Pharmacoeconomics

Following topics are covered in this slide deck:
Role and use of Pharmacoeconomics and health outcomes research | Impact of price regulation in India | Factors affecting drug pricing | Need, challenges and components of pharmacoeconomics | Aims, Objectives and principle of Pharmacoeconomic Evaluation | Different types of cost measurement | The Methods of Pharmacoeconomic Evaluation | Cost Analysis (CUA)

1. Prof. Shaikh Abusufiyan
Assistant Professor,
AIKTC-School of Pharmacy,
New Panvel-410206
Part-01: Pharmacoeconomics
Pharma Learning Forever

2. At the end of this e-learning session you are able to…
A. Define pharmacoeconomics, explain its aim anduses?
B. Discuss reason increase in health care spending and
increase in drug cost.
Copyright @shaikhabusufiyan2021

3. Definition
cost-
benefit
cost-
effectiveness
cost
minimization
cost-of-
illness
cost-utility
analyses
to compare pharmaceutical products andtreatment strategies.
Itisthedescriptionandanalysisofthecostsofdrugtherapy
tohealthcaresystemsandsociety.
•Pharmacoeconomicsis the branch of economicsthat uses
…Brinsmead 2003Copyright @shaikhabusufiyan2021

4. Role of Pharmacoeconomics and health outcomes research:
1. Informing clinical development and market
access decisions of new innovative medicines.
2. To work on the health economics which
particularly focuses upon
•the costs
•benefitsof drug therapy.
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5. 3.Itfocusedontheeconomicevaluationof
pharmaceuticalswhichincludes
Healthoutcomesresearch(HOR)and
patient-reportedoutcomes(PRO)
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6. •Itisaimatunderstandingpatientvalue
intermsofimpactofdiseaseanditstreatmenton
physicalfunctioningandpsychosocialwellbeing
knownas“health-relatedqualityoflife”(HRQL).
AIMHealthoutcomesresearchandpatient-reportedoutcomes(PRO)
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7. To Make
formulary
decisions
To Design
disease
management
programs To measure
the cost
effectiveness of
interventions
Use of Pharmacoeconomics
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8. Q&A
Q.1 Give definition of Pharmacoeconomics?
Q.2 What is HRQL.
Q.3EnlistusesofPharmacoeconomics?
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9. Improvement
in &
sophistication
of health
technologies.
Increased
life
expectancy
Increased
technology
Increased
standard
ofliving
Increased
demandin
healthcare
qualityand
services.
Reason for increase in health care spending
Reason
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10. 1. New medicines are
under patent law 5. Spending of
pharmaceutical
companies on
marketing &
launch of drugs2. Preference of
drug therapy
over invasive
therapy
3. Discovering
various off
label uses of
existing drugs
4. The irrational
drug prescription
Reason for Increase in cost of Drug
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11. Impact of price regulation in India
•About85%ofthedrugmarketwasunderpricecontrolin1979.
•Withsuccessivepolices,thenumberdiminishedandnowamere15
-20%ofthedrugmarketisunderpricecontrol.
Thereforedrugpricesarequicklyspinningoutofreachofthe
commonman.
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12. •All over the world, patients are affected
by high price of medicines.
•In a developing country like India, 85%
of total health expenditure
financed by house-hold out of pocket
expenditure.
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13. •Many poor people face a choice between
buying medicines or buying food
due to limited resources and high pricing
of drug.
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14. •Pharmacoeconomicsadoptsandappliesthe
principlesandmethodologyofhealtheconomics
tothefieldofpharmaceuticalpolicy.
•Pharmacoeconomicevaluation
makesuseofthebroadrangeoftechniques
usedinhealtheconomicsevaluation
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15. Reference:
•BrinsmeadR(2003):Useofpharmacoeconomicsinprescribingresearch.
JClinPharmTher28:339-46
•SumitKumar,AshishBaldi.Pharmacoeconomics:Principles,Methodsand
EconomicEvaluationofDrugTherapies.PhTechMed.2013;(2)5:362-367.
Copyright @shaikhabusufiyan2021

16. Disclaimer (Images)
•Theimagesusedinthispresentationarefoundfromdifferentsourcesalloverthe
Internet,andareassumedtobeinpublicdomainandaredisplayedunderthefair
useprincipleforeducationpurpose.
Copyright @ Presentation
•ThesaidpresentationiscopyrightunderCopyright@shaikhabusufiyan2021
•Thepresentationisforeducationpurposeonly,don’tusethesameforanylegal
perspective.

