Pharmacoeconomics and

Management in Pharmacy IV

2013 [UNIT PH 3340] 1

[John Vella B.Pharm.(Hons.) M.Sc.(Pharmacoeconomics)]

2013 [UNIT PH 3340] 2

News review

[John Vella B.Pharm.(Hons.) M.Sc.(Pharmacoeconomics)]

J. Vella [PH 3340]

Massive margins?!

• Generic clopidogrel 75mg tabs x 28 retails for € 29

• Tender for state supplies was won at € 2.13!

• Fluticasone 250mcg retails @ € 30.57 – Tender price € 6!

• A great differential between the private market and that for

publicly purchased medicinals

3

J. Vella [PH 3340]

Fair play?

• Is such a pricing strategy morally correct?

• Should the first priority of a pharmaceutical company be the

maximisation of profits or the provision of equitable healthcare with

the concomitant effect of a fair financial reward as a collateral effect?

• Do such price differentials have a punitive effect on the state system?

4

J. Vella [PH 3340]

Discussion

• Are patients forced to depend on the state system for

pharmaceuticals because of the high pricing strategy for

generics?

• Should generic drugs be granted MAs only if pricing is

substantially below that of the current market price?

• If so what discount would be deemed acceptable?

5

J. Vella [PH 3340]

A historical note

J. Vella [PH 3340]

The advantages of modern

medicine

• It was only in the 1830‘s that medical care broke

even with the probability of patient survival, as

opposed to no intervention at all!

• Antimony treatments and bleedings were

commonplace prior to the 1800‘s

• Very few members of the public appreciate how far

medicine has come, and how uncertain it still is

J. Vella [PH 3340]

Points of interest (i)

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Points of interest (ii)

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Points of interest (iii)

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Points of interest (iv)

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Points of interest (v)

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Points of interest (vi)

J. Vella [PH 3340]

Points of interest (vii)

J. Vella [PH 3340]

Technology’s effect on survival

rates and health care spending (i)

• A working paper 1 divided HTI into three types:

• (i) home administered, e.g. pharmaceuticals

• (ii) Interventions with varying degrees of value e.g.

an angioplasty

• (iii) Interventions with no proven value e.g. knee

arthroscopy at a cost of $ 5,000 per op

• 1Chandra & Skinner, 2011

J. Vella [PH 3340]

Technology’s effect on survival

rates and health care spending (ii)

• Applying the rationale to cardiac interventions, the

investigators discovered that :

• 44% of the reduction in mortality from 1980 to

2000 was due improved health behaviour

• 22% was due to Cat(i) such as aspirin and beta-

blockers, 12% Cat(ii) like angioplasty, and 10%

due to Cat(iii) interventions

J. Vella [PH 3340]

Technology’s effect on survival

rates and health care spending (iii)

• The cost of Cat(i) and Cat(ii) increased modestly over the

period under review

• Cat(iii) contributed greatly to the increase in healthcare

expenditures

• This seems to indicate that current healthcare

administrators are narrowly focused on a paradoxical

pairing of cost-cutting and an affinity for new and

attractive technologies rather then concentrating on

patient outcomes as the crux of treatment protocols

J. Vella [PH 3340]

Is the recession increasing access

to health-care? (i)

J. Vella [PH 3340]

Is the recession increasing access

to health-care? (ii)

• It appears that patients are accessing less healthcare

services as they are being more cost conscious

• The physical constraints on the system are being relieved by

a drop in demand

• There is a reported drop in unmet needs and delay in

access to care

• Could unnecessary interventions now be avoided?

• Are patients evaluating the actual medical and quality of life

improvements prior to care?

J. Vella [PH 3340]

Is the recession increasing access

to health-care? (iii)

• Could we apply a similar principle to the local healthcare

scenario?

• Introducing a form of co-pay or prescription fee might reduce

wastage and unnecessary usage of free state medical and

pharmaceutical services

• Prescribing limits for physicians could also enable a

quantification of trends within the system framework

• An element of cost-consciousness must be inserted, otherwise

excesses will persist

J. Vella [PH 3340]

The cost of ageing (i)

J. Vella [PH 3340]

The cost of ageing (ii)

J. Vella [PH 3340]

Bad news!

