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