Pharmaconomics

1. PHARMACOECONOMICS Presented by: Tavleen Kaur M.Pharmacology 1339246

2. "Not everything that can be counted counts, and not everything that counts can be counted." - Albert Einstein (1879-1955)

3. CONTENTS Introduction History Perspectives of Pharmacoeconomics Health economics Pharmacoeconomics methodologies Evaluating economic analysis Concept of outcome research Limitation of Pharmacoeconomics Pharmacoeconomics & drug development

4. Definition Pharmacoeconomics is the application of economic analysis to the use of pharmaceutical products, services and programs, which frequently focuses on the costs (inputs) and consequences (outcomes) of that use. Pharmacoeconomics is a young science that will improve with application. Its need is undeniable, especially in developing countries.

5. Pharmacoeconomics Find value In : Fixing the price of a new drug and re-fixing the price of an existing drug Finalizing a drug formulary Creating data for promotional materials of medicines. Compliance of requirement for drug license. Including a drug in the medical/insurance reimbursement schemes .

6. Introduction of new schemes and programs in hospital pharmacy and clinical pharmacy . Drug development and clinical trials.

7. Pharmacoeconomics works under : Decision makers Analysts Clinical trail economics Patient Patient counsellar HR Healtheconomics

8. Value Added Traditional Development Programmes

9. HISTORY In the 1970s Pharmacoeconomics developed In 1978 McGhan , Rowland & Bootman , from the university of Minnesota, introduced the concepts of cost-benefit & cost-effectiveness analyses Term Pharmacoeconomics was first published in 1986 by Townsend.

10. PERSPECTIVES of PE Assessing costs and consequences—the value of a pharmaceutical product or service—depends heavily on the perspective of the evaluation .

11. Patient -Clinical Cure -Quality of life -Out-of-pocket Cost -Satisfaction with treatment process Hospital / Physician - Clinical Cure -Profit from treatment 3rd-Party Payer - Clinical Cure -Cost -Customer perception of value Employer / Society - Clinical Cure -Cost -Productivity P E R S P E C T I V E Perspectives

12. Patient’s Perspective Patient perspective is paramount because patients are the ultimate consumers of healthcare services. Costs from the perspective of patients are essentially what patients pay for a product or service—that is, the portion not covered by insurance.

13. Provider’s Perspective Costs from the provider's perspective are the actual expense of providing a product or service, regardless of what the provider charges. Providers can be hospitals, managed-care organizations (MCOs), or private-practice physicians. From this perspective, direct costs such as drugs, hospitalization, laboratory tests, supplies, and salaries of healthcare professionals can be identified, measured, and compared .  

14. Payer’s Perspective Payers include insurance companies, employers, or the government From this perspective, costs represent the charges for healthcare products and services allowed by the payer . The primary cost for a payer is of a direct nature.

15. Payer’s Perspective contd … . However, indirect costs, such as lost workdays (absenteeism), being at work but not feeling well and therefore having lower productivity ( presenteeism ) , also can contribute to the total cost of healthcare to the payer. When insurance companies and employers are contracting with MCOs or selecting healthcare benefits for their employees, then the payer's perspective should be employed.

16. Societal Perspective The perspective of society is the broadest of all perspectives because it is the only one that considers the benefit to society as a whole. All direct and indirect costs are included in an economic evaluation performed from a societal perspective. Costs from this perspective include patient morbidity and mortality and the overall costs of giving and receiving medical care.

17. HEALTH ECONOMICS Health economics is the application of the discipline of economics to the topic of health. It include three parameters :- Output of healthcare . Cost of producing better health. Efficiency

18. PHARMACOECONOMIC METHODS Economic Humanistic Cost consequence Cost benefit Cost effectiveness Cost minimization Cost utility Quality of life Patient preferences Patient satisfaction

19. Understanding PE Cube

20. PE E valuation Pharmacoeconomic evaluations provide a basis for resource allocation and utilization. It is increasingly becoming important for health policy decision-making. A pharmacoeconomic evaluation may be conducted as an economic assessment incorporated into clinical trials. Such trials should compare the new drug/procedure with an older drug or existing intervention. Four techniques are used for economic evaluation, namely, cost-minimization analysis, cost-effectiveness analysis, cost-utility analysis and cost-benefit analysis. The choice of the evaluation method depends on the nature of outcomes and the context in which the choices need to be made.