J. Vella [PH 3340]

Financial implications

• No decrease in CVS admissions means that there is

no improvement in quality of life and resources

employed

• More effort to enforce prohibition and increased

health promotion required

• A recent commentator argued for the outright

banning of tobacco and its classification as an illegal

drug

J. Vella [PH 3340]

More bad news!

J. Vella [PH 3340]

More bad news!

• Malta in figures 2012 published by the NSO

J. Vella [PH 3340]

Mortality 2011

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Eurostat Figures (i)

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Eurostat Figures (ii)

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Eurostat Figures (iii)

J. Vella [PH 3340]

Vioxx in the news again! (i)

J. Vella [PH 3340]

Vioxx in the news again! (ii)

Vioxx Maker Settles False Advertising Suit

Published: Sep 13, 2013

By Peggy Peck, Editor-in-Chief, MedPage Today

save |

NEW ORLEANS -- Almost a decade after the maker of rofecoxib (Vioxx) pulled the onceblockbuster pain killer from the market, the company settled a class action suit charging

it with overselling the benefits of the Cox-2 inhibitor.

It was Merck that pulled Vioxx from drugstore shelves on Sept. 30, 2004, but it was Merck

Sharp & Dohme that settled this latest suit in the U.S. District Court for the Eastern District of Louisiana for $23 million, which will come to about $50 for each patient included in

the class.

A A

J. Vella [PH 3340]

Vioxx in the news again! (iii)

May 14, 2009

Merck Paid for Medical „Journal‟ Without Disclosure

By NATASHA SINGER

Pharmaceutical companies routinely offer doctors reprints of articles from medical journals that are favorable

to their products.

But news of a Merck-sponsored publication for doctors in Australia, that has come to light in a personal injury

lawsuit there over Vioxx, has raised eyebrows in international medical publishing.

From 2002 through 2005, the Australian affiliate of Merck paid the Australian office of Elsevier, an academic

publisher, to publish eight compilations of scientific articles under the title Australasian Journal of Bone and

Joint Medicine, a spokesman for Elsevier said.

The Merck marketing compilation was unusual in that it looked like an independent peer-reviewed medical

journal. It even called itself a “journal,” without indicating in any of the issues that Merck had paid for it.

“I believe that many doctors reviewing the journal would likely believe it to be a peer-reviewed medical

journal, and rely upon the contents as they would upon other journals they read,” said Robert J. Donovan,

an expert witness for the plaintiff, according to a deposition statement.

J. Vella [PH 3340]

A planned aberration

• The company knowingly promoted the drug for an

unapproved indication, and set aside funds for damage

settlements

• A case of premeditated damage limitation

• In certain cases the FDA has bowed to pressures from ‘big

pharma’ to approve NME

• The financial stakes are enormous

J. Vella [PH 3340]

Obesity again! (i) 12/3/13 Why Are The Maltese So Fat?

Why Are The Maltese So Fat?

By Palash Ghosh on Nov ember 26 2011 9:20 PM

A recent survey by Eurostat, the statistical arm of the European Union (EU), revealed that British people are the fattest in Europe.

According to the data, 23.9 percent of British women are obese -- as defined by a Body Mass Index (BMI) of at least 30 -– while 22.1

percent of British men are fat.

That‟s not surprising, given the poor diet, heavy drinking and lack of exercise that characterize modern life in what Prime Minister

David Cameron calls „broken Britain.‟

However, what surprised me about the EU report was that the people of Malta were also alarmingly overweight.

Malta is a group of islands only 60 miles south of Sicily, and 180 miles from North Africa -- hence, I would have thought they would

adhere to a healthy Mediterranean diet, blessed by warm sunshine like Italy.

But while Italians are generally slim and healthy (only 9.3 percent of women and 11.3 percent of men are obese there, among the lowest

levels in the EU).

The numbers for Malta are 21.1 percent for women (second highest in Europe) and 24.7 percent for men (the highest for the continent).

According to the Maltese ministry of health, the island has a serious obesity problem.

J. Vella [PH 3340]

Obesity again! (ii)

Pediatr Obes. 2013 Oct;8(5):e54-8. doi: 10.1111/j.2047-6310.2013.00191.x. Epub 2013 Jul 25.

Prevalence of obesity among 10-11-year-old Maltese children using four established standards.

