PHARMACOECONOMICS (PE)

(THEORY AND PRACTICE)

Ms.Pratibha

Guide:
Dr.U.P.Rathnakar

MD.DIH.PGDHM

ROAD MAP

Introduction
History
Definition
Concept
Cost and outcomes
Evaluation methods
Applications
Conduct of PE evaluation
Conclusion

INTRODUCTION

Resources are always scarce.

Challenge to provide
- quality medical care with minimum
resources.
Balance between
- economic,
- humanistic and
- clinical outcome.

HISTORY

Health economic is a branch of economics

Mid 1960s few systemic reference to it
can be found

In 1973 the first book on this subject was

published

The first time the PE was used in public forum in1986,

At a meeting of Pharmacists in Toronto.
When Ray Townsend, from the Upjohn
Company, used the term in a presentation

DEFINITION

ECONOMICS:
- Is the study of how society decides what
gets produced, how and for whom.

HEALTH ECONOMICS:

Branch of economics
- Study of
- How scarce resources are allocated for
the health care
- For the maintenance and
impprovement of health among people

PHARMACOECONOMIC:

Subdivision of health economic

- Process of
- Identification
- Measuring and comparing the cost
and outcome of health care
programme

CONCEPT

Provides a basis for

- resource allocation and utilization
Nowadays in India primary care providers are
- bombarded with various new drugs
usually of the same family
- having properties similar to the
available (older) drug

Cont

Cont..

Before prescribing any new drug therapy two

question must be important
1. Whether the new drug is equally or
more efficacious in the said disease
as compare to the standard
treatment?
2. Does the new drug have any
pharmacoeconomic advantage over the
existing drugs?

Pharmacoeconomics

Outcome

Cost

MEASURES COST AND OUTCOMES

Determines which alternative gives best

outcome for the resource invested.
Alternative which gives optimum outcome to the
rupee spent.

COST?

Not same as price

Involves all the resources that are used to

- produce and deliver a particular drug
therapy

Cont

Cont
COST

Direct Non medical

Medical
Direct

Intangible

Indirect

Opportunity


DIRECT

MEDICAL:

- Cost related to disease

Eg: Drugs, lab test, hospitalization

DIRECT

NON MEDICAL:

- Cost related to illness but not related to

purchasing health care services.
Eg: spent on transportation, hiring of a
room near treatment center


INDIRECT

NON MEDICAL:

- Cost of reduced productivity

INTANGIBLE:

- Cost incurred due to disease

- Which cannot be measured in rupee
terms
Eg:
Eg: pain, suffering


OPPORTUNITY

COSTS:

- When taking certain course of action

opportunity & cost is lost to use the
next best alternative therapy

OUTCOMES

Outcomes (consequence)

Clinical
(efficacy of
treatment)

Humanistic
(QOL, patient
satisfaction)

EVALUATION METHODS

Cost minimizition analysis [CMA]

Cost benefit analysis [CBA]
Cost effectiveness analysis [CEA]
Cost utility analysis [CUA]

Cost--minimization Analysis
Cost

Simplest

of the pharmacoeconomics tool

Comparing two drugs of equal efficacy and
equal tolerability

Therapeutic equivalence must be
established between 2 procedures to be
compared

Now no need to compare efficacy or
outcome

Simple comparison of cost

COST MINIMIZATION ANALYSIS

- - Eg:
Eg:
Comparing two dosage forms of intravenous
clindamycin for prevention of postoperative
infection

Patient undergoing surgery for gangrenous
appendicitis
- Clindamycin 900mg every 8 hour OR
Clindamycin 600mg every 6 hour
- Both showed equal
- efficacy
- safety
- pharmacokinetics

COST BENEFIT ANALYSIS (CBA)

Both cost and benefits of various

alternatives are reduced to monetary terms
Used to evaluate the desirability of a given
intervention in markets
Intervention vs status quo

CBA.

Expressed

as ratio B/C ratio

- B/C ratio >1, Programme or treatment is
of value
- B/C ratio = 1, Benefit and cost equal
- B/C ratio < 1, Programme is not
beneficial

COST EFFECTIVE ANALYSIS (CEA)

Ratio of cost of a treatment alternative and

clinical outcome is compared to another
alternative

Outcomes is not expressed

- in monetary terms
- but in units - (non rupee units)

CEA..

Eg:
Eg:
- 4 Statins compared Fluvastatin
Lovastatin,, Simvastatin,
Lovastatin
Simvastatin, Pravastatin
- Outcome: rate of success in achieving the LDL
goal of therapy
- Cost: drug cost, physician cost, lab cost
- Fluvastatin lowest CEA ratio for LDL reduction
of 25% or less

CEA--ACEA
CEA

1.

