direct and indirect costs attributable to a specific disease. The costs of various diseases, including peptic ulcer disease, mental disorders, and cancer, in the United States have been estimated. COI evaluation is not used to compare competing treatment alternatives but to provide an estimation of the financial burden of a disease. Thus the value of prevention and treatment strategies can be measured against this illness cost. 4 COST MINIMIZATION ANALYSIS Cost minimization analysis (CMA) involves the determination of the least costly alternative when comparing two or more treatment alternatives. With CMA, the alternatives must have an assumed or demonstrated equivalency in safety and efficacy (i.e., the two alternatives must be therapeutically equivalent). Once this equivalency in outcome is confirmed, the costs can be identified, measured, and compared in monetary units (dollars). CMA is a relatively straightforward and simple method for comparing competing programs or treatment alternatives as long as the therapeutic equivalence of the alternatives being compared has been established24. COST BENEFIT ANALYSIS Cost benefit analysis (CBA) is a method that allows for the identification, measurement, and comparison of the benefits and costs of a program or treatment alternative. The benefits realized from a program or treatment alternative are compared with the converted into equivalent dollars in the year in which they will occur12, 14, 15, 24. Future costs and benefits are discounted or reduced to their current value. These costs and benefits are expressed as a ratio (benefit to cost ratio), a net benefit or net cost. A clinical decision maker would choose the program or treatment alternative with the highest net benefit or the greatest benefit to cost (B/C) ratio10. Guidelines for the interpretation of this ratio are indicated14, 15,16,20,21. If B/C ratio> 1, the program or treatment is of value. The benefits realized by the program or treatment alternative outweigh the cost providing it. If B/C ratio = 1, the benefits equal the cost. The benefits realized by the program or treatment alternative are equivalent to the cost of providing it. If B/C ratio