Decelis A, Fox K, Jago R.

Institute for PE and Sport, University of Malta, Msida, Malta; Centre for Exercise, Nutrition and Health Sciences, School for Policy Studies, University of Bristol, Bristol, UK.

Abstract

OBJECTIVE: The objective of this study was to establish, through measured height and

weight, the prevalence of overweight and obesity in a representative sample of Maltese

children aged 1011 years.

METHODS: Height and weight were measured in a sample, stratified by sex, region and type

of school, of 874 year 6 children and their body mass index classified as normal weight,

overweight, and obese using International Obesity Task Force (IOTF), World Health

Organization (WHO), US Centre for Disease Control and U.K. Department of Health

standards.

RESULTS: IOTF standards indicated 20.4% overweight and 14.2% obese, while WHO

standards indicated 23.1% overweight and 20.9% obese. All four standards reported

significant sex differences, classifying more boys in the overweight and obesity categories.

J. Vella [PH 3340]

Champions, of the flab?

• Maltese men are the fattest in Europe!

• Maltese women are second to the UK

• Neighbouring Italy has half the number of obese

citizens

• More awareness of the potential dangers must be

created, from an early age

J. Vella [PH 3340]

Discussion points

• Should obese people be forced to pay a surcharge on

medicines they get free, if they are the sequelae of

their own negligence?

• Should healthy and lifestyle conscious individuals

have to pay for other‘s indiscretions?

• Could future health systems measure vital statistics

and insurance be paid accordingly?

J. Vella [PH 3340]

The irony of life! 12/3/13 Food Prices Linked to Obesity Rates - Real Time Economics - WSJ

June 28, 2013, 11:19 AM ET

Food Prices Linked to Obesity Rates

ByKhadeeja Safdar

The pricing of food options may be exacerbating the childhood obesity epidemic in the U.S., according to

new research.

In a working paper published by the National Bureau of Economic Research, economists Michael

Grossman, Erdal Tekin and Roy Wada examined the connection between the body fat compositions of

youth across U.S. counties from 1999 to 2004 and the corresponding prices of foods. They found that

bigger price tags on fruits and vegetables were associated with greater levels of youth obesity, while

lower prices of fast-food options were correlated with higher youth obesity levels.

J. Vella [PH 3340]

The irony of life!

• A recent study found that a drop in the price of

foodstuffs in high-income countries was related to an

increase in consumption and obesity-related morbidity

• A case of too much or too little, as exhibited in the

previous examples

• It is expected that rates of obesity will rise further as

basic food prices keep dropping

J. Vella [PH 3340]

A novel Russian idea! (i)

• The Russian Federation has the same issues with obesity as

the Maltese Islands

• With the upcoming Sochi Winter Olympics this is a topical

subject

• The ROC has devised a plan based on a basic incentive:

money

41

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A novel Russian idea! (ii)

42

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A novel Russian idea! (iii)

• Although just launched it is anticipated to be a relative

success, at least in raising awareness

• Society does not respond to traditional approaches, with

health promotion campaigns focusing on the same

techniques and having to deal with a lack of funds, at least

as compared to the massive multi-national fast food entities

43

J. Vella [PH 3340]

Cycle to work (i)

44

J. Vella [PH 3340]

Cycle to work (ii)

• On the same lines, a British initiative

• ‘Cyclescheme enables company employees to get a bike

tax-free, saving on average about half the cost‘

• Again, the financial incentive is leveraged to obtain a gain in

health and long-term savings in state disbursement for

conditions related to obesity and fitness levels

45

J. Vella [PH 3340]

A Fat tax? (i)

46

J. Vella [PH 3340]

A Fat tax? (ii)

• A paper drawn up in the UK five or six years ago

• The main recommendations were:

• (i) pilot the tax prior to legislation

• (ii) attempt to defray the impact on low-income

individuals

• (iii) set up a framework to channel funds directly to

health promotion initiatives

47

J. Vella [PH 3340]

A Fat tax? (iii)

48

J. Vella [PH 3340]

A Fat tax? (iv)

49

J. Vella [PH 3340]

Vaccines are big money(i)

J. Vella [PH 3340]

Vaccines are big money(ii)

• Research is costly

• Few specialised companies, high barrier to entry

• Pfizer acquired Prevenar through its acquisition of Wyeth

• 175,000 cases and 6,000 deaths per year in the US

• Vaccines eliminate their own need over time!

