Post on 21-Feb-2023
ISSN No : 2321 – 8630, V – 1, I – 1, 2014 Journal Club for Pharmaceutical Sciences (JCPS)
Manuscript No: JCPS/REV/2014/23, Received On: 05/09/2014 , Accepted On : 22/09/2014, Published On: 09/11/2014
REVIEW ARTICLE
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Pharmacoeconomics : Analysis of The Cost of Drug Therapy To Health Care Systems and Society
Sharma PH *1, Kalasare SN 2, Kamble RA 3, Powar PV 4, Ambikar RB 5
1Department of Pharmaceutics, Padmashree Dr. D.Y. Patil College of Pharmacy, Akurdi, Pune- 411044.India
ABSTRACT Pharmacoeconomics is a subdivision of health economics and result from that discipline coming of age through consolidation to diversification. