Pharmacoeconomics

pharmacoeconomics

1. PHARMACOECONOMICS SUBMITTED BY Pavithra.V M .Pharm-2 nd Sem Department of Pharmacology SUBMITTED TO Ms.Sanju.K Department of Pharmacology 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 1

2. CONTENTS Definitions Cost analysis Outcomes Perspectives Pharmaco -economic models Applications Case studies 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 2

3. DEFINITIONS According to ISPOR (Indian Society for Pharmacoeconomics and Outcomes Research) “ Pharmaco -economics is the field of study which evaluates the behaviour of individuals, firms and markets relevant to the use of pharmaceutical products, services and programs , and which frequently focuses on the costs (inputs) and consequences (outcomes) of that use”. 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 3

4. PRICE: It is the amount a customer pays for a product or service. COST: It is the monetary value of resources consumed in production or delivery of product or a service. QOL: An individual’s perception of their position in life in the context of the culture and value systems in which they live and in relation to their goals, expectations, standards and concerns. 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 4

5. HRQOL: It is a multi-dimensional concept that includes domains related to physical, mental, emotional, and social functioning. It goes beyond direct measures of population health, life expectancy, and causes of death, and focuses on the impact health status has on quality of life. TIME TRADE OFF (TTO): It is a tool to help determine the QOL of patient. 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 5

6. QALY: Quality Adjusted Life Years DISCOUNTING: It is a method for time adjustment for costs where the future costs are brought to the present. 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 6

7. COSTS According to ACCP (American College of Clinical Pharmacy) the costs can be categorized as DIRECT COST INDIRECT COST INTANGIBLE COST OPPORTUNITY COST INCREMENTAL COST 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 7

8. DIRECT COST These are the resources consumed in the prevention, detection or treatment of a disease or illness. It involves transfer of money DIRECT MEDICAL COST: represents costs that are incurred during provision of care. Eg ) Cost of drugs, lab tests, salaries of health care professionals B) DIRECT NON-MEDICAL COST: Arising due to illness but do not involve purchasing medical services. Eg ) Cost of transportation, cost of special clothings , etc., 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 8

9. INDIRECT COST External cost or indirect medical cost. These are costs of reduced productivity. It is the one borne by the patient and family. Eg ) Wages and salaries lost due to mortality and morbidity 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 9

10. INTANGIBLE COSTS These are costs incurred, which represent non-financial outcomes of disease and medical care, which cannot be expressed in money value. Eg ) costs of mental agony, pain, suffering, loss of energy etc., It is difficult to measure or give monetary value on these costs. Presently these costs are omitted (or) included in indirect costs. 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 10

11. OPPORTUNITY COSTS It is the benefit forgone when selecting one therapy alternative over the next best alternative. It includes the cost of lost opportunity or revenue forgone. 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 11

12. INCREMENTAL COSTS It is the cost associated with increasing production by one unit. It represent additional cost that a program or therapy alternative imposes over another, compared to the additional effect, benefit or outcome it provides. These are extra costs required to produce an additional unit of effect. 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 12

13. OTHERS Average costs Fixed costs Variable costs 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 13

14. COST DETERMINATION 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 14

15. OUTCOMES The outcomes (or) benefits (or) consequences can be categorized as [ECHO model] Economic outcomes Clinical outcomes and Humanistic outcomes 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 15

16. ECONOMIC OUTCOMES Related to direct, indirect and intangible costs of medical treatment alternatives. Expressed in terms of money value. Include savings due to treatment (direct) as well as production gains to return to work (indirect) 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 16

17. CLINICAL OUTCOMES These are medical events or results that occur as a result of disease or its treatment. Includes improvement of disease condition, cure of the disease, no. of lives saved, no. of deaths averted, etc., INTERMEDIATE OUTCOME: Serves as indicator for more relevant final outcomes. Eg ) Decrease in LDL is an intermediate outcome where the final outcome is decrease in MI rate and increase in lives saved. 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 17

18. HUMANISTIC OUTCOMES These are the outcomes of diseases or their treatment on the functions or HRQOL. Includes healthy life, general well being, social compatibility and physical functions. 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 18