2013 [UNIT PH 3340] 52

Health Consumer

Powerhouse Report 2013

[John Vella B.Pharm.(Hons.) M.Sc.(Pharmacoeconomics)]

J. Vella [PH 3340]

HCP Report 2013 (i)

53

J. Vella [PH 3340]

HCP Report 2013 (ii)

• Malta in 27th place!

• Relatively low share of public expenditure from total

• Median position for PPP adjusted per capita spend

• Bottom rankings in patient access to information and

records, and also e-prescribing

• No data collected regarding the consumption of antibiotics!

54

J. Vella [PH 3340]

HCP Report 2013 (i)

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2013 [UNIT PH 3340] 63

A comparison of vital

statistics: Malta & the US

[John Vella B.Pharm.(Hons.) M.Sc.(Pharmacoeconomics)]

J. Vella [PH 3340]

David & Goliath

• At first glance the comparison might seem ludicrous

• A country of close to 300 million should definitely win hands

down when placed side by side to one with 400,000

individuals

• First thoughts and certain ingrained misconceptions are

however deceiving, as we shall see

64

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Population

65

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GDP per capita(in 2009 PPP international $)

66

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Health Exp per capita(PPP Int $ 2008, WHO)

67

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Health Exp as a % of GDP(2000/2009)

68

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Health Exp as a % of GDP over time (US)

69

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Life Expectancy at birth

70

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Once again prosperity = long life!

71

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Physicians per 100,000 pop.

72

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Malta in 2000 WHO rankings

73

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Why?

• The 2000 WHO health system rankings were revealing!

• Malta placed 5th whilst the US placed 37th

• This, regardless of the great disparity in resources deployed

• All the more so intriguing since there are obvious

deficiencies in the Maltese system

74

J. Vella [PH 3340]

Not how much but how!

• The deployment of resources is critical

• In the Maltese Islands our primary care system is relatively well

developed

• Citizens have easy access to physicians who can take timely

decisions on whether to dismiss, treat or refer

• The number of deferred hospitalisations is low

75

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A different approach

• This is not the case in the US

• Primary care has developed along different lines

• The uninsured are only begrudgingly afforded the mandatory

emergency care

• Often the same patients turn up elsewhere in a worse condition, and

now costing more to treat

76

J. Vella [PH 3340]

Multi-layered care systems

• On both countries, the patients, prescribers, dispensers, and

purchasers of pharmaceutical care are distinct

• This leads to a level of disconnect

• The value of the intervention is not passed along the treatment chain

• This leads us to the need to introduce value into HTA and

pharmaceutical care structures

77

2013 [UNIT PH 3340] 78

Healthcare expenditures in a

local and global context

[John Vella B.Pharm.(Hons.) M.Sc.(Pharmacoeconomics)]

J. Vella [PH 3340]

The public health system and

pharmaceutical care

J. Vella [PH 3340]

J. Vella [PH 3340]

Increasing healthcare

expenditure(i)

J. Vella [PH 3340]

Expenditure vs GDP

J. Vella [PH 3340]

Increasing healthcare

expenditure(ii)

• The figure for the Maltese Islands per capita is €

185, or around $ 249 at today‘s rates

• This does not take into account PPPs

• If purchasing power parities are taken into account,

then the figure would be $313 per capita (2009 fig,

from UPenn CIC)

• After adjusting for variation, it still emerges that

spending in Malta is 1/3 that of the US

J. Vella [PH 3340]

Increasing healthcare

expenditure(iii)

J. Vella [PH 3340]

Increasing healthcare

expenditure(iv) (PPP adjusted)

J. Vella [PH 3340]

Increasing healthcare expenditure

(v)

J. Vella [PH 3340]

Increasing healthcare expenditure

(vi)

J. Vella [PH 3340]

A few definitions (i)

• GDP – Gross Domestic Product, which can be

defined as the total market value of all final goods and

services produced in a country in a given year, equal

to total consumer, investment and government

spending, plus the value of exports, minus the value

of imports

• A commonly quoted figure

J. Vella [PH 3340] 89

€0

€1,000,000,000

€2,000,000,000

€3,000,000,000

€4,000,000,000

€5,000,000,000

€6,000,000,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

GDP( CONST€ 2000)

