PharmacoeconomicApplications in MOH
RAED ALNOWAISER .MIPHE
Scoop of Discussion
Introduction.
Pharmacoeconomic tools.
Examples
Optimum decision making Support.
ECONMOIC IS ??
The study of how individuals & society end up choosing, with or without the use of money, to employ scarce resources that could have alternative uses, to produce various commodities & distribute them for consumption now or in the future, among various people and groups in society.
Paul Samuelson
How to use pharmacoeconomic tools?
Using data to distinguish your practice:
•Data about efficacy (clinical and humanistic)
•Data about cost i.e. resources consumed to achieve efficacy endpoints (investment)
The main objective of using such tools ?
Objectives of pharmacoeconomics must originate within three dimensions when considering results and value of healthcare.
•Acceptable clinical outcomes.
•Acceptable humanistic outcomes.
•Acceptable economic outcomes.
Types of Pharmacoeconomic Analysis
Methodology Cost measurement unit
Outcome unit
Cost minimization $ Various- but equivalent in
comparative groups
Cost benefit $ $
Cost effectiveness $ Natural units (life years, mg/dl blood
sugar, LDL cholesterol)
Cost utility $ Quality adjusted life years
Applying Pharmacoeconomic Principles
The “point of view” considered in economic analyses influences the outcomes and costs considered to be most relevant:◦ Provider
◦ Patient
◦ Payer
◦ Society
Comprehensive Definition of Cost-effectiveness
Therapy is deemed to be a cost-effective strategy when the outcome is worth the cost relative to competing alternatives.In other words, scarce resources are utilized to acquire the best value on the market.
Average Cost-effectiveness
Specifies the cost of an agent required to achieve each unit of effect. No comparison is made to alternative agents.
Cost of drug/ Resulting effect = Cost per unit of effect achieved
Contd..example
Average cost-effectiveness of Agent A
$50.00 /50 units of effect = $1.00 per unit
Average cost-effectiveness of Agent B
$150.00 /90 units of effect = $1.60 per unit
i.e.
$100 per 1% reduction in Hem A1C
$50 per 10 mg reduction in LDL
$5 per symptom-free day gained
Incremental Cost-effectiveness Analysis
Makes comparisons to other therapeutic options, standard of care, or “doing nothing” (placebo)
Fundamental ratio
Cost optionB – Cost optionA
Effect optionB – Effect optionA
= Cost to achieve one unit of effect
contd
$150-$50/ 90 – 50 units = $2.50 per unit of effect achieved
Therefore, because Agent A is an available alternative with a lower average cost per unit of effect achieved, the cost-effectiveness of using Agent B is diminished. The cost of Agent B is not in line with the product it delivers- a poor value.
Incremental Analysis
“The additional costs that one service or program imposes over another, compared with the additional effects, benefits, or utilities it delivers.”
Drummond – Methods for the Economic Evaluation of Health Care Programs
Relationships of Cost to Effect Between Two Competing Alternatives
Cost of alternative A relative to alternative B
Lower Equal Higher
Effectiveness alternative A relative to alternative B
Lo+/-
Trade off-
-
Dominated
Eq + Arbitrary -
Hi+
Dominant+
+/-
Trade-off
Measuring Efficacy Data Variables
What product (effect) can be consistently expected from use of drug or health service?
Usually determined from clinical trials.
Seek direct relationship to morbidity and mortality.
Survival/ death.
Myocardial infarction avoided.
May rely on surrogate probably related to final outcome to enhance feasibility of analysis.
LDL cholesterol changes.
Intimal vessel wall thickness changes.
Randomized controlled clinical trial is gold standard for deriving efficacy data.
Measuring Cost Data Variables
What resources are consumed to produce one unit of the effect?
Direct costs:
• Drug product acquisition costs
• Drug preparation & administration costs
• Drug monitoring costs
• Treatment costs of adverse effects
Indirect costs:
example of institution indirect cost??
Discounting Costs
•In order to draw most valid conclusion about costs generated over time to achieve an effect in the future, it is necessary to consider that there is a time preference associated with money
•Money in hand is worth more than the same amount sometime in the future (we like to be paid as soon as possible, but prefer to pay at the last possible moment)
Therefore future costs must be adjusted to reflect present value.
•A $1000 cost one year from now requires only $930.00 in hand today assuming a 7% return on investment.
Sensitivity Analysis
Conclusions drawn from an economic analysis may change, depending on the uncertainty of cost and effects considered.
S.A., by altering important variables & then recalculating results, tests the validity of conclusions:
Would Agent A still be most cost-effective if the effect of Agent B was greater than measured in clinical trial?
Would Agent A still be most cost-effective if the monitoring costs of Agent B were actually lower?
S.A. becomes increasingly important as assumptions are made to a greater degree.
Cost Utility Analysis
Resource consumed measured in monetary units
Health outcomes/consequences adjusted for quality
Quality adjusted life year (QALY)
QALYs based upon utility (patient preference)
Utility – the value or worth placed on a level of health status, or improvement in health status, as measured by the preferences of individuals or society.
Rating Scale(Feeling Thermometer )
Perfect Health
Death 0
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conclusion
Time and money can only be spent once- choice is inevitable.
Whether done unconsciously or with a consistent process, health care professionals are constantly evaluating patient care choices & acting on them.
Pharmacoeconomics and outcomes research can enhance the quality of your practice by strengthening your evaluation process and increasing the probability that you deliver better value in patient care.