Pharmacoeconomics

Pharmacoeconomics is the study of the cost and value of drugs and pharmaceutical therapies. It combines aspects of health economics and clinical pharmacy to assess the economic impact of drug treatments on healthcare systems and patient outcomes. By evaluating the cost-effectiveness, cost-utility, and cost-benefit of medications, pharmacoeconomics aims to inform healthcare decision-making, optimize resource allocation, and improve the overall efficiency and quality of care.

1. Parul Institute of Pharmacy and Research
Waghodiya, Gujarat -391760
A Seminar as a part of curricular requirement for
First year M.Pharm II Semester
Presented By
Prasan Das
Department of Pharmacology
Under the guidance/Mentorship of
Dr. Snigdha Das Mandal
PHARMACOECONOMICS
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2. Pharmacoeconomics Contents
Introduction
Perspective of Evaluation
Consequences (Outcomes)
Pharmacoeconomical Methodology
Humanistic Evaluation Method
Importance of Pharmacoeconomics
Application of Pharmacoeconomics
Conclusion
References
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3. Introduction
Pharmacoeconomicsisascientificdisciplineconcernedwiththe
costandvalueofdrugs,oftenwiththegoalofoptimizingthe
allocationofhealthcareresources.
Itcomparethecostofvariousdrugswiththeoutcomes,suchas
benefitsofpatientsreceivingthedrugsandcosts.
Overthelastdecadetherehasbeentremendousinterestin
economicevaluationsofhealthcareprogrammes,especiallyinthe
pharmaceuticalfield.
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4. Economicevaluationshelpdecisionmakersdeterminewhetherthe
costofthisextraeffectivenessprovidedbythenewdrugis
worthwhile,withinthebudgetavailable.
Millionsofpeoplesufferanddieinabsenceofaccessorinability
toaffordmedicalcare,manyotherssufferbecausetheyendup
payingthroughborrowingdebtsandsellingassetsetc.
Pharmacoeconomics
Pharmakon –
Drug
Oikonomia –
Management of
a household
Oikos -House
Nomos -Law
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(Derived from Greek Source)

5. Why Study
Pharmacoeconomics?
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Helpstodecidewhichdrugtodevelop.
Toestimateandunderstandthefullimpactofnewtherapy.
Tomakeaninformeddecisionregardingappropriateuseofdrug
whichhavebeendeveloped.
Tomakethebestuseoflimitedresources.

6. Goals of Pharmacoeconomics
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Todeterminewhichhealthcarealternativesprovidethebest
healthcareoutcomeintermsofmoneyspent.
Toimprovetheallocationofresourcesforpharmaceuticalproducts
andservices.

7. 7
Input cost
Provided Healthcare System/
Pharmaceutical Products
Analyse the
Outcome

8. Perspective of Evaluation
CommonPerspectiveinclude:
PatientsPerspective–Portionofcostcoveredby
insurance.
ProviderPerspective–eg.Hospital-Directcosts.
PayerPerspective-eg.InsuranceCompanies,Employers
orthegovernment.
SocietyPerspective–Alldirect&IndirectCosts.
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9. Costs
Thevalueoftheresourcesconsumedbyaprogramordrug
therapy,isdefinedasCost.
Healthcarecostsarecategorizedas…
DirectMedicalCosts–Drugs,Medicalsupplies&
Equipment's,Laboratory&Diagnostictests,Hospitalization
&Physicianvisits.
DirectNon-medicalCosts–Transportationto&form
healthcarefacilities,extratripstotheemergency
department,Childorfamilycareexpenses,Specialdiets&
Variousotherout-of-pocketexpenses. 9