17. Copyright @shaikhabusufiyan2021

18. Q&A
Quiz-Attendance/Feedback:
https://forms.gle/5LyHRasLi5ZmTwN16
Copyright @shaikhabusufiyan2021

19. Prof. Shaikh Abusufiyan
Assistant Professor,
AIKTC-School of Pharmacy,
New Panvel-410206
Part-02: Pharmacoeconomics
Pharma Learning Forever

20. At the end of this e-learning session you are able to…
A. Discuss factors affecting drug pricing.
B. Explain need, challenges and components
of pharmacoeconomics.
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21. Factorsaffectingdrugpricing
I.Thesectorinwhichmedicinesare
purchased:Thepriceisoftenhigherinthe
privatesector-->profiteeringintention.
II.Thetypesofprocurementagent:e.g.
differentpricesmaybepaidforthesame
productbyapublicsectorpurchaser,suchas
MinistryofHealth.
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22. III.Thedistributionroute.
•Apatientwhopurchasesamedicineata
hospitalpharmacymayhavetopaymore
thehospitalpharmacypurchasedthe
productfromalocalwholesaler
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23. •Continue….
•Manytimeshospitalpharmacymayhave
limitedstockofthegenericdrugswhichoneis
cheaperthanthebrandeddrugsprescribedto
thepatientonroutinebasis.
•Sometimepatienthastopurchasethe
brandeddrugsintheemergencycondition.
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24. iv. The patient status:
•The price of patented medicineis often higher than that
of their generic equivalent.
•other factors influence the total cost of drugs are:
• Prices of patented, non-patentedand generic drugs
• Retailand wholesalemark-ups
• Pharmacists' professional fees
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25. Continue….
•Changes in the compositionof totalpopulatione.g.
proportion of older persons
•Changes in prescribing habits of physicians
•Changes in the utilization of drugsi.e. number of drugs
used per patient
•Trends towards using newer drug therapy instead of
other treatments
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26. In Industry:
Deciding among
specific
research and
development
alternatives.
In Government:
Determining
program benefits
and prices paid.In Private Sector:
Designing insurance
benefit coverage
Need of Pharmacoeconomics
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27. Q&A
Q.1 Enlist factor affecting drug price.
Q.2 What is need of Pharmacoeconomics in
industry?
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28. 1. Establishing
guidelines or
standards of practice.
4. Continuing
education on the
relevant features
of this discipline
for practitioners,
government
officials, private
sector executives.
3. Creating a
cadre of trained
producers of
pharmacoeconomic
work.
CHALLENGES
2.Stable fundingto
support applied
pharmacoeconomic
research.
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29. Component of Pharmacoeconomics
Health
Economics
Health Policy
research
Health
technology
assessment
Disease
burden
Health
outcome
researchComponent
of PE
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30. Aims, Objectives and principle of Pharmacoeconomic Evaluation
Aims,Objectives:
1.Toreducemonetaryburdenonthe
consumers
byinsuringglobalpricingstrategyforthe
effectivemanagementofhealthcaresystem.
2.Totakedecisionsaboutdrugtherapies.
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31. Principle
Tomakemoreefficientuseoflimited
resources
formaximizationofhealthcarebenefit
atlowercost.
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32. 7 ways of cost Measurement:
1. Cost / unit
2. Cost / treatment
3. Cost / person
4. Cost / person / year
5. Cost / case prevented
6. Cost / life saved
7. Cost / DALY (disability-adjusted life year)
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33. Reference:
•SumitKumar,AshishBaldi.Pharmacoeconomics:Principles,Methodsand
EconomicEvaluationofDrugTherapies.PhTechMed.2013;(2)5:362-367.
Copyright @shaikhabusufiyan2021

34. Disclaimer (Images)
•Theimagesusedinthispresentationarefoundfromdifferentsourcesalloverthe
Internet,andareassumedtobeinpublicdomainandaredisplayedunderthefair
useprincipleforeducationpurpose.
Copyright @ Presentation
•ThesaidpresentationiscopyrightunderCopyright@shaikhabusufiyan2021
•Thepresentationisforeducationpurposeonly,don’tusethesameforanylegal
perspective.

35. Copyright @shaikhabusufiyan2021

36. Q&A
Quiz-Attendance/Feedback:
https://forms.gle/5LyHRasLi5ZmTwN16
Copyright @shaikhabusufiyan2021
Dr. Suleman MerchantDr. Suleman Merchant