21. Cost Consequence Analysis : CCA Most disaggregated of all the economic analyses & place the greatest burden on decision- makers.This type of analysis comprises a listing of all relevant costs and outcomes of drug therapy or healthcare intervention including direct medical costs, direct nonmedical costs , indirect costs , clinical costs etc. Example : CCA involving drugs used in stroke prevention which include drug cost, hospital cost , other costs and include special monitoring , number of strokes observed , number of deaths observed, the rate of clinically meaningful side effect.

22. Cost Effective Analysis : CEA It is a technique designed to assist a decision-maker in identifying a preferred choice among possible alternatives. Generally it include analytical & mathematical procedures. CEA analysis has applied to health matters where the programs inputs can be readily measured in dollars but the programs output are stated in terms of health improvement created.

23. Cost Benefit Analysis : CBA CBA allows policy & decision makers to make allocative comparisons & decisions across divergent sectors. It include many technical consideration require a degree of explanation & interpretation to understand how it can be or has been applied. Benefits side s are either difficult to measure , difficult to convert to dollar or both . Example : benefits of improved patient QOL , patient satisfaction & working condition for the physician are not only difficult to measure , but are extremely difficult to convert in dollar value.

24. Cost Minimization Analysis : CMA This type is used when two or more interventions are evaluated & demonstrated or assumed to be equivalent in terms of a given outcome or consequence, cost associated with each intervention may be evaluated & compared.

25. Cost Utility Analysis : CUA It is a form of cost effectiveness analysis in which the health outcomes are measured in terms of quality adjusted life years (QALYs) gained. It is used successfully to aid in decisions regarding health care programs (surgery vs. chemotherapy) , instrument that are reliable & sensitive enough to detect changes with drug treatments (anti-hypertension agents vs. another) are still needed .  

26. Outcomes Research Pharmaco - economics Pharmaceutical Care Relationship Between Outcomes, Pharmacoeconomics and Pharmaceutical Care

27. Contd … Definitions Pharmacoeconomics : The description and analysis of the costs and consequences of pharmaceutical products and services and their impact on individuals, health care systems and society. Pharmaceutical Care : The responsible provision of drug therapy for the purposes of achieving definite outcomes. Outcomes Research : Broadly defined as studies that attempt to identify, measure and evaluate the end result of health care services in general.

28. CLINICAL ECONOMIC HUMANISTIC OUTCOMES RESEARCH Outcomes Relationship

29. Clinical Efficacy Safety Impact of therapy on “ natural history ” of the disease Economic Cost Analysis Cost-of-Illness Cost-Minimization Cost-Benefit Cost-Effectiveness Cost-Utility Humanistic Health Related Quality of Life Patient Satisfaction Caregiver Impact Patient Preferences Functional Status Health Services Research Policy Research Access Structure of Care The assessment of technology (drugs, devices, etc ) Outcomes Research

30. Applications Of Pharmacoeconomics Phase II Phase III Marketing Phase Regulatory Phase Pharmacoeconomic Studies Research and Development Strategy Pricing and Reimbursement Strategy Communication to Physicians and Patients

31. Pharmacoeconomics and Drug D evelopment What is the relationships between Pharmacoeconomics evaluation & Clinical trials ? Pharmacoeconomics studies may be planned & conducted at the Clinical development & phase IV stages of post marketing research .

32. PE and Drug D evelopment Phase I Cost of illness , Clinical benefits (in achieved order to have a marketable product) Phase II Cost of illness, QOL, Resources utilization, Instrument costs. Phase III How much money is spent in new drug development ? Patient related costs(as large number of patient are involved in this trail)

33. PE and Drug Development Phase IV Post marketing Pharmacoeconomics studies are extremely important in that they allow evaluation of the costs & consequences of drug therapy without the altered interventions that occur in strictly controlled clinical trials. Pharmacoeconomics evaluation may be secondary objective of a trail designed primarily to safety & efficacy. Pharmacoeconomics evaluation may be the principle purpose of a clinical trail . A Pharmacoeconomics evaluation may be done retrospectively using clinical data obtained in previous.

