PHARMACOECONOMICS

PHARMACOECONOMICSDr. Harsh Yadav,Dr.Gopal jhalaniResident Doctor,Department of Pharmacology, SMS Medical College , Jaipur28th November 2013

Good Morning all of you, Respected Madam and seniors. Today the topic that I have been alloted is PE. 14/25/2016Yadav H, SMS Med Coll, JAIPUR

ECONOMICS-

Science of distribution of wealth and resources in a balanced way so that everyone is benefited with available resources and finances.

Pharmacoeconomics is the process of identifying, measuring, and comparing the costs, risks, and benefits of programs, services, or therapies & determining which alternative produces the best health outcome for the resource invested.4/25/2016Yadav H, SMS Med Coll, JAIPUR3

Pharmacoeconomics identifies, measures, and compares the costs and consequences of pharmaceutical products and services. It involves economic evaluation of drug development, drug production, and drug marketing i.e., all the steps that take place from the time the drug is manufactured to when it reaches the patients.

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Doctors prescribe patients consume third purchasing parties (government insurance companies) pay the bill with money that they have obtained from increasingly reluctant healthy members of the public". [4/25/2016Yadav H, SMS Med Coll, JAIPUR5

In terms of production, the India pharma industry ranks 3 rd on a global scale whereas in terms of turnover worth, it ranks 14 thMedication prices are among the lowest prices in the world.

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The Indian pharmaceutical industry is a hub where medications can be produced at a low price and still be of international quality. It witnessed a robust growth from the production turnover of about 1.14 billion dollars in 1990 to over 22.73 billion dollars in 2009-10, comprising about Rs, 14 billion dollars of domestic market and 9 billion dollars of exports.4/25/2016Yadav H, SMS Med Coll, JAIPUR7

Although India is a producer of abundance of quality drug at low cost only one third of its population has access to essential medicines

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P.E. STUDY USEFUL INFixing the price of a new drug and re-fixing the price of an existing drugFinalizing a drug formularyCompliance of requirement for drug license.Including a drug in the medical/insurance reimbursement schemes.Introduction of new schemes and programs in hospital pharmacy and clinical pharmacy.Drug development and clinical trials

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How to do PE Study1. Perspective

2. Costs

3. Consequences4/25/2016Yadav H, SMS Med Coll, JAIPUR10

To do a pharmacoeconomic study we have to very clear about

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PerspectivePatient PerspectiveProvider PerspectivePayer PerspectiveSocietal Perspective

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Cost : The value of the resources consumed by a program or drug therapy of interestDirect medical costsDirect nonmedical costs Indirect costs Intangible costs Opportunity costs

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Direct medical costsMedicationsSuppliesLaboratory testsHealthcare professionals' timeHospitalizationDirect nonmedical costsTransportationFoodFamily careHome aides

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Cost

CostsIndirect costsLost wages (morbidity)Income forgone because of premature death (mortality)Intangible costsPainSufferingInconvenienceGriefOpportunity costsLost opportunityRevenue forgone

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Consequences : is defined as the effects, outputs, or outcomes of the program or drug therapy of interest.

Economic outcomes(direct, indirect, and intangible costs compared with the consequences of medical treatment alternatives) Clinical outcomes (e.g., safety and efficacy end points). Humanistic outcomes-quality of life along several dimensions (e.g., physical function, social function, general health and well-being, and life satisfaction)4/25/2016Yadav H, SMS Med Coll, JAIPUR15

Positive versus Negative ConsequencesPositive outcome is a desired effect of a drug (efficacy or effectiveness measure) A negative outcome is an undesired or adverse effect of a drug, possibly manifested as a treatment failure, an adverse drug reaction (ADR), a drug toxicity, or even death.4/25/2016Yadav H, SMS Med Coll, JAIPUR16

Economic Evaluation MethodsCost-of-Illness EvaluationCost-Minimization AnalysisCost-Benefit AnalysisCost-Effectiveness AnalysisCost-Utility Analysis4/25/2016Yadav H, SMS Med Coll, JAIPUR17

Cost-of-Illness Evaluation

identifies and estimates the overall cost of a particular disease for a defined population.This evaluation method is often referred to as burden of illness and involves measuring the direct and indirect costs attributable to a specific disease

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Cost-Minimization Analysisdetermination of the least costly alternative when comparing two or more treatment alternatives. With CMA, the alternatives must have demonstrated equivalency in safety and efficacy (i.e., the two alternatives must be equivalent therapeutically)The least expensive agent, considering all these costs, should be preferred.

