Pharmacoeconomics and Outcomes Research: Some Comments

Dean Smith

Michigan Student ChapterMichigan Student ChapterMichigan Student ChapterMichigan Student Chapter

The International Society for Pharmacoeconomics and Outcomes Research is an international organization promoting the science of pharmacoeconomics and health outcomes research.

The International Society is organized to act as a scientific leader relevant to research in pharmacoeconomics, health outcomes assessment, and related issues of public policy.

The International Society represents health care researchers and practitioners including pharmacists, physicians, economists, and other health care professionals involved in pharmacoeconomic analysis and health outcomes assessment.

The mission of the International Society for Pharmacoeconomics and Outcomes Research is to translate pharmacoeconomics and outcomes research into practice to ensure that society allocates scarce health care resources wisely, fairly, and efficiently.

Further Reading …Further Reading …Further Reading …Further Reading …

Designed specifically to meet the clinical informational needs of managed care's Pharmacy and Therapeutics Committee Members, The American Journal of Managed Care identifies the challenges and shortcomings of and opportunities for the current healthcare system by disseminating original research that examines the impact of clinical, management, and policy interventions and programs on healthcare and economic outcomes.

Editors: Michael E. Chernew, Ph.D.

A. Mark Fendrick, MD

DisclosureDisclosureDisclosureDisclosure

Professor,

Health Management & Policy

DisclosureDisclosureDisclosureDisclosure

Co-Director, UM-Pfizer Pharmacoeconomics & Outcomes Research Fellowship Program

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Member, Board of Directors

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Consultant, various projects

Conflict of InterestConflict of InterestConflict of InterestConflict of Interest

"No doubt there are other important things in life besides conflict, but there are not many other things so inevitably interesting."

-Robert Lynd, The Blue Lion

OutlineOutlineOutlineOutline

Pharmacoeconomics & Outcomes Research

The FDA View

A Study Example

Prescription Drug ExpendituresPrescription Drug ExpendituresPrescription Drug ExpendituresPrescription Drug Expenditures

0%

2%

4%

6%

8%

10%

12%

14%

16%

1965 1970 1980 1990 2000

% Change inRx Spending

Drugs as % ofTotal HealthSpending

Is this is a good thing?

PatientPatient-Clinical Cure-Clinical Cure-Quality of life-Quality of life-Out-of-pocket Cost-Out-of-pocket Cost-Satisfaction with -Satisfaction with treatment processtreatment process

Hospital / PhysicianHospital / Physician-Clinical Cure-Clinical Cure-Profit from treatment-Profit from treatment

3rd-Party Payer3rd-Party Payer-Clinical Cure-Clinical Cure-Cost-Cost-Customer -Customer perception of valueperception of value

Employer / SocietyEmployer / Society-Clinical Cure-Clinical Cure-Cost-Cost-Productivity-Productivity

P E R S P E C T I V EP E R S P E C T I V E

PerspectivesPerspectivesPerspectivesPerspectives

J&J Pulls Guide on Web SiteJ&J Pulls Guide on Web SiteWall Street JournalWall Street Journal, April 12, 2002, April 12, 2002J&J Pulls Guide on Web SiteJ&J Pulls Guide on Web SiteWall Street JournalWall Street Journal, April 12, 2002, April 12, 2002

In an embarrassing retraction, Johnson & Johnson has withdrawn a how-to-guide from a company web site that helped doctors calculate how much money they might make by administering an expensive arthritis drug in their offices.

World-wide sales of Remicade climbed 95% to 721 million last year.

J&J fell 74 cents to $62.70

DefinitionsDefinitionsDefinitionsDefinitions

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.

Outcomes research refers to broader consideration of the measurement of the efficacy or effectiveness of treatment.