GDP( CONST€ 2000)

A few definitions (ii)

J. Vella [PH 3340]

A few definitions (iii)

• GNP – Gross National Product includes all that is

encompassed by the GDP plus any goods

manufactured abroad by entities owned by nationals

of the said country

• Gross as opposed to the Net Domestic Product,

which is the GDP minus the depreciation of the capital

national stock

J. Vella [PH 3340]

A few definitions (iv)

• Recession is officially defined as two consecutive quarters of

negative GDP figures

• An important economic indicator, together with the Rate of

Inflation, unemployment figures and expenditures in various

vital public sectors

• Politics has a lot to do with spin and ‗feel good‘ factors!

J. Vella [PH 3340]

An example (i)

J. Vella [PH 3340]

An example (ii)

J. Vella [PH 3340]

The American paradox, again! (i)

J. Vella [PH 3340]

The American paradox again! (ii)

• Better survival rates in breast and colorectal cancers

• Higher rates of admission in asthma and COPD

• Primary system is underdeveloped due to a shortage

of physicians

• Administration costs are 2.5x the OECD average

J. Vella [PH 3340]

Annual Expenditure on health in

the Maltese Islands

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

% SHE/TSE 7.96% 7.78% 7.60% 7.74% 7.66% 7.63% 7.77% 8.10% 8.74% 9.44% 9.08% 9.28%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

10.00%

% SHE/TSE

J. Vella [PH 3340]

Annual Expenditure on health in

the Maltese Islands

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

% SHE/GDP 3.33% 3.46% 3.54% 3.75% 4.20% 4.18% 4.22% 4.39% 5.01% 6.08% 5.93% 6.14%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

% SHE/GDP

J. Vella [PH 3340]

New Medicines Increase Longevity They Account for 40% of Increase in Life Expectancy

Data source: Lichtenberg8

0.120.23

0.30

0.570.45

0.76

0.56

1.07

0.62

1.37

0.70

1.65

0.79

1.96

0.0

0.5

1.0

1.5

2.0

2.5

Num

ber o

f Yea

rs In

crea

sed

Long

evity

1988 1990 1992 1994 1996 1998 2000

Increase in Longevity Due to

New Drug Launches

Total Increase in Longevity

J. Vella [PH 3340]

Note: Total health care expenditures for 2004 were $1.9 trillion.

* Now revised to Structures and Equipment

** Now revised to Government Public Health Activities

Data source: U.S. Department of Health and Human Services, Centers for Medicare & Medicaid Services,

Office of the Actuary6

Research and Construction*

Personal Medical Equipment

and Nonprescription Drugs

Nursing Home and Home

Health Care

Net Cost of Private Health

Insurance, Administrative

Costs, and Public Health

Programs**

Hospital Care

Prescription Drugs

Doctors, Dentists, and Other

Professional Services

Health Care Costs: 1965–2004 US

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

$1,600,000

$1,800,000

$2,000,000

'65 '70 '75 '80 '85 '90 '95 '00 '04

Do

llars

(in

Mill

ion

s)

J. Vella [PH 3340]

Therapeutic shift from inpatient to outpatient care with drug therapy Direct-to-consumer (DTC) advertising and consumer demand Existing drugs — expanded applications and more aggressive treatment guidelines New drug ―improvements‖ and ―new markets‖ Price inflation Demographic shifts

Reasons Implications

Why more spending?

More users

More prescriptions per user

More expensive mix

Higher unit costs

Spending on healthcare is increasing annually in the Maltese Islands

J. Vella [PH 3340]

Factors increasing expenditure (i)

• Individually these factors are understandable...

