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PHARMACOECONOMICSDr. Mohammad Aljawadi, PharmD PhDDepartment of Clinical PharmacyKing Saud University Aug , 2015PHCL 431
OBJECTIVES
Define pharmacoeconomics.
Understand the importance and clinical relevancy of pharmacoeconomics.
Understand the relationship of pharmacoeconomics to other disciplines.
List and describe the differences between the four most common types of pharmacoeconomics studies.
WHAT IS PHARMACOECONOMICS?
Pharmacoeconomics has been defined as the description and analysis of the costs of drug therapy to health care systems and society. Identifies, measures, and compares the costs and consequences of pharmaceutical products and
services.
Pharmacoeconomics attempts to find whether the added benefit of one intervention is worth the added cost of that intervention.
BASIC PHARMACOECONOMIC EQUATION:
Clinical or outcome Study
BASIC PHARMACOECONOMIC EQUATION:
Cost Analysis
BASIC PHARMACOECONOMIC EQUATION:
WHY TO STUDY PHARMACOECONOMICS?
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HEALTH COSTS FIGURES (US)
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HEALTH COSTS FIGURES (US)
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HEALTH COSTS FIGURES (US)
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HEALTH COSTS FIGURES (US)
Health care costs in Saudi Arabia
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HEALTH COSTS FIGURES (SAUDI ARABIA)
In Saudi Arabia, budget allocations for medications and drug products have increased sharply over recent years, with a greater % of health care costs devoted to providing medications.
Payment for drug products and pharmaceuticals constitutes 17% of total health care costs.
Source: CLINICAL THERAPEUTICS, VOL. 25, NO. 4, 2003
HEALTH COST IN SAUDI ARABIA
http://www.csc.org.sa/Arabic/NationalCommittees/NationalCommitteesList/Comm12/Documents/Collier%20Study.pdf
HEALTH COSTS IN SAUDI ARABIA
Gross Domestic Product (GDP): The total value of goods produced and services provided in a country during one year
http://www.csc.org.sa/Arabic/NationalCommittees/NationalCommitteesList/Comm12/Documents/Collier%20Study.pdf
HEALTH COSTS IN SAUDI ARABIA
The compound annual growth rate (CAGR)
http://www.csc.org.sa/Arabic/NationalCommittees/NationalCommitteesList/Comm12/Documents/Collier%20Study.pdf
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FACTORS BEHIND THE HIGH COSTS
Expensive new technologies (high cost R&D)
Aging of the population
Increase in consumer demand
Emergence of life style diseases
WHY IS PHARMACOECONOMICS IMPORTANT?
This continued increase in costs has resulted in a need to understand how limited resources can be used most
efficiently and effectively.
WHY IS PHARMACOECONOMICS IMPORTANT? In 2012, Kalydeco for cystic fibrosis and Gattex for short bowel syndrome were approved my FDA Annual Cost $300,000 per year Should decrease the number of hospital admissions or the need for parenteral nutrition
Pharmacoeconomics combines these objectives by estimating the value of patient outcomes received for the expenditures spent on medications and other health care products and services.
WHY IS PHARMACOECONOMICS IMPORTANT? Pharmacoeconomics affect: Medication selection by the patient
More expensive drug with marginal benefits
Providing local health services Immunization
Medication coverage under hospital and national formulary
Personal Level
National Level
RELATIONSHIP OF PHARMACOECONOMICS TO OTHER RESEARCH
Pharmacy-related clinical or humanistic outcomes research
Health Care EconomicsPharmacoEconomics
supply and demand for health care resources, the effects of health insurance, and manpower supply
Identify, measure, and evaluate the end results of health care services.
TYPES OF PHARMACOECONOMIC STUDIES Cost-Minimization analysis (CMA)
Cost-effectiveness analysis (CEA)
Cost-utility analysis (CUA)
Cost-Benefit analysis (CBA)
COST-MINIMIZATION ANALYSIS (CMA): A comparison in which inputs are measured in monetary values and outcomes are assumed to be identical.
The simplest
Cannot be used when the outcomes are different
Examples: Comparing Panadol® to Fevadol® on fever reduction Comparing two generic medications
The only difference is cost
COST-EFFECTIVENESS ANALYSIS (CEA) A comparison in which inputs are measured in monetary units and outcomes are measured in natural units of effectiveness.
CEA measures outcomes in natural units (e.g., mmHg, cholesterol levels, symptom-free days [SFDs], years of life saved)
Easy to comprehend by clinicians
Easier than CBA or CUA
Cannot compare different types of outcomes Cannot compare the cost-effectiveness of implementing an anticoagulation clinic with implementing
a diabetes clinic
COST-EFFECTIVENESS ANALYSIS (CEA) Cannot lump outcomes differences in one single effectiveness measure: First-Generation antihistamine
Effectiveness: treat allergy Side effect: drowsiness
Second-Generation antihistamine Effectiveness: treat allergy Side effect: very low drowsiness
Although the effectiveness can be measured my SFDs, the measure doesn’t include the differences in the side effect
COST-UTILITY ANALYSIS (CUA)
A comparison in which inputs are measured in monetary units and outcomes are measured as patient preference–weighted extensions of life.
Chemotherapy agents effectiveness is measured by number of years of life gained
However, longer life may not imply better quality of life
CUA measures outcomes by based on years of life that are adjusted by “utility” weights, which range from 1.0 for “perfect health” to 0.0 for “dead.”
No consensus how to measure utility weights
COST-BENEFIT ANALYSIS (CBA)
A comparison in which both inputs and outcomes are measured in monetary units.
Two major advantages: First, clinicians and other decision makers can determine whether the benefits of a program or
intervention exceed the costs of implementation. Second, clinicians and other decision makers can compare multiple programs or interventions with
similar or unrelated outcomes.
The major disadvantage of CBA is that it is difficult to place a monetary value on health outcomes
Different methods of measurement may elicit different estimates
TYPES OF PHARMACOECONOMIC STUDIES
DO NOT FORGET:
Whatever type of analysis or combination of analyses is conducted, the economic comparisons are but one part of the decision-making process; social values and legal, ethical, and political considerations are also incorporated into the decision-making process.
QUESTIONS
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