ClinicalClinical

• Efficacy• Safety • Impact of therapy on “natural history” of the disease

EconomicEconomic

• Cost Analysis • Cost-of-Illness • Cost-Minimization• Cost-Benefit• Cost-Effectiveness • Cost-Utility

HumanisticHumanistic

• Health Related Quality of Life• Patient Satisfaction• Caregiver Impact• Patient Preferences• Functional Status

Health Services ResearchHealth Services Research

•Policy Research •Access •Structure of Care

The assessment of technology (drugs, devices, etc)The assessment of technology (drugs, devices, etc)

Outcomes ResearchOutcomes ResearchOutcomes ResearchOutcomes Research

Application of PharmacoeconomicsApplication of Pharmacoeconomics

Phase II Phase III Marketing Phase

RegulatoryPhase

Pharmacoeconomic Studies

Research and Development

Strategy

Pricing and Reimbursement

Strategy

Communication to Physicians and

Patients

Why Pharmacoeconomics - InternalWhy Pharmacoeconomics - Internal

Phase II Phase III

New Drug Approval -

NDA

Investigational New Drug - IND

Basic Research Phase I

Time (months) 42.6 15.5 24.3 36.0 = 119.4

Direct Cost ($mil.) 65.5 9.3 18.6 20.2 = 113.6

Capitalized Cost 155.6 17.8 30.3 27.1 = 230.8

Why Pharmacoeconomics - ExternalWhy Pharmacoeconomics - External

Evidence

Registration Price/Reimbursement

EfficiencySafety

Efficacy

QualityMarket

Pricing ToolPricing Tool

Total Cost of Treatment

Effectiveness

Drug BDrug A

Drug C

Drug D

1. Break-even Price

2. Efficiency Price

3. Premium Price

1. Break-even Price

2. Efficiency Price

3. Premium Price

1 2 3

Patient Outcomes Assessment Patient Outcomes Assessment Sources and ExamplesSources and Examples

Clinician - Reported Physiological

Caregiver - Reported

Patient - Reported

Global impressions Observation

& tests of function

FEV1

HbA1cTumor size

DependencyFunctional

status

Functional statusSymptoms

HRQLTreatment

SatisfactionProductivity

Effectiveness / Outcomes

IV

Treatment Cost

C

# : New Drug

C : Control

# : New Drug

C : ControlI

II III

Conclusion

Adopt

RejectEvaluate

Evaluate

Value: Ratio AcceptabilityValue: Ratio AcceptabilityValue: Ratio AcceptabilityValue: Ratio Acceptability

OutlineOutlineOutlineOutline

Pharmacoeconomics & Outcomes Research

The FDA View

A Study Example

Regulation and Acceptance of PERegulation and Acceptance of PE

2000

CDN

AUS

NL

ESP

F

SW

FRG

I

UKUSA

Level of Regulation

Level of Acceptance

B

Substantial Evidence- FDA Act 505Substantial Evidence- FDA Act 505Substantial Evidence- FDA Act 505Substantial Evidence- FDA Act 505

Adequate and well-controlled investigations...

By experts qualified to evaluate therapy effectiveness...

Can be concluded that the drug has the effect it purports...

Under the conditions of use, prescribed or recommended in the label...

Labeling ClaimsLabeling ClaimsLabeling ClaimsLabeling Claims

Labeling (approved claims) Indications must be in the label Other information of “clinical

significance” Relevance for prescribing decision FDA decides (approves)

Advertising ClaimsAdvertising ClaimsAdvertising ClaimsAdvertising Claims

Advertising (permitted claims) Meet advertising substantiation and

disclosure requirements Must be consistent with and not

contrary to Label Company decides, FDA reviews

FDA Recommendations: FDA Recommendations: Development of EvidenceDevelopment of EvidenceFDA Recommendations: FDA Recommendations: Development of EvidenceDevelopment of Evidence

Consult the experts

Start with the desired claims

Integrate with the clinical program

Develop with patient input

Validate with clinical trial experience

Get FDA buy-in early

Recent FDA Warning LettersRecent FDA Warning LettersRecent FDA Warning LettersRecent FDA Warning Letters

Neurontin (seizures)- 6/29/01

Misleadingly claims improvement in QOL parameters based on the NEON study. The NEON study is not considered substantial evidence for claims of QOL improvements because its not a controlled study.