34. Putting Theory into Practice Mission - To provide pharmacoeconomics and outcomes research , education , and consulting services to assess the value of pharmaceutical products and services in today ’ s healthcare systems. Applied Pharmacoeconomics

35. 1. Drug Therapy Evaluation Pharmacoeconomics principles and methods have been applied to assist clinicians and practitioners in making more informed and complete decisions regarding drug therapy. Selecting the most cost effective drug for an organizational formulary is important. It is equally important to determine the most appropriate way to use and prescribe these agents. It is also useful for making a decision about an individual patient ‘s therapy. Evaluating the impact a drug has on patient’s health related quality of life can be useful when deciding between two agents for customizing a patient’s pharmacotherapy.

36. 2. Clinical Pharmacy S ervice Evaluation Pharmacoeconomic principles and methods has been used for justifying the value of various health care services ,especially pharmacy services. When a specific service is competing for hospital resources, pharmacoeconomics can provide the data necessary to justify that service maximizes the resources allocated by health care system administrators. It is also useful in determining the value of existing service, estimating the potential worth of implementing a new service.

37. Limitations of Pharmacoeconomics Pricing decisions for pharmaceuticals usually follow a two-step process. A final economic evaluation needs to be based on a prior clinical-pharmacological evaluation of a new drug in light of therapeutic alternatives.

38. However , major limitations for this evaluation process may be encountered . Most notably a lack of (1) evidence-based data , (2) clinical endpoint data , (3) direct comparator studies or (4) an impaired "assay sensitivity" may cause uncertainty about the appropriate value of a new drug. Moreover situations with ( 5) incremental, small benefit, ( 6) lack of precedents in case of innovations or (7) obvious "efficacy-effectiveness gaps" may pose challenges in the pricing decision process for pharmaceuticals.

39. PE in Today’s S cenario Drug development is very expensive process Duration of development – 10 to 15 yrs Patent life – 20 yrs. Patent life starts with preclinical phase. All new drugs are very expensive when they come in market.

40. International Society of Pharmacoeconomics & Outcomes Research The mission of ISPOR is to increase the efficiency, effectiveness, and fairness of health care to improve health. ISPOR is recognized globally as the authority for outcomes research and its use in health care decisions towards improved health . The ISPOR scope and sphere of influence includes outcomes researchers, health technology developers and assessors, regulators, health economists, health care policy makers, payers, providers, patients, populations, and society as a whole.

41. ISPOR Members ISPOR outreach to over 11,300 members. ISPOR worldwide members come from different work environments – 50% from research organization and academic institutions, 12% from government organizations, health technology assessment agencies, hospitals and clinical practice, and 38% from pharmaceutical, biotechnology and medical device industries. Visit Website - http:// www.ispor.org .

42. Activities of ISPOR : India chapter • Preparation of Pharmacoeconomics guidelines for India • Symposia & Workshop on Pharmacoeconomics • Symposia on Clinical Outcome Studies • Symposia on Health Care and Policy- issues • Second International Conference on Pharmacoeconomics & Outcomes Research

43. Health C are B udget In both developed and developing countries there is increased cost of health care > 10 % Expensive techniques for diagnosis and treatment of disease. So health care sector is becoming very expensive. Health care includes: cost of drug infrastructure salary of physician , pharmacist, nurses, administration in hospitals. payers like insurance .

44. Objectives of health care budget : Decrease health care cost. Increase evidence based medicine. Health care provider’s role: Quality of care Patient satisfaction Cost effectiveness

45. Conclusion In our developing economy, India, the words “ pharmacoeconomics ” and “outcomes research” are new to health care practitioners , but we are determined to familiarize ourselves with these concepts and put them into practice. I n most developing countries, the patients continue to suffer due to an ignorance about information, and practice and resources being overburdened. There is a universal need to optimize both, which is possible by adopting the practice of pharmacoeconomics , outcomes research, and Health Technology Assessment.

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