08 Basics of Pharmacoeconomics.pptx

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1. Basics of Pharmacoeconomics Dr. Furqan K. Hashmi Assistant Professor Punjab University College of Pharmacy

2. Economics The study of how individuals & society end up choosing, with or without the use of money, to employ scarce resources that could have alternative uses, to produce various commodities & distribute them for consumption now, now or in the future, among various people and groups in society.

3. Efficacy Data Management of efficacy endpoints based on evidence enables clinicians to maximize prescribing skills Evidence-based healthcare is a determination of the mix of those services, drug products, and procedures that maximise benefits and reduce risks.

4. Opportunity Cost Time and money as resources can only be spent once – choice is unavoidable. O.C. is defined as the amount that a resource could earn in its highest valued alternative use. How do you invest your time? Why take valuable time to learn about pharmacoeconomics and outcomes research?

5. Cost Data Management of resource consumption enables patients to maximize purchasing power- Individual level- managing insurance co-payments Group level- managing insurance premiums across groups and maximizing the number of insured patients Govt level- sustaining public programs

6. Pharmacoeconomics The process of identifying, measuring, and comparing the costs, risks, and benefits of programs, services, or therapies To determine which alternative produces the best health outcome for the resource invested Most impactful when making decisions about a population rather than individual “Costs vs. Consequences of Alternatives”

7. Types of Economic Evaluation Cost of illness evaluation (COI) Cost minimization analysis (CMA) Cost benefit analysis (CBA) Cost effectiveness analysis (CEA) Cost utility analysis (CUA)

8. Cost of Illness Evaluation Also termed cost consequence model Description: Estimates the cost of a disease within a defined population Application: Provides a baseline for evaluating the impact of prevention/treatment options Measurement Units: Monetary ($) Example: Cost of peptic ulcer disease

9. Cost Minimization Analysis Description: Identifies intervention cost differences between similar alternatives Application: Identify least costly alternative when outcomes/consequences are identical Measurement Units: Monetary for intervention costs (no outcomes measured) Example: Comparing costs of Drug A and Drug B, which have evidence of equal efficacy for a given condition and safety

10. Cost Benefit Analysis Description: Identifies net cost impact of an intervention Measurement Units: Monetary for both intervention costs and outcomes Calculated: Benefit($)/Cost ($) Application: Compare programs or agents with different objectives or 1 program against a return on investment benchmark Example: Clinical pharmacy service vs. other institutional service

11. Cost Effectiveness Analysis Description: Compares costs of two or more alternatives versus outcomes measured in natural units Measurement Unit: Monetary for cost, outcome in physical measures i.e., event avoided Incremental cost to achieve a one unit increase in outcome ICER = ∆Cost/∆Effect = (C Tx1 – C Tx2 )/(E Tx1 – E Tx2 ) Application: Compare treatment alternatives for a given condition that differ in outcomes and costs Example: Osteoporosis Drug A vs Drug B on fracture risk reduction ($/fracture avoided)

12. Cost Utility Analysis Description: Subset of cost effectiveness analysis -outcomes are measured in utility units Utilities represent patient preferences and quality of life/functional status associated with disease and/or treatment QALY: Quality adjusted life year – factor of life expectancy and utility e.g., 4 years at 25% QOL = 1 year at 100% QOL Application: Same as CEA, useful when treatment extends life and/or effects quality of life Example: Compare cancer chemotherapy regimens

13. Economic Modeling Analytic models used to predict economic consequences of coverage, treatment, and access decisions budget impact, cost effectiveness, cost minimization E.g., evaluate the impact of adding drug A to the formulary Constructed by health plans, pharmaceutical manufacturers, academic groups, and consultants

14. Economic Modeling Good practice guidelines for model development should utilized in constructing models Promote transparency, minimize bias Guidelines also exist to facilitate the evaluation of pharmacoeconomic studies

15. Thank you