Fosamax (osteoporosis)-6/20/01

Website link titled “ Preserving your independent Lifestyle”- overstates the potential benefit, no substantiation

Prescription for Profit Prescription for Profit New York Times MagazineNew York Times Magazine, 3/11/01, 3/11/01

“Claritin is a drug of our times: designed to relieve symptoms and improve quality of life, hardly lifesaving or even curative, expensive as hell.”

~50% effective (46% v. 35% placebo)

$103/month

“ ... it offers no clinical advantage over cefdinir, but it costs less.” Cefdirir $82.42* Cefditoren $65.50*

* Drug Topics Red Book, 10 Day treatment

Cefditoren (Spectracef)Cefditoren (Spectracef)Medical LetterMedical Letter, January 21, 20021, January 21, 20021Cefditoren (Spectracef)Cefditoren (Spectracef)Medical LetterMedical Letter, January 21, 20021, January 21, 20021

OutlineOutlineOutlineOutline

Pharmacoeconomics & Outcomes Research

The FDA View

A Study Example

oral third-generation, semisynthetic, oral third-generation, semisynthetic, extended spectrum cephalosporin antibioticextended spectrum cephalosporin antibiotic

To obtain FDA approval of cefprozil (Omnicef®) for uniform 5-day therapy (from prior labeling of 7 to 10-day therapy ~ as is common for many antibiotics)

The Trial / Goal The Trial / Goal

Patient PopulationsPatient Populationsfrom Randomized to Curedfrom Randomized to Cured

0

50

100

150

200

250

Cefdinir Cefprozil

Randomized

Clinically Evaluable, Test-of-Cure

Cured at Test-of-Cure

Clinically Qualified, Long-termFollow-UpCured at Long-term Follow-Up

TOC 63.9% v. 65.7%P = 0.35

Study Drug PricesStudy Drug Prices

• Dose size varies cefdinir (7 mg/kg) v cefprozil (15 mg/kg) as do drug prices:

Pricing (125/5 ml bottles)

Drug ml AWP AWP/ml

Cefdinir 50 ml $27.20 $0.544

Cefprozil 100 ml $29.72 $0.297

Source: Red Book

Study Drug CostsStudy Drug Costs

• Mean doses were 5.03 and 10.59 - with dosing of 7 mg/kg vs 15 mg/kg. Median days on study drug were 5, 10.

Cefdinir (5.03 * 2 * 5 = 50.3) $27.87

Cefprozil (10.59 * 2 * 10 = 211.8) $62.90

* $82.42 comes from 300 mg tablets.

Non-Study MedicationsNon-Study Medications

0%

14%

28%

42%

56%

70%

Cefdinir Cefprozil

Use of AnyNon-StudyMedication

68.0% 67.1%

Non-Study MedicationsNon-Study Medications

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

Cefdinir Cefprozil

Adverse EventOtitis MediaOther

P = 0.69

Non-Study VisitsNon-Study Visits

$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

$14.00

$16.00

Cefdinir Cefprozil

Adverse EventOtitis MediaFailure

P = 0.14

Total CostsTotal Costs

$0.00

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

$140.00

$160.00

Cefdinir Cefprozil

Non-StudyVisitsNon-StudyMedicationsStudy OutpatVisitsStudyMedications

P < 0.01

ConclusionsConclusionsConclusionsConclusions

Antibiotic Costs For some clinics, selection of antibiotics

may be determined by “value” With equivalent clinical outcomes, selection

may be determined by cost. Costs should consider total cost of

treatment, not just drug price.

ConclusionsConclusionsConclusionsConclusions

"Not everything that can be counted counts, and not everything that counts can be counted."

- Albert Einstein (1879-1955)

QuestionsQuestionsQuestionsQuestions

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