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Cost-Benefit AnalysisBoth the costs and the benefits are measured and converted into equivalent dollars in the year in which they will occur.These costs and benefits are expressed as a ratio (a benefit-to-cost ratio)If the B:C ratio is greater than 1, the program or treatment is of value.If the B:C ratio is less than 1, the program or treatment is not economically beneficial.4/25/2016Yadav H, SMS Med Coll, JAIPUR20

Cost-Effectiveness AnalysisCEA involves comparing programs or treatment alternatives with different safety and efficacy profilesa way of summarizing the health benefits and resources used by competing healthcare programs so that policymakers can choose among them.

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Cost : measured in dollarsOutcomes: measured in terms of a specific therapeutic outcome. e.g., lives saved, cases cured, life expectancy, drop in BP4/25/2016Yadav H, SMS Med Coll, JAIPUR22

Average Cost-Effectiveness Ratio (ACER)

ACER = HEALTH CARE COST(IN RS.)CLINICAL OUTCOME(NOT IN RS.)

Using this ratio, the clinician would choose the alternative with the least cost per outcome gained

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Incremental Cost- Effectiveness Ratio (ICER)ICER = COST A(IN RS.) COST B(IN RS) EFFECT A(%) EFFECT B(%)

This formula yields the additional cost required to obtain the additional effect gained by switching from drug A to drug B.

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Experts differ over which ratio, ACER or ICER, is the most appropriate and useful. ACER reflects the cost per benefit of a new strategy independent of other alternatives. ICER reveals the cost per unit of benefit of switching from one treatment strategy (that already may be in place) to another.4/25/2016Yadav H, SMS Med Coll, JAIPUR25

Cost-Effectiveness Plane4/25/2016Yadav H, SMS Med Coll, JAIPUR26costcosteffecteffectNE quadrant: more costly, more effective

NW quadrant: more costly, less effectiveSW quadrant: less costly, less effectiveSE quadrant: less costly, more effectivePERFORM CEAPERFORM CEADOMINATEDDOMINATES

Adapted from: Smith KJ et al. In: Arnold, RJG, editor. Pharmacoeconomics from theory to practice. Boca Raton: CRC Press; 2010. p. 95-108.

QALY and HRQOLHRQOL(HEALTH RELATED QUALITY OF LIFE)-A persons perception of how health impacts his physical, social and psychological functioning of well beingMeasurement of HRQOL is achieved by use of patient completed questionnaires4/25/2016Yadav H, SMS Med Coll, JAIPUR27

TerminologyUtilityNumerical estimate of quality of life (QOL) associated with a disease state or treatmentPerfect health = 1, Dead = 0Anything elsesomewhere in betweenMeasured using questionnaires 4/25/2016Yadav H, SMS Med Coll, JAIPUR28

TerminologyQuality-Adjusted Life-Year (QALY)Life expectancy adjusted based on utility QALY = time in health state utility of stateIf patient remains in the state for the remainder of their life, we can use life expectancy for time

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QALY ExampleConsider 2 hypothetical chemo drugsStandard of care vs. new therapyBoth prolong lifeBoth cause side effects which reduce QOL4/25/2016Yadav H, SMS Med Coll, JAIPUR30

QALY ExampleStandard of care treatment:Prolongs life by an average of 1 yearEstimated utility of 0.65 due to side effectsNew treatment:Prolongs life by an average of 1.5 yearsEstimated utility of 0.5 due to side effects

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Standard of Care QALYsQALY = Life expectancy utility= 1 year 0.65 utility= 0.65 QALYs

The standard of care is expected to add 0.65 quality-adjusted life-years to our patients life.4/25/2016Yadav H, SMS Med Coll, JAIPUR32

New Treatment QALYsQALY = Life expectancy utility= 1.5 years 0.5 utility= 0.75 QALYs

The new treatment is expected to add 0.75 quality-adjusted life-years to our patients life.

