Pharmacoeconomics PDF

New Edition Introduction to Pharmacoeconomics Dr. Nimer Alkhatib, PharmD, MSc, PhD Health outcomes and economics College of Pharmacy/ Al-Zaytoonah University of Jordan Alkhatib 2022...

New Edition Introduction to Pharmacoeconomics Dr. Nimer Alkhatib, PharmD, MSc, PhD Health outcomes and economics College of Pharmacy/ Al-Zaytoonah University of Jordan Alkhatib 2022 1  Don’t miss out with marketing Patient Pharmacoeconomics: can evaluate drugs effect and costs from all perspectives Provider Pharmaceutical marketing: takes the Manufacturer’s perspective Manufacturer Payer Alkhatib 2022 2 The economic problem in health care Finite resources for health care ↑ costs of health care - Labor intensive - Expensive technologies - New drugs ↑ demand for health care - Demographics - ↑ Expectations Olivia Wu, Glasgow University Alkhatib 2022 3 Resource allocation in healthcare Budget constrained health care systems Taxation Insurance Systems without a budget constraint Budgets increase to accommodate new ‘valuable’ technologies Mixed systems Budget constraints (perhaps time limited) Partial increase in budget to accommodate new technologies Alkhatib 2022 4 The concept of opportunity costs Alkhatib 2022 5 Key questions Development Can it work? - Efficacy Does it work? EBM Policy - Effectiveness Should it be used, given other demands on a fixed budget? - Economics Alkhatib 2022 6 Overall aim of evaluation Help decision-makers maximize health gain (technical efficiency) given constraints. Provide clear signals to industry regarding likely return on investment. The ideal aim: is to ensure the allocative efficiency in the health care system. Alkhatib 2022 7 Pharmacoeconomic evaluation  The comparative analysis of alternative courses of action in terms of both their costs and consequences in order to assist policy decisions. Alkhatib 2022 8 Spotting pharmacoeconomic evaluations Is there a comparison of two or more alternatives? Are both costs and consequences examined? If not - the study is not a pharmacoeconomic evaluation but may be: Description of costs or outcomes Evaluation of efficacy or effectiveness Cost analysis Alkhatib 2022 9 Pharmacoeconomic Principles COSTS CONSEQUENCES COST-EFFECTIVE EFFECTIVENESS ANALYSIS DISCOUNTING VS. EFFICACY PERSPECTIVE SENSITIVITY ANALYSIS Alkhatib 2022 10 Stages of an economic evaluation Define study question (perspective, alternatives, form of evaluation) Identify, measure and value all relevant costs and consequences Adjust for differential timing Apply decision rule and undertake sensitivity analyses Make recommendations to decision makers (not to make decisions) Alkhatib 2022 11 Who is currently using pharmacoeconomics Health Technology Assessments (HTA) agencies: 1. ICER: Institute for Clinical and Economic Review (USA) 2. NICE: National Institute for Health and Care Excellence (UK) 3. CADTH: Canadian Agency for drugs and Technology in Health (Canada) 4. Many more countries are implementing HTA like DIMID: German Institute of Medical Documentation and Information Jordan: we don’t have HTA Alkhatib 2022 12 References Michael F. Drummond, Mark J. Sculpher, George W. Torrance, Bernie J. O'Brien, Greg L. Stoddart. Methods for the economic evaluation of health Care programmes. Olivia Wu, University of Glasgow. Pharmacoeconomics: from Policy to Science. A. D. P. Briggs, Karl Claxton, and Mark Sculpher. Decision modelling for health economic evaluation. Alkhatib 2022 13  New Edition Types of costs, clinical evidence, and analysis perspectives Dr. Nimer Alkhatib, PharmD, MSc, PhD Health outcomes and economics College of Pharmacy/ Al-Zaytoonah University of Jordan Alkhatib 2022 14 Deciding upon the study question Identifying the problem and aims of evaluation What is the problem? Why is this problem important? What aspects of the problem need to be explained? Choosing the alternative options Describing the interventions accurately Defining the counterfactual intervention (comparator) Defining the audience Defining the info needs of the audience Considering how the audience will use the study results Alkhatib 2022 15 Deciding upon the study question Defining the perspective of the study Patient / Providers / Payers / Healthcare system / Society Choosing a perspective depends on the audience Defining the time frame and analytic horizon Analytic horizon > Time frame Choosing the study format Prospective / Retrospective / Model Depends on data, time and resources available Alkhatib 