PRINCIPLES OF PHARMACOECONOMICS

PRINCIPLES OF PHARMACOECONOMICS

K. ShameelHH, Sujith Varma

National College of Pharmacy, Manassery, Calicut

Cite this:  K. Shameel, Sujith Varma, "PRINCIPLES OF PHARMACOECONOMICS", B. Pharm Projects and Review Articles, Vol. 1, pp. 631-672, 2006. (http://farmacists.blogspot.in/)

    Pharmacoeconmics has been defined as the description and the analysis of the cost of drug therapy to health care systems and society². more specifically, pharmacoeconmic research is the process of identifying, measuring, and comparing the costs, risks, and benefits of programs, service, or therapies and determining which alternative produces the best health outcome for the resource invested³. for most pharmacists, this translates into weighing the cost of providing a pharmacy product or service against the consequences (outcomes) realized by using the product or service to determine which alternative yields the optimal outcome per dollar spent. This information can assist clinical decision makers in choosing the most cost-effective treatment options⁴.

 

    There is distinct relationship between pharmacoeconomics, outcome research, and pharmaceutical care. Pharmacoeconomicsis not synonymous with outcomes research. Outcomes research is defined mor broadly as studies that attempt to identify, measures and evaluate the results of health care services in general⁵. pharmacoeconomics is a division of outcomes research that can be used to quantify the value of pharmaceutical care products and services. Pharmaceutical care has been defined as the responsibleprovision of drug therapy for the purpose of achieving definite outcomes. By accepting this as the paradigm or vision for our profession, pharmacy is accepting responsibility for managing drug therapy is that positive outcomes are produced.

 

    Cost is defined as the value of the resources consumed by a program or drug therapy of interest. Consequence is defined as the effects, outputs, or outcomes of the program of drug therapy of interest. Consideration of both costs and consequences differentiates most pharmaconomic evaluation methods form traditional cost containment strategies drug-use evaluations.

 

    Assessing costs and consequences-the value of pharmaceutical product or service-depends heavily on the perspective of the evaluation.

 

Figure 1. Components of pharmacoeconomics

 

METHODS OF PHARMACOECONOMICS

 

    The pharmocoenonomic methods of evaluation are listed in Figure 1. these methods or tools can be separated into two distinct categories: economic and humanistic evaluation techniques. These methods have been used in variety of fields and are being applied increasing to health cace¹². Those most commonly used by pharmacists are discussed in the nest sections and briefly summarized in table 1.1.

 

Table 1.1 Summary of Pahrmacoeconomic Methodologies

Method	Description	Application	Cost Unit	Outcome unit
COI	Estimates the cost of a disease on a defined population	Use to provide baseline to compare prevention/treatment options against	$$$	NA
CMA	find the least expensive cost alternative	Use when outcomes are the same	$$$	Assume to be equivalent
CBA	Measures benefit in monetary units and computes a net gain	Can compare programs with different objectives	$$$	$$$
CEA	Compares alternatives with therapeutic effects measured in physical units; computes a C/E ratio	Can compare drugs programs that differ in clinical outcomes anduse same unit of benefit	$$$	Natural units
CUA	Measure therapeutic consequences in utility units rather than physical units; computes a C/U ratio	Use to compare drugs/programs that are life extending with serious side effects or those producing reductions in morbidity	$$$	QALYs
QOL	Physical, social, and emotional aspects of patient's well-being that are relevant and important to the patient	Examines drug effects in areas not converted by laboratory; or physiologic measurements	NA	QOL score
CBA = cost benefit analysis; CEA = cost effectiveness analysis; CMA = cost minimization analysis ; COI = cost of illness evaluation; CUA = cost utility analysis; QOL = quality of life assessment; QALY = quality adjusted life year gained.

 

COST OF ILLNESS EVALUATION

 

    A cost of illness (COI) evaluation identifies and estimates the overall cost of particular disease for a defined popualtion⁸. This evaluation method is often referred to as "burden of illness" as involves measuring the direct and indirect costs attributable to a specific disease. The costs of various diseases, including peptic ulcer disease, mental disorders, and cancer, in the United States have been estimated. COI evaluation is not used to compare competing treatment alternatives but to provide an estimation of the financial burden of a disease. Thus the value of prevention and treatment strategies can be measured against this illness cost.

 

COST MINIMIZATION ANALYSIS

 

    Cost minimization analysis (CMA) involves the determination of the least costly alternative when comparing two or more treatment alternatives. With CMA, the alternatives must have an assumes or demonstrated equivalency in safety and efficacy (i.e., the two alternatives must be therapeutically equivalent). Once this equivalency in outcome is confirmed, the costs can be identified, measured, and compared in monetary units (dollars).