10. Costs
IndirectNon-medicalcosts–Morbiditycost–Lossof
productivity+Mortalitycost–Lossofyearsofservicedue
toprematuredeath.
Intangiblecosts–Nonfinancialoutcomesofdisease&
medicalcaresuchaspain,suffering,inconvenience&grief.
Opportunitycosts–Value(economicbenefit)ofthe
alternativetherapythatwasforgone.
Incrementalcosts–Theextracostsrequiredtopurchasean
additionalunitofeffect.
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11. Costs
Directcosts–DirectmedicalCosts+Directnon-medicalcosts
Indirectcosts–Morbiditycosts+Mortalitycosts
Totalcosts–Directcosts+Indirectcosts+Intangiblecosts
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12. Consequences
Consequencesisdefinedastheeffect,outputsoroutcomesofthe
programordrugtherapy.
Consequencesarecategorizedas…
Economicoutcomes-Comparingdirect,indirect,and
intangiblecostswiththeconsequencesofmedicaltreatment
alternatives.
Clinicaloutcomes-Medicaleventsthatoccurasaresultof
diseaseortreatment(e.g.,safetyandefficacyendpoints)
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13. Consequences[Cont.]
Humanisticoutcomes-Consequencesofdiseaseortreatment
onpatientfunctionalstatussuchasphysicalfunction,social
function,generalhealthandwell-being,andlifesatisfaction.
Positiveoutcomes-Desiredeffectofadrug.
Negativeoutcomes-ADRortoxicityofadrug.
Intermediateoutcome-Canserveasaproxyformore
relevantfinaloutcomes.
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14. Pharmacoeconomic Methodology
Humanisticevaluations
HealthRegulatedQuality
ofLife(HRQOL).
Patientpreferences.
Patientsatisfaction.
Economicevaluations
Partialeconomicevaluation
Costconsequenceanalysis(CCA)or
Costoutcomeanalysis(COA)
Cost-of-illness(COI)evaluation
CostMinimizationAnalysis(CMA)
CostBenefitAnalysis(CBA)
CostEffectivenessAnalysis(CEA)
CostUtilityAnalysis(CUA)
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Fulleconomicevaluation

15. Cost-Consequence Analysis (CCA)
Partialeconomicevaluationscanincludesimpledescriptive
tabulationsofoutcomesorresourcesconsumed.
Requireaminimumoftimeandeffort.
Cost-outcomeorcost-consequenceanalysis(CCA)describesthe
costsandconsequencesofanalternative.
Doesnotprovideacomparisonwithothertreatmentoptions.
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16. Cost of Illness (COI) Evaluation
COIidentifiesandestimatestheoverallcostofaparticular
diseaseforadefinedpopulation.
COIevaluationmethodisalsoknownasburdenofillness.
Itinvolvesmeasuringthedirectandindirectcostsattributable
toaspecificdiseasesuchasdiabetes,mentaldisorders,or
cancer.
COIevaluationisnotusedtocomparecompetingtreatment
alternativesbuttoprovideanestimationofthefinancialburden
ofadisease.
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17. Cost Minimization Analysis (CMA)
Cost-minimizationanalysisisthemostbasictechnique.
CMAinvolvesthedeterminationoftheleastcostlyalternative.
Forexample,ifdrugsAandBareantiulceragentsequivalentin
efficacyandadversedrugreactions(ADRs),thenthecostsof
usingthosedrugscouldbecomparedusingCMA.
Anotherexamplewouldbeprescribingagenericpreparation
insteadofthebrandleader
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18. Cost Benefit Analysis (CBA)
Measurescostsandbenefitsinmonetaryterms.
Estimatesthestrengthsandweaknessesofalternatives.
Boththecostsandthebenefitsaremeasuredandconvertedinto
equivalentdollarsintheyearinwhichtheywilloccur.
Thecostsandbenefitsareexpressedasaratio(abenefit-to-cost
(B:C)ratio).
ManyCBAsmeasureandquantifydirectcostsanddirect
benefitsonlyduetodifficultiesinmeasuringindirectand
intangiblebenefits.
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19. Cost Effectiveness Analysis (CEA)
Themostcommonlyemployedmethodiscost-effectiveness
analysis.
Measureseffectiveness(healthbenefit)innaturalunits(eg.
yearsoflifesaved,diseasehealed)andthecostsinmoney.
Itcolaparestherapieswithqualitativelysimilaroutcomesina
particulartherapeuticarea.Forinstance,inseverereflux
oesophagitis,usingaprotonpumpinhibitorcomparedtousing
H2blockers.
CEAdoesnotallowcomparisonstobemadebetweentwo
totallydifferentareasofmedicinewithdifferentoutcomes.
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20. TheresultsofCEAareexpressedasaratioeitherasanaverage
cost-effectivenessratio(ACER)orasanincrementalcost
effectivenessratio(ICER).
ACER=NetCost/NetHealthBenefit
ICER=Differenceincosts(A-B)/Differenceinbenefits(A-B)
CEAisbeingusedtosetpublicpoliciesregardingtheuseof
pharmaceuticalproducts(nationalformularies)incountriessuch
asAustralia,NewZealand,andCanada.
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21. Cost Effectiveness Plane
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This cost-effectiveness plane is a visual
method for representing the comparison
of alternatives.
4 quadrants