Average cost effective analysis[ACEA]:

Cost in rupee of option A / clinical outcome

- when this ratio is compared to another
option B
- one with least ACER is selected

CEA--ICEA
CEA

2.

Incremental cost effective analysis:

This helps to know the
- increase in cost to get better outcome
between two options

COST UTILITY ANALYSIS (CUA)

Drugs/intervention with different outcomes are

compared
Outcomes measured in utility units ,
i.e. Quality Adjusted Life Years (QALY)
Eg:
Eg:
Ondansetron Vs Metoclopramide in
patient receiving high dose Cisplatin
therapy
Cont

CUA ..

Cost:

direct cost of the drug,

material, labour

Clinical outcome: counting emesis
episode in 24 hours after
antiemetic and extrapyramidal
reaction after metoclopramide

CUA.
Example, intervention A

Allows a patient to live for 3 additional years

Than if no intervention had taken place, but
only with a quality of life weight of 0.6,

Then the intervention confers 3 * 0.6 = 1.8
QALYs to the patient [A]

If intervention B confers 2 extra years of life
at a quality of life weight of 0.75,

Then it confers an additional 1.5 QALYs to
the patient. [B]

The net benefit of intervention A over
intervention B is therefore 1.8 - 1.5 = 0.3
QALYs.

Quality--adjusted life years, or QALYs,

Quality
Is a way of measuring disease burden,

Including both the quality and the quantity of
life lived

As a means of quantifying in benefit of a
medical intervention.

Based on the number of years of life that
would be added by the intervention.

Each year in perfect health is assigned the
value of 1.0 down to a value of 0 for death.

I If the extra years would not be lived in full
health -the extra lifelife-years are given a value
between 0 and 1 to account for this.

Methodology

Cost measurement units

Outcome measurement
units

CMA

Rupees or monetary units Assumed to be equivalent

CEA

Rupees or monetary units Natural units[Bp, blood

sugar, life years]

CBA

Rupees or monetary units Rupees or monetary units

CUA

Rupees or monetary units QALY or other utilities

Application of Pharmacoeconomics:
Pharmacoeconomics:

1. Pricing of a new drug

2. ReRe-pricing of an old drug
3. Generation of a data for promotional
material
4. Legislative requirement for drug
licensing and medical reimbursement
5. Justify clinical pharmacy evaluation
Cont

Use ..
6. Used to justify use of pharmacy
products and pharmaceutical care
7. Principle of Pharmacoeconomic also
influences health care decision making
and individual patient care
8. Earlier clinical decisions were solely
based on outcomes. Now cost, outcome,
humanistic outcome are also considered

Conduct of pharmacoeconomic evaluation:

1. Define the problem
2. Assembe the study team
3. Identify treatment alternative
4. Decide on correct pharmacoeconomic
method
5. Decide monetary value of clinical
outcome
6. Make analysis
7. Present result
8. Implement



Eg: Pain from osteoarthritis

Pain results in significant disability and resource
utilization
NSAIDs
- effective pain relief
- Less expensive than CoxCox-II inhibitor
- associated with a significant risk of adverse
effects
- Dyspeptic symptoms
- More serious nonnon-dyspeptic effectseffectssymptomatic ulcers, ulcer hemorrhage,
ulcer perforation

Cox- II inhibitors
Cox- effective pain relief
- substantially more expensive than CoxCox-1
inhibitors
- associated with lower risk of GI side effects

NSAIDs are inexpensive compared to CoxCox-II

inhibitor:
- But wont the more expensive agent pay for
itself many times over by preventing an
expensive GI bleed?
- Dyspeptic symptoms are decreased by
15%
- Clinically significant ulcer complications are
reduced by 50%

Risk reduction for GI complications seen with

Cox--II inhibitors is unlikely to offset their
Cox
increased cost in the management of average
risk patients with osteoarthritis pain
- With no history of GI bleed, choose naproxen
- With history of GI bleed, choose CoxCox-II
inhibitor

CONCLUSION

Is a young science, which is still testing its

methodology.
The science will improve with application and
value of the analysis to clinicians
Principle and methods balances the cost and
outcomes and provides the best possible health
care to the with available resources.
Time and money can only be spent onceonce- choice
is inevitable. Whether done unconsciously or
with a consistent process, health care
professionals are constantly evaluating patient
care choices & acting on them.

REFERENCE

Averys text book, author, publishers,city,

publishers,city, year,
Page
The national medical journal of India
vol.17:no.2:2004
Essentials of PE, By: Karen L. Rascati,
Rascati, Lippincot
Williams and Wi
Cost--Effectiveness Analysis: Methods and
Cost
Applications by Henry M. Levin,
Levin, Patrick J.
McEwan,, Patrick J. McEwan
McEwan