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Cost-Utility AnalysisPharmacoeconomists sometimes want to include a measure of patient preference or quality of life when comparing competing treatment alternatives. Cost-utility analysis (CUA) is a method for comparing treatment alternatives that integrates patient preferences and HRQOL. 4/25/2016Yadav H, SMS Med Coll, JAIPUR34

Cost is measured in dollars, and therapeutic outcome is measured in patient-weighted utilities rather than in physical units. Results of CUA 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 or some other health-state utility measurement. The preferred treatment alternative is that with the lowest cost per QALY (or other health-status utility).4/25/2016Yadav H, SMS Med Coll, JAIPUR35

CUA is the most appropriate method to use when comparing programs and treatment alternatives that are life extending with serious side effects (e.g., cancer chemotherapy)those which produce reductions in morbidity rather than mortality (e.g., medical treatment of arthritis)and when HRQOL is the most important health outcome being examined. 4/25/2016Yadav H, SMS Med Coll, JAIPUR36

Proper application of pharmacoeconomics will empower the pharmacy practitioners and administrators to make better and more informed decisions regarding products and services they provide. Pharmacotherapy decisions traditionally depended solely on clinical outcomes like safety and efficacy, but pharmacoeconomics teaches us that there are three basic outcomes to be considered clinical, economic, and humanistic in drug therapy.4/25/2016Yadav H, SMS Med Coll, JAIPUR37

Australia was the first country to form evidence based guidelines about medication reimbursement on the basis of cost-effectiveness research. Since 1993 Food and Drug Administration (FDA) in United States and Central Drug Standard Control Organization (CDSCO) in India do not require an economic analysis for Drug approval.A new drug has to be approved for a program based on pharmacoeconomic analysis.

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The development of pharamcoeconomics is at an infancy stage in India at the moment, despite the rapid growth of clinical research.

In India Chapter of SPOR-INDIA ( Society of Pharmacoeconomics and Outcomes Research India )has been formed, but it needs to develop the platform for pharmacoeconomics. 4/25/2016Yadav H, SMS Med Coll, JAIPUR39

We hope in India clinical pharmacists including doctors with knowledge of P.E. be more beneficial than conventional doctors as they can implement the principles of economics in daily basis practice in community and hospital pharmacy.

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Questions?

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ReferencesAssesspharmacy:principles of pharmacoeconomics chapter 1The role of pharmacoeconomics in current Indian healthcare system(Akram Ahmad1, Isha Patel2, Sundararajan Parimilakrishnan1, Guru Prasad Mohanta1, HaeChung Chung3, Jongwha Chang3)journal of research in pharmacy practice, review article, volume 2 ,issue 1

Ahuja J, Gupta M, Gupta AK, Kohli K. Pharmacoeconomics. Natl Med J India 2004;17:80-3Drummond MF, Sculpher MJ, Torrance GW. Critical Assessment of Economic Evaluation. Methods for the Economic Evaluation of Health Care Programmes. 3 rd ed. Oxford: Oxford University Press; 2005Bennett PN, Brown MJ. Topics in drug therapy. Clinical Pharmacology. 9 th ed. Edinburgh: Churchill Livingstone; 2003. p. 24.

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Cost-Effective Cost-Saving!!!

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Cost-Saving vs. Cost-EffectiveCost-savingAn intervention that has a lower total cost than an alternative intervention

Cost-effectiveAn intervention that is sufficiently effective relative to its total cost when compared with an alternative intervention4/25/2016Yadav H, SMS Med Coll, JAIPUR44

Calculating ICERICER = difference in cost difference in effectiveness

Or

ICER = C2 C1 $s E2 E1 QALYs4/25/2016Yadav H, SMS Med Coll, JAIPUR45

USE OF P.E. IN INDIA1. To find the optimal therapy at the lowest price. 2. Numerous drug alternatives and empowered consumers also fuel the need for economic evaluations of pharmaceutical products. 3. The use of economic evaluations of alternative healthcare outcomes.

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