22. Cost Effectiveness Grid
Cost effective choice
Not cost-effective choice
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23. Cost Utility Analysis (CUA)
InCUA,Costismeasuredindollars,andtherapeuticoutcomeis
measuredinpatient-weightedutilitiesratherthaninphysical
units.
CUAcancomparecost,quality,andthequantityofpatient-
years.
ResultsofCUAareexpressedinaratio,acost-utilityratio(C:U
ratio).CUAiscomplex,andthusCUAcanbelimitedinscopeof
applicationfromahospital.
InCUA,thecostsaremeasuredinmoneyandthereisadefined
outcome.ButinCUA,theoutcomeisanunitofutility.
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24. Humanistic Evaluation Methods
Methodsforevaluatingtheimpactofdiseaseandtreatmentof
diseaseonapatient'sHRQOL,patientpreferences,andpatient
satisfactionareallgrowinginpopularityandapplicationto
pharmacotherapydecisions.
HRQOLhasbeendefinedastheassessmentofthefunctional
effectsofillnessanditsconsequenttherapyasperceivedbythe
patient.
Theseeffectsoftenaredisplayedasphysical,emotional,and
socialeffectsonthepatient.
MeasurementofHRQOLusuallyisachievedthroughtheuseof
patient-completedquestionnaires
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*HRQOL= Health-Related Quality of life*

25. Importance of Pharmacoeconomics
Pharmacoeconomicanalysishelpstoachievemaximumbenefit
inlimitedcost.
Clinicianswanttheirpatientstoreceivebestcareandoutcome
available.
Pharmacoeconomicscombinestheobjectivesofbothclinician
andpayersbyestimatingthevalueofpatientoutcomesforthe
expenditurespentonmedicationsandotherhealthcareservices.
Intoday'shealthcaresettings,pharmacoeconomicmethodscan
beappliedforeffectiveformularymanagement,individual
patienttreatment,medicationpolicydetermination,andresource
allocation.
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26. Application of Pharmacoeconomics
Healthcarepractitionerscanbenefitfromapplyingtheprinciples
andmethodsofPharmacoeconomicstotheirdailypractice
settings.
Pharmacoeconomicsaidclinicalandpolicydecisionmaking.
Completepharmacotherapydecisionsshouldcontainassessments
ofthreebasicoutcomeareaswheneverappropriate:economic,
clinical,andhumanisticoutcomes(ECHO).
Traditionally,mostdrugtherapydecisionswerebasedsolelyon
theclinicaloutcomes(e.g.,safetyandefficacy)associatedwitha
treatmentalternative.
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27. Application of Pharmacoeconomics[Cont.]
Overthepast15to20years,assessmentoftheeconomic
outcomesassociatedwithatreatmentalternativebecomepopular.
Thecurrenttrendistoincorporatethehumanisticoutcomes
associatedwithatreatmentalternative,thatis,tobringthepatient
backintothisdecision-makingequation.
Intoday'shealthcareenvironment,itisnolongerappropriateto
makedrug-selectiondecisionsbasedsolelyonacquisitioncosts.
Pharmacoeconomicdatacanbeapowerfultooltosupportvarious
clinicaldecisions,includingeffectiveformularymanagement,
individualpatienttreatment,medicationpolicy,andresource
allocation.
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28. Conclusion
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Pharmacoeconomicanalysisplaysacrucialrolein
optimizinghealthcareresourceallocationandimproving
patientoutcomes.
Continued research and innovation in
Pharmacoeconomicswillenhancethevalueandimpactof
healthcareinterventions.
Collaborationamongstakeholders,includingresearchers,
policymakers,healthcareproviders,andpatients,is
essentialforthesuccessfulapplicationof
pharmacoeconomicprinciples.

29. References
Textbookofclinicalpharmacypractice,pharmacoeconomics:
Theory,ResearchandPractice,byDuskaFranic,AnandiVLaw
andDevSPathak;page:507-523.
Pharmacotherapy:APathophysiologicApproach,Chapter1.
Pharmacoeconomics:Principles,Methods,AndApplicationsby
LisaSanchezTrask.
https://en.Wikipedia.org/wiki/pharmacoeconomics
https://www.slideshare.net/slideshow/pharmacoeconomicstudies
ppt/255857372
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Thank You!