19. PERSPECTIVES Refers to the point of view from which the economic analysis is performed. PE study can be conducted from a single perspective or a group of perspective. The generally used perspectives are: Patient perspective Provider perspective Payer perspective Society perspective 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 19

20. PE MODELS PE models help the authorities to allocate the limited resources of medicine and health care facilities among the various stakeholders. Three important factors for any economic analysis is Identification and choice among alternatives Assessment of costs and consequences Decision making within the limited/ fixed or available budgets 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 20

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22. COST BENEFIT ANALYSIS It compares the total costs of each alternative to resultant consequences or benefits of the intervention measured in monetary units Benefits are measured using contingent evaluation. WTP WTA 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 22

23. COST BENEFIT RATIO CBR = Total benefits / Total costs If B/C ratio is > 1 Benefit outweighs the cost Hence such program is of good value If B/C ratio is = 1 Benefit is equal to the cost If B/C ratio is < 1 Cost of providing treatment outweighs the benefits Hence not economically beneficial 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 23

24. APPLICATIONS Useful in comparing two or more alternatives with different outcomes Helpful in deciding implementation of projects by government or funding agencies. LIMITATIONS: Converting benefit into monetary value is difficult 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 24

25. COST EFFECTIVENESS ANALYSIS It is a technique used to aid in decision making between alternative; when the costs are measured in monetary terms while the consequences are measured in natural unit changes in health. When the treatment alternatives are not therapeutically equivalent or when it is not desirable to measure the outcome in terms of rupees or money value it is used. 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 25

26. ADVANTAGES The outputs or the outcomes are measured in natural health units and need not be converted as in CBA CEA compares program or treatment alternatives with different safety and efficacy profiles DISADVANTAGES: The outcome have to be evaluated in the same clinical unit When several outcomes results from a medical intervention CEA consider these two outcomes only if a common measure of outcome can be developed. Effectiveness should be evidenced and should be reliable, reproducible and valid 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 26

27. APPLICAIONS The health care units are commonly used in clinical trials and are very much familiar to researchers Choose from among the various competing programs or alternatives. It has great use in formulary system, choosing programs or therapies and comparision of drugs or devices. It also helps to identify which treatment alternative represents the best outcome for the rupees spent. CEA can provide valuable data to endorse drug policy, formulary system and individual patient treatment decisions. 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 27

28. COST MINIMIZATION ANALYSIS CMA is a PE method used to compare 2 or more treatment alternatives that are equal in efficacy. Outcomes are not compared because of the underlying assumption that the treatment alternatives are therapeutically equivalent. The primary objective of the CMA is to identify the least costly alternative 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 28

29. ADVANTAGES CMA is the simple and straightforward method of evaluation The study need not analyse the outcome and can focus on inputs only for assessing the costs DISADVANTAGE: It can be applied to only limited cases . 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 29

30. APPLICATIONS CMA is often applied in formulary decision making Best method to compare the various branded products of same drug It can also be used to study the generic versus branded products. 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 30

31. COST UTILITY ANALYSIS CUA is considered to be an extension of CEA In CUA both quantity and quality of life, often measured from the patient’s perspective, are merged into a single unit by calculating utility or preference for the alternatives and then calculating QALY. Utilities are measured using either the rating scale, TTO or standard gamble approaches. In this evaluation, drug/interventions with different outcomes can be compared. 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 31

32. ADVANTAGE Can be applied to the comparison of different types of health outcomes and disease with multiple outcomes of interest using one common unit like QALY. DISADVANTAGE: It is often difficult to determine an accurate utility or QALY value 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 32

33. APPLICATION When QOL is the important health care outcome to be measured or evaluated CUA is having appropriate applications. 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 33

34. COST OF ILLNESS COI is also known as Burden of Disease (BOD) or Burden of illness (BOI) It is an economic evaluation method used to identify and estimate the overall cost of a particular disease for a defined population It involves measuring the direct and indirect cost attributable to a specific disease The COI studies usually include some metric of ‘health loss’ and try to measure the resource cost incurred in treating the related diseases. 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 34