    CMA is a relatively straightforward and simple method for comparing competing programs or treatment alternatives as long as the therapeutic equivalence of the alternatives being compared has been established

 

COST BENEFIT ANALYSIS

 

    Cost benefit analysis (CBA) is a method that allows for the identification, measurement, and comparison of the benefits and costs of a program or treatment alternative. The benefits realized from a program or treatment alternative are compared with the converted into equivalent dollars in the year in which they will ccoour^8,12. Future costs and benefits are discounted or reduced to therir current value.

 

    These costs and benefits are expressed as a ratio (benefit to cost ratio), a net benefit or net cost. A clinical decision maker would choose the program or treatment alternative with the highest net benefit or the greatest benefit to cost (B/C) ratio⁹. guidelines for the interpretation of this ratio are indicated.^12,15,16

 

• If B/C ratio> 1, the program or treatment is of value. The benefits realized by the program or treatment alternative outweigh the cost providing it.
• If B/C ratio = 1, the benefits equal the cost. The benefits realized by the program or treatment alternative are equivalent to the cost of providing it.
• If B/C ratio <1, the program or treatment is not economically beneficial. The cost of providing the program or treatment alternative outweighs the bebefits realized by it.

 

CBA should be employed when pampering treatment alternatives in which the costs and benefits do not occur simulataneously. CBA also may be used when comparing programs with different objectives, because all benefits are converted into dollars. CBA also cab be used to evaluate a single program or compare multiple programs. However, valuing health benefits in monetary terms can be difficult and controversial.

 

COST EFFECTIVENESS ANALYSIS

 

    CEA involves comparing programs or treatment alternatives with different safety and efficacy profiles. Costs is measured in dollars, and outcomes are measured in terms of obtaining a specific therapeutic outcome. These outcomes are often expressed in physical units, natural units, or nondollar units (lives saved, cases cured, life expectancy, or mm Hg drop in blood pressure).^8,17,18

 

    The result of CEA area also expressed as a ratio-either as an average cost-effectiveness ratio (ACER) or as an incremental cost-effectiveness ratio (ICER).

 

 

 

    CEA is particularly useful in balancing cost with patient outcome, determining which treatment alternatives represent the best health outcome per dollar spent, and when it is appropriate to measure outcome in terms of obtaining a specifit therapeutic objective.

    

    When comparing antiemetic agent for development of a policy for the prevention of chemotherapy-induced emesis, CEA can be employed.

 

COST-UTILITY ANALYSIS

 

    Cost-utility analysis (CUA) is another method for comparing treatment alternatives. CUA integrates patient preferences and health related quality of life (QOL). Cost is measured in dollars, and therapenutic outcome is measured in patient-weighted utilities rather than in physical units. Often the utility measure used is a quality-adjusted life year (QALY) gained. QALY is a common measure of health status used in CUA, combing morbidity and mortality data.

 

    Results of aCUA are also expressed in a ratio, a cost –utility ratio (C/U ratio). Most often, this ratio is translated as the cost per QALY gained. The preferred treatment alternative is that with the lowest cost per QALY (or other health status utility).

 

    CUA is the most appropriate method to use when comparing programs and treatment alternatives that are life extending with serious side effects(e.g., cance chemotherapy, those which produce reduction in morbidity rather than morality (e.g., medical treatment of arthritis), and QOL is the most important health outcome being examined.

 

APPLICATIONS PHARMACOECONOMICS

 

    One of the primary applications of pharmacoeconomics in clinical practice today is to aid clinical and policy decision making. Pharmacoeconomic data can be powerful tool to support various clinical decisions, ranging from the level of the patient to the level of an entire health care system. Figure 2 shows various decisions that may be supported using pharmacoeconomics, including effective formulary management, individual patient treatment, medication policy, and resource allocation. For discussion purpose, the application; of pharmacoeconomics to decision making is divided into basic areas: drug evaluation and clinical pharmacy service evaluation.

 

 

 

 

 

 

 

 

 

 

 

 

Figure 2. decision for Pharmacoeconomic applications

 

CONDUCT A PHARMACOECONOMIC EVALUATION

 

    Clinicians may need to conduct a Pharmacoeconomic evaluation if there is insufficient literature, if published results cannot be extrapolated to clinical practice, or if building a model is not appropriate. Before conducting a Pharmacoeconomic evaluation, clinicians should be familiar with the similarities, differences, and appropriate application of Pharmacoeconomic methods

 

    This process contains 14 fundamental steps for conducting a Pharmacoeconomic evaluation in a health care system and can be applied to virtually any therapeutic area or health care service.

 

STEP 1: DEFINE THE PHARMACOECONOMIC PROBLEM

 

    A broad problem might be, "which antiemetic regimen represents the best value for the prevention of chemtherpy-incduced emesis (CIE)?" However, a more succinct and measurable problem would be "which regimen is the best valule for preventing acute CIE patients receiving highly emetogenic chemotherapy?"

STEP 2: ASSEMBLE A CROSS-FUNCTIONAL STUDY TEAM

    The study tem can provide early "busy-in " and additional resources for a Pharmacoeconomic evaluation. Team members vary depending on the analysis but may include representatives from medicine, nursing, pharmacy, hospital administration, and information systems.