2022 16 Perspectives Patient Payer Provider Societal Alkhatib 2022 17 Type of pharmacoeconomic evaluations Alkhatib 2022 18 Types of costs Alkhatib 2022 19  Directly related to providing medical Treatment (drugs) care: Direct Practitioner &staff Facilities &equipment Medical Lab tests, diagnostics Alkhatib 2022 20  Non-medical costs Wheelchair ramp Hotel costs associated with Direct Non- providing care Medical Transportation Day care Indirect Loss of productivity associated with providing care: Time off work Less effective at work Lost leisure time Alkhatib 2022 22 Intangible Impact on quality of life associated with providing care: Pain Suffering Greif Alkhatib 2022 23 Costs for Each Perspective Cost type Patient Payer Provider Society Direct Medical X X X X Direct Non- X X Medical Indirect X X Intangible Not usually included as a cost; can be included in cost-utility analysis denominator (e.g., QALY). Alkhatib 2022 24 Costs vs. Charges Alkhatib 2022 25 Measuring costs- precision Alkhatib 2022 26 Outcomes Change in health status Lives saved Life-years gained Measures of functioning Cases avoided (preventive interventions) Change in perceived health status Subjective measures of quality of life Adjustment of perceived risk Alkhatib 2022 27 Clinical evidence Clinical trials (efficacy data) Real-world data (effectiveness data) Patient level data Observational data Reports Alkhatib 2022 28 Assessment of health effects Alkhatib 2022 29 Quality Adjusted Life Years (QALYs) Weighting each remaining year of an individual’s life by the expected quality of life For example: A 70-year-old man is expected to live for another 20 years, but between the age of 80 and 90, due to a variety of illnesses, we expect his quality of life to be only half the quality of his life prior to this The answer: 15 QALYs Alkhatib 2022 30  New Edition Conducting Economic Evaluations Alongside Clinical Trials Dr. Nimer Alkhatib, PharmD, MSc, PhD Health outcomes and economics College of Pharmacy/ Al-Zaytoonah University of Jordan Alkhatib 2022 31 Concept Economic evaluations are piggybacked to clinical trials Randomized Clinical trials: Phase III (efficacy) & Phase IV (effectiveness) Efficacy: Randomized Controlled Trials. Does the drug work? Effectiveness: pragmatic clinical trials. Do the patient benefit from the drug? Alkhatib 2022 32 Dr. Nimer Alkhatib 2021 33 Phase III trials Purpose: To determine the efficacy of a drug under ideal condition Design advantages: - Randomization: Internal validity - Blinding patients and observers - Patient population (small) Alkhatib 2022 34 Phase III trials Advantages of economic evaluation alongside the phase III: - Examine efficacy before marketing - Price support - Educational activities - Technology assessment reviews prior to market access Alkhatib 2022 35 Phase III trials Pharmacoeconomic evaluations can be added on if: - Doesn’t interfere with clinical trial - Not expensive - Doesn’t increase time to complete phase III - Clinical investigators consent Alkhatib 2022 36 Phase III trials Common names - Efficacy trial - Explanatory trial - Piggy-back, add-on, bolt-on Alkhatib 2022 37 Phase IV How does the drug work in normal or usual practice, taking into account patient? Advantages of economic phase IV RCTs - Preserve internal validity - Estimates are closer to “real life” - Generalizability Alkhatib 2022 38 Phase IV Common names - Effectiveness - Pragmatic - Naturalist Alkhatib 2022 39 Phase III vs IV Phase III Phase IV (pragmatic) Design issues Goal Establish efficacy Establish effectiveness Randomization Yes Yes Comparative products No/Sometimes Yes Study endpoints Clinical Clinical, economic, Quality of life, utility Sample size Typically small Large Alkhatib 2022 40 Phase III vs IV Phase III Phase IV (pragmatic) Patient Identification Co-morbidities Excluded Included Patient location Academics Primary care Patient Monitoring Diagnostic tests Gold standard Usual care Physician behavior Scrutinizing Standard of practice Protocol-induced procedures Present Absent or minimal Data collection Well-defined Obscure Study duration Short (weeks) Long (months) Alkhatib 2022 41 Phase III vs IV Phase III Phase IV (pragmatic) Inter-site variation Clinical endpoints less likely to be affected by geographic or physical location Economic endpoints more likely to be affected by site-specific policies or procedures Comparators and compliance Comparators Placebo Alternative therapy Compliance Enforced Observed Alkhatib 