35. APPLICATIONS COI studies are frequently used by policy makers and other government organisations The published COI reports are used in law suits to recover medical insurance claims COI are often cited in disease studies that attempt to highlight the importance of particular disease It help authorities to appropriately target specific problems and policies 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 35

36. LIMITATIONS They are limited in determining how resources are to be allocated because they do not measure benefits Studies can vary by perspective, sources of date, inclusion of indirect cost and the time frame of cost. 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 36

37. MODELS COMPARISON MODELS COST MEASUREMENT OUTCOME MEASUREMENT DECISION RULE Cost Of Illness (COI) Monetary Not assessed - Cost Minimization (CMA) Monetary Assumed to be equal in groups Lowest monetary cost Cost Benefit (CBA) Monetary Monetary Net monetary gain Cost Effectiveness (CEA) Monetary Natural units/ units of effects CE ratios using incremental of marginal analysis Cost Utility (CUA) Monetary Utility like QALY Cost per QALY and League tables 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 37

38. PE EVALUATION The important criteria for construction or conduct of a PE study can be listed as: Study objective Study perspective PE method Study design Choice of interventions Costs and consequences Discounting Study results Sensitivity analysis Study conclusions Sponsorship and bias Use of a comparator 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 38

39. APPLICATIONS It aid in decision making - Including drug in formulary - Clinical decision - Which drug provide net benefits to a particular group of patients - Which drug is best for pharmaceutical manufacturer to develop and the right place to market - What is the expected QOL improvement with a certain drug. In drug use policy/guidelines development In resource allocation by government or funding agencies or hospitals etc., 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 39

40. CASE STUDIES PROBLEM 1: From the perspective of a provider , which one of the following is a direct cost of health care? a) The rupees paid directly for physicians consultation b) Fee for CT scan conducted c) Cost of medicines paid to the hospital pharmacy d) Salary of the nurse who supervise the therapy 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 40

41. From the perspective of a provider , which one of the following is a direct cost of health care? d) Salary of the nurse who supervise the therapy 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 41

42. PROBLEM 2 Which one of the following is an example of a partial pharmaco -economic evaluation? a) A comparison of the costs and consequences of two alternatives. b) A cost utility analysis. c) A comparison of the costs of two equally effective alternatives. d) A QOL comparison of multiple treatment alternatives. 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 42

43. Which one of the following is an example of a partial pharmaco -economic evaluation? d) A QOL comparison of multiple treatment alternatives. 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 43

44. PROBLEM 3 Which one of the following is an example of an intermediate outcome ? a) Adherence to the prescription. b) Clinical laboratory investigation results. c) Total cost of hospitalization. d) A patient’s physical functioning and mental well being. 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 44

45. Which one of the following is an example of an intermediate outcome ? a) Adherence to the prescription. 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 45

46. PROBLEM 4 Which one of the following best describes Economic outcome ? a) The medical events that occur as a result of a disease or treatment. b) The direct, indirect and intangible costs compared with the consequences of medical treatment alternatives. c) The consequences of a disease or treatment on a patient’s functional status or QOL d) Drug effects on the patient functioning. 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 46

47. Which one of the following best describes Economic outcome ? b ) The direct, indirect and intangible costs compared with the consequences of medical treatment alternatives. 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 47

48. PROBLEM 5 You are the chair of the PTC at a hospital. It has been brought to your attention that many physicians at your hospital are using ampicillin-sulbactam for intraabdominal infections. The suggestion was made to substitute cefoxitin , a less expensive drug, to save the hospital money. The incidence of side-effects is similar for both therapeutic regimens, but the cure rate for intra-abdominal infections is higher with ampicillin-sulbactum than with cefoxitin . Whose perspective should be adopted? What are the relevant alternatives? What should be considered? Which healthcare evaluation technique should be used? 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 48

49. Provider perspective Cefoxitin or Ampicillin-sulbactam Cost and outcomes CEA 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 49

50. References Pharmacoeconomics and epidemiology by Revikumar Textbook of clinical pharmacy by Parthasarathi 12/10/2018 DEPARTMENT OF PHARMACOLOGY KMCH COLLEGE OF PHARMACY 50

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