• Together they produce a kind of ―Perfect Storm‖ effect

• E.g. Inpatient to outpatient shift - primary treatment of

ulcers used to be gastric resection surgery; now

surgery is very rare

J. Vella [PH 3340]

Factors increasing expenditure (ii)

• DTC advertising- Claritin captured 80% market share

supported by extensive Direct To Consumer advertising

• Expanded applications and more aggressive treatment

guidelines

• e.g Asthma and allergy drug Singulair now approved for

treatment of allergic rhinitis;

J. Vella [PH 3340]

Factors increasing expenditure

(iii)

• Pre-mid ‗90s guidelines for treating high cholesterol

targeted >222, current guidelines target > 150 (I.e.,

‗more people qualify for treatment‘)

• New drugs - we can treat diseases today that we

couldn‘t treat before - hepatitis, Aids, MS, renal dialysis

(e.g., Cerezyme to treat Gaucher‘s disease costs

$450k/year)

J. Vella [PH 3340]

Solutions to increased costs

• Paradoxically increased investment in pharmaceutical

care can lead to overall reduction in healthcare costs

• This is demonstrated in the following two slides with

data from the United States

• Locally, a strong case is made for considerable

investment in obesity prevention and diabetes

education in an effort to defray future costs

J. Vella [PH 3340]

Disease Management Program Increases

Use of Diabetes Medicines and Reduces

Total Health Spending

Data source: Cranor, Bunting, and Christensen40

Other Prescriptions

Diabetes Prescriptions

Insurance Claims

$6,096

$488

$666

$3,596

$889

$724

$3,492

$1,440

$894

$3,283

$1,572

$1,027

$2,815

$1,409

$1,170

$1,584

$1,702

$1,393

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

Mea

n C

ost p

er P

atie

nt p

er Y

ear

(in 2

001

U.S

. Dol

lars

)

Baseline Year 1 Year 2 Year 3 Year 4 Year 5

Follow-Up (12-Month Intervals Following Baseline)

J. Vella [PH 3340]

Increased Use of Medicines Reduces Overall

Health Care Costs Mental Health/Substance Abuse (MH/SA) Spending per

Patient Fell as Drug Spending Increased, 1992–1999

Data source: Mark and Coffey39

Psychotropic Drug Spending

Inpatient MH/SA Spending

Other MH/SA Spending

$42.70

$55.20

$17.10

$24.10

$25.30

$45.60

$0

$20

$40

$60

$80

$100

$120

$140

Spe

ndin

g pe

r Cov

ered

Life

per

Yea

r

1992 1999

2013 [UNIT PH 3340] 107

Healthcare expenditure and

global inequalities

[John Vella B.Pharm.(Hons.) M.Sc.(Pharmacoeconomics)]

J. Vella [PH 3340]

Shocking!

108

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Health inequality and social conditions

109

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Money is important!

110

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Discussion (i)

• Research demonstrates that social inequality leads to

imbalances in healthcare outcomes

• ‗Tiered‘ healthcare systems where the wealthy have better

treatment options and access to cutting-edge

pharmaceuticals

• This is not ‗fair‘, but it is reality, even to some extent, locally

• Administrators work to reduce this inequality, both locally

and world-wide

111

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Discussion (ii)

• http://www.who.int/features/factfiles/health_inequities/facts/e

n/index.html

• Follow the link above for a reality check

• Although our present system is inefficient, we are privileged

to have the functional basics for a decent existence

• All the more reason to implement changes and improve the

provision of services

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Discussion (iii)

• It is the duty of us as pharmacy professionals to

reduce the impact of socio-economic factors on

health outcomes

• This can be done by:

• (i) improving counselling for illiterate patients

• (ii) educating the public about lower priced generics

113

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Discussion (iv)

• (iii) providing specific services to aid the elderly with

compliance and dosage issues

• (iv) improving interpersonal communication skills so

as to enable a more productive patient & health

professional relationship

114

2013 [UNIT PH 3340] 115

The impact of demographics

in pharmacoeconomic

considerations

[John Vella B.Pharm.(Hons.) M.Sc.(Pharmacoeconomics)]

J. Vella [PH 3340]

Healthcare and demography (i)

• Literature and commentators constantly

reference demographic shifts

• Is this a chicken and egg situation?

• Is an ageing population driving up

healthcare costs, or

• Is a greater healthcare expenditure making

increased life expectancy possible?

J. Vella [PH 3340]

Healthcare and demography (ii)

J. Vella [PH 3340]

Healthcare and demography (iii)

• Increased spending leads to better outcomes and

longer life expectancy

• The gross exception is the United States

• Malta, with a figure of € 2500 has better results than

the US at € 4500!