2022 42  New Edition Methods for Pharmacoeconomic Evaluations Dr. Nimer Alkhatib, PharmD, MSc, PhD Health outcomes and economics College of Pharmacy/ Al-Zaytoonah University of Jordan Alkhatib 2022 43 Consequences Effects, outputs, outcomes associated with providing a product or services Surrogate vs. final outcome measures Pharmacoeconomic analysis includes outcomes in denominator: Life year gained Cure Successfully treated patient mmHg reduced Symptom-free day etc Alkhatib 2022 44 Alkhatib 2022 45 Pharmacoeconomic methods Cost-effectiveness analysis Cost-utility analysis Cost-minimization analysis Cost-benefit analysis Budget Impact analysis Alkhatib 2022 46 Alkhatib 2022 47 Alkhatib 2022 48 Its all about incremental benefit (effect) and incremental cost Alkhatib 2022 49 Decision Analysis Method used to clarify the dynamics and trade-offs involved in selecting one strategy over a set of alternatives A quantitative, probabilistic method for modelling problems under situations of uncertainty Most helpful for important, unique, complex, non-urgent, and high- stakes decisions that involve uncertainty Alkhatib 2022 50 Decision analysis Alkhatib 2022 51 Alkhatib 2022 52 Model Inputs consideration Alkhatib 2022 53 Alkhatib 2022 54 Alkhatib 2022 55 Alkhatib 2022 56 What is the impact of Pharmacoeconomics Pharmacoeconomics don’t make decisions about health care programs but they inform decision makers about the best alternative program (Program = treatment and beyond) Help patients and their payers to make right decisions about their health Affects clinical guidelines It is important when have limited economic resources to invest in health care services Creates competition in the market in terms of pricing drugs, and innovations Alkhatib 2022 57 Alkhatib 2022 58 ICER vs HOPE Arizona Alkhatib 2022 59  New Edition Cost-effectiveness analysis Dr. Nimer Alkhatib, PharmD, MSc, PhD Health outcomes and economics College of Pharmacy/ Al-Zaytoonah University of Jordan Alkhatib 2022 60 Facilitating the lecture Cost $100,000 with 10 features Cost $10,000 with 1 feature Alkhatib 2022 61 Incremental cost-effectiveness ratio (ICER) ICER = Cost of Mercedes – Cost of Hyundai Number of features in Mercedes – Features of Hyundai ICER = ($100,000 – $10,000)\(10-1) = $10,000 \ additional feature If your Willingness-To-Pay (WTP) is $12,000/additional feature = you are able to buy the Mercedes. If your WTP is $9,999/ additional feature, you will not be able to enjoy the Mercedes. Alkhatib 2022 62  Incremental cost in ICER plane positive Dominated area Trade off area +$90,000 Incremental features Incremental features +9 (effect) in positive (effect) in negative Trade off area Dominant area Incremental cost in negative Alkhatib 2022 63  Incremental cost-utility ratio (ICUR) ICUR = Cost of Mercedes – Cost of Hyundai Number of features in Mercedes and utility values – Features of Hyundai and utility values Take home message: ICER estimates quantity ICUR estimates quantity and quality Alkhatib 2022 64 Cost-effectiveness Analysis (CEA) Is a form of pharmacoeconomic evaluation that compares the incremental costs and outcomes (effects) of different courses of action Cost: US$, JOD, etc Effect (quantity): number of cured patients, mmHg reductions, adverse events averted, life-year gained, any proven clinical effect We always have at least one comparator ICER: incremental cost effectiveness ratio is the measurement used to assess cost-effectiveness of treatments Alkhatib 2022 65 Equation of ICER ICER= Treatment cost (A) – Treatment cost (B) Effect (A) – Effect (B) ICER is a ratio between incremental cost and incremental effect, and can be a positive or negative estimate Alkhatib 2022 66 The cost-effectiveness plane The cost-effectiveness plane is used to visually represent the differences in costs and health outcomes between treatment alternatives in two dimensions, by plotting the costs against effects on a graph. Health outcomes (effects) are usually plotted on the x axis and costs on the y axis. Used as a tool for interpretation of cost-effectiveness Alkhatib 2022 67 ICER plane Alkhatib 2022 68 Alkhatib 2022 69 Alkhatib 2022 70 Alkhatib 2022 71 Exercise (scenario 1) Assume the following: New drug A has a cost $75, with an effectiveness of 50% Old drug B has a cost of $100, with an effectiveness of 30% Calculate the ICER and located on the ICER plane Alkhatib 2022 72 ICER (scenario 1) ICER = $75-$100 0.50- 0.30 ICER= -$125 per additional successfully