37. Outcomes:
•Thefundamentalcomponentofapharmacoeconomicstudyis:
•outcomesorbenefits.
•Acost-benefitanalysisallow:
•Tocomparesthecostsandoutcomesofalternativetherapies----->theoutcomeisthen
expressedinmonetaryterms.
•Itcomparesthecostsinvolvedinimplementingaprogrammewiththevalueoftheoutcome.
•Sincetheendpointsaremeasuredinmonetaryterms,differentendpointscanbestudied--à
suchasasurgicalprocedurecomparedwithapharmaceuticalintervention.
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38. Outcomes:
•Theexpectedbenefitsfromaninterventionmightbemeasuredin:
•A.“Natural”units:
•e.g.strokesprevented
•yearsoflifesaved
•B.“Utility”units–Utilityisaneconomist’swordfor
•Satisfaction
•Orsenseofwellbeing
•andisanattempttoevaluatethequalityofastateofhealth,andnotjustits
quantity. Copyright @shaikhabusufiyan2021

39. The Methods of Pharmacoeconomic Evaluation
•Pharmacoeconomicevaluationsincludeanystudydesigned:
•Toassessthecosts(resourcesconsumed)andconsequences(clinical,
humanistic)ofalternativetherapies.
•Theevaluationmechanismsoftenhelpfulindemonstrating:
•thecostimpactofinnovativetreatments
•thereforegrantingthemgreateracceptancebyhealthcareproviders,administrators,
andthepublic.
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40. Types of pharmacoeconomic studies or methods:
Therearebasically4methods:
•Cost-minimizationanalysis(CMA)
•Cost-effectivenessanalysis(CEA)
•Cost-utilityanalysis(CUA)
•Cost-benefitanalysis(CBA)
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41. Cost-Minimization Analysis (CMA):
•Objective:Toselecttheleastcostlyamongmultipleequivalent
interventions.
•Cost-minimizationisatoolusedinpharmacoeconomicsandis
applied:
•whencomparingmultipledrugsofequalefficacyandequaltolerability.
•whentheoutcomesarethesameforthetwointerventions.
•Inthis,onlytheinput,i.e.thecost,isconsidered.
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42. •Theoptionthathastheleastcostisselected:
•e.g.ifahospitaldecidestointroducecompulsoryprescribingof
genericnamesofdrugsinsteadoftheirbrandnames-->thenthe
pharmacoeconomicevaluationofthiswouldbedonebyCMA.
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43. •CMA shows only a “cost savings” of one program or treatment
over another.
•The CMA is appropriate:
•when comparing two or more therapeutically equivalent agentsor
alternate dosing regimens of the same agent.
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44. Cost Effective Analysis (CEA)
•CEAisatechniquedesignedtoassistadecision-makerinidentifying
apreferredchoiceamongpossiblealternatives.
•Itinvolveaseriesofanalyticalandmathematicalprocedurethataid
intheselectionofacourseofactionfromvariousalternative
approaches.
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45. •CEAevaluatesmultipledrugtreatmentsforthesamecondition.
•Thecostofthedrugtreatments-->areweighedagainstthe
effectivenessofthedrug.
•Thecostsofdrugtreatmentsinclude
•acquisitioncosts
•physicianinvolvement
•andnursingcostsforadministrationofthedrug.
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46. •Theeffectivenessofdrugtreatmentismeasuredintangiblemeasuressuchas:
•lengthofhospitalstay
•durationoftreatmentrequired
•andmortalityrate.
•TheresultsofaCEAareexpressedascost/outcomeforboththerapies.
•Pharmacoeconomicanalysisshouldbeincorporatedintheclinicaltrialitself.
•Itisdoneonthebasisofpre-existingdataavailableinthemedicalliterature.
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47. •Itdoesnotallowcomparisonstobemadebetweentwototally
differentareasofmedicinewithdifferentoutcomes.
•Thekeymeasureoftheseevaluationsistheincrementalcost
effectivenessratio(ICER):
•Incrementalcosteffectivenessratio=
CostofdrugA-CostofdrugB
BenefitsofdrugA-BenefitsofdrugB
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48. 3. Cost Utility Analysis (CUA)
•CUAisatypeofevaluationinwhich
•drugs/interventionswithdifferentoutcomescanbecompared.
•Itisusewhencomparingprogramsandtreatmentalternatives:
•Thatarelifeextendingwithserioussideeffects(e.g.,cancer
chemotherapy).
•Thosewhichproducereductionsinmorbidityratherthanmortality(e.g.,
medicaltreatmentofarthritis).
•WhenHRQOListhemostimportanthealthoutcomebeingexamined.
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49. •CUAisemployedlessfrequentlythanothereconomic
evaluationmethodsbecauseof:
•alackofagreementonmeasuringutilities
•DifficultycomparingQALYs(qualityadjustedlifeyears)across
patientsandpopulations
•Anddifficultyquantifyingpatientpreferences.
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50. •Itisamethodfor:
•Comparingtreatmentalternativesthatintegratespatientpreferencesand
HRQOL.
•Itcompare:
•cost
•quality
•andthequantityofpatient-years.
•Costismeasuredindollars/Rs.
•Thetherapeuticoutcomeismeasuredinpatient-weightedutilities.
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51. •Oftentheutilitymeasurementusedisaquality-adjustedlife
year(QALY)gained.
•ResultsofCUAarealsoexpressedinaratio:Acost-utility
ratio(C:Uratio).
•MostoftenthisratioistranslatedasthecostperQALY
gained.
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52. SCOREFORUTILITY
•QALYsrepresent-->thenumberoffullyearsatfullhealth.
•Ex.afullyearofhealthinadiseasefreepatientwould-->equal1.0
QALY.
•whereasayearspentwithaspecificdiseasemightbevalued
significantlylower-->perhapsas0.5QALY,dependingonthe
disease.
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53. 4. Cost Benefit Analysis (CBA)
•CBAisthemostcomprehensiveandthemostdifficultofall
economicevaluationtechniques.
•Inthistechnique-->thebenefitsarealsoassignedamonetary
valuesothatcostsandbenefitscanbeeasilycompared.
•Totallydifferentinterventionscanbecompared.
•Makingitausefultoolforresourceallocationbypolicy-makers.
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54. •Itisabasictoolthatallowsforthe
•identification
•measurement
•andcomparisonofthebenefitsandcostsofaprogramortreatment
alternative.
•CBAshouldbeemployedwhencomparingtreatmentalternatives.
•Allbenefitsareconvertedintodollars(Rs.)toevaluateasingleprogram
orcomparemultipleprograms.
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55. •Boththecostsandthebenefitsaremeasuredand--->convertedintoequivalent
dollars(Rs.)intheyearinwhichtheywilloccur.
•Thesecostsandbenefitsareexpressedas:
•aratio(abenefit-to-costratio)
•anetbenefit
•oranetcost.
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56. Challenges of CBA
1.Calculatingthebenefitsineconomicterms.
2.Somebenefitsareeasytoconvert,othersneedsubjectivejudgment.
3.Itmayignoreintangiblebenefits(pain,anxiety,stress)thatare
-->difficulttoexpressinmonetaryterms.
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57. Applications of Pharmacoeconomics
1. To aid clinical and policy decision making:
•Practitionersand administratorscan make --> better, more informed decisionsregarding the
productsand servicesthey provide.
•Traditionally, most drug therapy decisions were based solely on the clinical outcomes (e.g.,
safetyand efficacy) associated with a treatment alternative.
•Complete pharmacotherapy decisions should contain assessments of three basic outcome areas:
1. economic
2. clinical
3. And humanistic outcomes (ECHO).
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58. 2.Pharmacoeconomicdatacanbeapowerfultooltosupportvarious
clinicaldecisions.
•Thisdecisionsarerangingfromthelevelofthepatienttothelevelof
anentirehealthcaresystem.
•Theapplicationofpharmacoeconomicstodecisionmakingisdividedinto
twobasicareas:
1.Drugtherapyevaluation(Pharmacotherapeutics)
2.andclinicalpharmacyserviceevaluation.
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59. 3.Itprovideinformationneededformakingdecisionson:
•selectionofpharmaceuticals
•andmedicaldevices.
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60. 4.Healthcarepractitioners-->canapplyingtheprinciplesandmethodsof
pharmacoeconomicstotheirdailypracticesettings.
5.Appliedpharmaco-economicsisdefinedas:
•puttingpharmacoeconomicprinciples,methods,andtheoriesintopractice-->to
quantifythevalueofpharmacyproductsandpharmaceuticalcareservicesusedin
real-worldenvironments.
•Today’spractitionersincreasinglyneedstojustifythevalueoftheproductsand
servicestheyprovide.
•Appliedpharmacoeconomicscanprovidethemeansortoolsforthisvaluation.
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61. 6.Pharmacoeconomicanalysisisimportantsincepayerssuch
as:
•third-partypayersorgovernment/
•privatehealthplanstoutilizethemwhendeterminingwhetherto
reimburseaclaim.
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62. Reference:
•BrinsmeadR.UseofPharmacoeconomicsinprescribing
research.JClinPharmTher.2003;28:339-46.
•SumitKumar,AshishBaldi.Pharmacoeconomics:Principles,
MethodsandEconomicEvaluationofDrugTherapies.PhTech
Med.2013;(2)5:362-367.

63. Disclaimer (Images)
•Theimagesusedinthispresentationarefoundfromdifferentsourcesalloverthe
Internet,andareassumedtobeinpublicdomainandaredisplayedunderthefair
useprincipleforeducationpurpose.
Copyright @ Presentation
•ThesaidpresentationiscopyrightunderCopyright@shaikhabusufiyan2021
•Thepresentationisforeducationpurposeonly,don’tusethesameforanylegal
perspective.