• We are more efficient at employing the resources at

hand, probably because the public system still plays

a major role

J. Vella [PH 3340]

Worldwide picture (i)

119

J. Vella [PH 3340]

Worldwide picture (ii)

120

J. Vella [PH 3340]

Worldwide picture (iii)

121

J. Vella [PH 3340]

What does this all mean? (i)

• An older population has a negative effect on

a country or region‘s finances in three main

ways:

• (i) older people require a greater quantity of

more expensive healthcare interventions,

including pharmaceuticals

• (ii) there is a smaller percentage of

productive labour force to pay for the above

J. Vella [PH 3340]

What does this all mean? (ii)

• The ratio is now 4:1 in most industrialised

countries; this is projected to drop to 3:1 in

the US and 2:1 or less in Europe and Japan

in 50 years‘ time

• This problem is also relevant to the Maltese

Islands, as the following slides demonstrate

J. Vella [PH 3340]

Demographic shifts in Malta (i)

124

J. Vella [PH 3340]

Demographic shifts in Malta (ii)

• The latest demographic survey by the NSO illustrates

the problem

• By 2050 the population will decrease to 380,000

• 24% will be aged 65+, as opposed to 15% in 2009

• Our finances are already feeling the strain

J. Vella [PH 3340]

Demographic shifts in Malta (iii)

• Expenditure on pharmaceuticals is increasing

rapidly, and shortages will become more frequent

• All this points to the need for a change in the

approach to the pharmaceutical healthcare provision

paradigm that is presently advocated by

administrators and policy makers

2013

[UNIT PH 3340] 127

Suggestions for improvements

to local practice within the state

pharmaceutical healthcare

system

[John Vella B.Pharm.(Hons.) M.Sc.(Pharmacoeconomics)]

2013 [UNIT PH 3340] 128

Supply chain issues

[John Vella B.Pharm.(Hons.) M.Sc.(Pharmacoeconomics)]

J. Vella [PH 3340]

Reducing local pharmaceutical healthcare

costs (i)

• Better inventory control, both in stock management

and in tendering procedure

• Distributive logistics applied locally would make better

use of the money allocated for rolling stock

• At present, certain areas of the primary care state

system can be OOS, while others have 2-3 months

stocks

J. Vella [PH 3340]

Reducing local pharmaceutical healthcare

costs (ii)

• Minimum level systems to trigger automated re-order

procedures within the context of a pre-determined

contract would ensure less frequent OOS

• Less frequent changes of brand will reduce patient

confusion and medication errors

• Transparent tender systems, possibly online and e-

compliant

2013 [UNIT PH 3340] 131

Care issues

[John Vella B.Pharm.(Hons.) M.Sc.(Pharmacoeconomics)]

J. Vella [PH 3340]

Reducing local pharmaceutical healthcare

costs (iii)

• Focus on patient-centred care, rather than cost control

• Build a system around a central database architecture

that revolves round the patient and the layers of

pharmaceutical care

• Various degrees of care can be applied, according to

the necessity and cost-effectiveness of the treatment

J. Vella [PH 3340]

Reducing local pharmaceutical healthcare

costs (iv)

• Develop a set of indicators for the cost-effectiveness

of pharmaceutical care

• Set a minimum level of care and a set of milestones

to be achieved

• Take the step to e-medicine and do away with

mountains of paperwork, at the same time reducing

administrative costs considerably

J. Vella [PH 3340]

Reducing local pharmaceutical healthcare

costs (v)

• This can only be achieved by pharmacists taking the

lead in this change

• To do so we must have the right attitude and

initiative to blend pharmaceutical care skills together

with administrative and pharmacoeconomic

techniques

• These skills can be developed by putting our

knowledge and profession into the context in which

we learn and practice

2013 [UNIT PH 3340] 135

The future for pharmacists

and pharmaceutical

healthcare administration

[John Vella B.Pharm.(Hons.) M.Sc.(Pharmacoeconomics)]

J. Vella [PH 3340]

Why must we change?

• "If you think that you can run an

organisation in the next 10 years as you've

run it in the past 10 years you're out of your

mind."

CEO, Coca Cola

J. Vella [PH 3340]

Predictions can go awfully wrong!