 

STEP 3: DEFINE THE APPROPRIATE STUDY PERSPECTIVE

    Choose a study perspective(s) mostly relevant to the problem. For example, if the problem is as listed in Step 1, than the perspective of the institution or health care system may be most appropriate.

 

STEP 4: IDENTITY TREATMENT ALTERNATIVES AND OUTCOMES

    Treatment alternatives can include pharmacologic and nonpharmocologic options but should include all clinically relevant alternatives. The outcomes identified should include both positive and negative clinical outcomes.

 

STEP 5: IDENTITY THE APPROPRIATE PHARMACOECONOMIC METHOD TO EMPLOY

    Pharmacoeconomic methods to choose from include CMA, CBA, CEA and CUA. Employing the incorrect method can adversely affect medication decisions influencing both cost and quality of care.

 

STEP 6: PLACE A MONETARY VALUE ON TREATMENT ALTERNATIVES AND OUTCOMES

Placing a monetary value on treatment alternatives and outcomes includes not only drug administration and acquisition costs but also the cost of positive and negative clinical outcomes (e.g. determining the cost of ADRs and treatment failures.) this can be measured prospectively or retrospectively or estimated using comprehensive databases or expert panels.

 

 

 

STEP 7: IDENTITY RESOURCES TO CONDUCT STUDY IN AN EFFICIENT MANNER

    Resources necessary will vary by study but may include access to medical or computerized records, average medical personnel wages, and specially medical staff.

 

STEP 8: IDENTITY PROBABILITIES THAT OUTCOMES MAY OCCUR IN STUDY POPULATION

    What are the probabilities of the outcomes identified in step 4 actually occurring in clinical practice? Using primary literature and expert option, these probabilities can be obtained and may be manifested as efficacy rates and incidence of ADRs.

 

STEP 9: DISCOUNT COSTS OR PERFORM A SENSITIVITY OR INCREMENTAL COST ANALYSIS

    Costs and consequences that occur in the future must be discounted back to their present value. Sensitive variables must be tested over a clinically relevant range and results recalculated. If appropriate, an incremental analysis of the costs and consequences should be performed.

 

STEP 10: PRESENT STUDY RESULTS

    Results should be presented to the cross-functional team and the appropriate committees. Presentation style and content may vary depending on the audience.

 

STEP 11: DEVELOP A POLICY OR AN INTERVENTION

Take the study results and develop a policy or an intervention that can improve or maintain quality of care, possibly at a cost savings.

 

STEP 12: IMPLEMENT POLICY AND EDUCATE PROFESSIONALS

    Spend adequate time and resources strategically implementing the policy or interventiuon. Educate those health care professionals most likely to be affected by this policy, using various strategies, including verbal, written, and online communication.

STEP 13: FOLLOW UP DOCUMENTATION

    Once the intervention or policy has been implemented for a reasonable period of time, collect follow up data. These data will provide feedback on the success and quality of the policy or intervention.

 

PRINCIPLES OF PHARMACOTHERAPY

• Pharmacoeconomics seeks to describe and analyze the costs of drug therapy to the health care system and society.
• Values are placed on various economic, humanistic, and clinical outcomes using the methods of pharmacoeconimics.
• Health care costs can be categorized as direct medical, direct nonmedical, indirect nonmedical, intangible, and opportunity costs.
• To compare varius health care choices, economic valuation methods are used, including cost-minimization, cost benefit, cost-effectiveness, and cost-utility analyses. Comparisons may be expressed in monetary units, ratios, or mixed units 9such as dollars per quality - adjusted life year).
• Cost of illness evaluations identifies and estimates the overall cost of a particular disease for a defined population, but it is not used to compare alternative choices.
• In pharmacy practice, Pharmacoeconomic methods can be used for effective formulary management, individual patient treatment, medication policy determination, and resource allocation.
• The following factors should be considered when evaluating published Pharmacoeconomic studies: study objective, study perspective, pharmaceoconomic method, study design, choice of interventions, costs and consequences, discounting, study results, sensitivity analysis, study conclusions, and sponsorship.

 

CONCLUSIONS

    The principles and methods of pharmacoeconomics provide the means to quantify the value of pharmacotherapy through balancing costs and outcomes. Providing quality care with minimal resources is the future, and the future is here. By understanding the principles, methods, and application of pharmacoeconomics, pharmacicists will be prepared to make better, more-informed decisions regarding the use of pharmaceutical products and services, that is, decisions that ultimately represent the best interests of the patient, the health care system, and society.

 

REFERENCES

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    Cite this:  K. Shameel, Sujith Varma, "PRINCIPLES OF PHARMACOECONOMICS", B. Pharm Projects and Review Articles, Vol. 1, pp. 631-672, 2006. (http://farmacists.blogspot.in/)