treated patient Alkhatib 2022 73 Exercise (scenario 2) Assume the following: New drug C has cost $125, with an effectiveness of 10% Old drug B has a cost of $100, with an effectiveness of 30% Calculate the ICER and located on the ICER plane Alkhatib 2022 74 ICER (scenario 2) ICER = $125-$100 0.10- 0.30 ICER= -$125 per additional successfully treated patient Alkhatib 2022 75 Summary of Scenario 1 and 2 Both analyses use the same formula Both analyses involve 2 products Drug A vs drug B Drug C vs drug B Both analyses obtain the same number (-$125 per outcome) Interpretation of the each result is substantially different Alkhatib 2022 76 Alkhatib 2022 77 How about trade-off regions Alkhatib 2022 78 Alkhatib 2022 79 Alkhatib 2022 80 Alkhatib 2022 81 Willingness-to- pay (WTP) is used when we have trade-offs Alkhatib 2022 82 Willingness-to-pay (WTP) Wide commonly used term in Pharmacoeconomics is the maximum price per additional benefit (effect) at which or below a consumer will buy a product Alkhatib 2022 83 Alkhatib 2022 84 Alkhatib 2022 85 Alkhatib 2022 86 Advantages of CEA Easy to calculate the ICER No need to place a dollar value on clinical outcomes Alkhatib 2022 87 Disadvantages of ICER estimates Can’t simultaneously evaluate more than 2 treatments: comparison is pairwise-based Have a problem with undefined ICERs ICERs will have tremendous variability when difference in effect is small Difficult to make decisions when data lies in more than one quadrant (probabilistic data) Only one natural unit of interest can be evaluated at a time Alkhatib 2022 88  New Edition Cost-utility analysis, cost- minimization analysis, cost- benefit analysis Dr. Nimer Alkhatib, PharmD, MSc, PhD Health outcomes and economics College of Pharmacy/ Al-Zaytoonah University of Jordan Alkhatib 2022 89 Cost-utility analysis (CUA) Is a form of pharmacoeconomic evaluation that compares the incremental costs and combined outcomes (effects) of different courses of action. An evaluation that provides attention on the quality of the health outcome produced or forgone by health programs or treatment. Cost: US$, JOD, etc Combined effect (quantity and quality): Quality-adjusted life year (QALY) We always have at least one comparator ICUR: incremental cost utility ratio is the measurement used to assess cost-effectiveness of treatments Alkhatib 2022 90 Quality-adjusted life year Is a generic measure of disease burden, including both the quality and the quantity of life lived. One QALY equates to one year in perfect health QALY scores range from 1 (perfect health) to 0 (dead) It is utility-based value: requires utility calculations Utility: patient’s preferences and tastes Alkhatib 2022 91 Methods to calculate utility values Rating scale Standard gambling Time trade-off (TTO) Visual analogue scale (VAS) Alkhatib 2022 92 Common mistake Cost-effectiveness analysis = Cost-utility analysis (wrong) But we can say cost-effective treatment in terms of LY or QALY Alkhatib 2022 93 A question Two right-handed young men broke their right arms. One is an artist and the other one is singer. Both are candidate for the same treatment. Who will appraise the treatment more and which analysis can be useful to estimate the cost-effectiveness of the treatment? Alkhatib 2022 94 Equation of ICUR ICUR= Treatment cost (A) – Treatment cost (B) Effect (A)*utility (A) – Effect (B)*utility (B) ICUR is a ratio between incremental cost and incremental effect, and can be a positive or negative estimate Alkhatib 2022 95 The cost-effectiveness plane The cost-effectiveness plane is used to visually represent the differences in costs and health outcomes between treatment alternatives in two dimensions, by plotting the costs against effects on a graph. Health outcomes (effects) are usually plotted on the x axis and costs on the y axis. Used as a tool for interpretation of cost-effectiveness for CEA and CUA Alkhatib 2022 96 ICER plane = ICUR plane Alkhatib 2022 97 Willingness-to- pay (WTP) is used when we have trade-offs QALY Alkhatib 2022 98 Willingness-to-pay (WTP) Is the maximum price per additional QALY (effect) at which or below a consumer will buy a product WTP in CUA is associated with Cost/QALY gained as a threshold to pay for intervention or treatment Elicited from general population, and society preferences on how much they are interested to pay for each additional QALY gained from a health care program Can be specified for a disease Alkhatib 2022 99 Cost/ QALY gained threshold