• "Radio has no future"

• "Heavier than air flying machines are

impossible"

• "X rays will prove to be a hoax‖

Lord Kelvin

J. Vella [PH 3340]

What is instigating change? (i)

• The evolution of the information age:

the internet, databases, globalisation

• Cost containment: healthcare providers

cannot keep increasing expenditure

without budgetary controls

• Ageing world: demographic shifts are

contributing to a greater strain on public

healthcare systems

J. Vella [PH 3340]

What is instigating change? (ii)

• Increasing public accountability: expenditure must be

justified and audited

• Increasing access to all: healthcare for all members of

a global society

• Ethical provision: health systems must function

without discrimination and within professional

boundaries

J. Vella [PH 3340]

What is instigating change? (iii)

• Current approaches to financial investment and

expenditures take into account the new era of

capitalism and money management following the

crash of 2008

• Healthcare and pharmaceutical services have not

been immune to cut-backs

• In fact, medicines are usually the first to feel the force

of budgeting constraints

J. Vella [PH 3340]

Why we must change!

• Population growth, increasing spending and an

increased level of expectancy and accountability

have placed great pressure on pharmaceutical

healthcare administrators and pharmacists at every

level

• We must rise to the challenge by being prepared to

implement our professional skills in a socially

relevant context

J. Vella [PH 3340]

Practical Intelligence (i)

• All the pharmaceutical knowledge to be had is

useless if we cannot bring it to practical use

• We must concentrate on developing a set of problem

solving skills, rather than becoming simple data

collectors

• Memorising quantities of data is no longer relevant as

IT has put all the information we need at arm‘s reach

J. Vella [PH 3340]

Practical Intelligence (ii)

• Rather, our next challenge as pharmacist(s)

administrators and managers is to enable the delivery

of equitable pharmaceutical care within the confines

of the system within which we are placed

• This concept applies both to a public and private

professional placement

J. Vella [PH 3340]

Practical Intelligence (iii)

• Dispensing duties are no longer the only facet of our

profession, but patient counselling, social integration

and the meshing of the public and private sector

pharmaceutical systems are all part of the

pharmacist‘s remit

• This can only be achieved through a complete re-

think of our professional mind-set

J. Vella [PH 3340]

A paradigm shift

“healthcare: a cost to be rationed” dogma to the

opposite vision: “healthcare: a service to deliver

consumer satisfaction” 1

1The Great Healthcare Paradigm Shift- Building the Largest Service Industry in Society,

Arne Björnberg, Ph.D.

J. Vella [PH 3340]

Current approach to

pharmaceutical care

• Presently the focus is on keeping costs down to a

specified limit, usually imposed by administrators from

outside the healthcare circle

• The future is a complete reversal of this approach

• The patient‘s health outcomes must be evaluated

along the whole cycle of care, and a decision taken for

the cheapest holistic option

J. Vella [PH 3340]

Patient-centred care

• This is the evolution of patient-centred care

• A philosophy that is still in its infancy, but that will form

the cornerstone of pharmaceutical care in years to

come

• PE will play a central part in this change, bringing a

measure of reason and justice to a highly-charged and

emotional debate

J. Vella [PH 3340]

PE in this change (i)

• HTAs should be used to speed up access to novel

and/or cheaper technologies

• Not used as a tool for simple cost-containment

• Existing reimbursement and pricing policies delay

patient access

• PE should be used to establish clinical and cost-

effectiveness indicators

J. Vella [PH 3340]

PE in this change (ii)

• Patients W.A.I.T. Indicator, EFPIA, May 2009 – 17 EU

countries covered in the report

• Between 47 to 90% of medicines licensed in the last

three years were available to patients, delays in

patient access to those medicines ranged from 101 to

403 days (beyond the 180 days mandated by EU

legislation).

J. Vella [PH 3340]

Types of Possible Remedies (i)

• Purchasing to Improve Quality/Patient Safety • Performance linked pay • Tiered networks • Strengthening primary care and care coordination

(medical homes) • Improve Efficiency (i.e., appropriate care settings)

• Purchasing Strategies to Reduce Costs

• Pooled purchasing, rebates, etc.

J. Vella [PH 3340]

Types of Possible Remedies (ii)

• Promoting Health and Disease Prevention

• Wellness Programs • Disease Management • Reducing Obesity/Tobacco Use • Positive incentives for Health

• Producing and Using Better Information

• Information Technology

• Evidence-Based Medicine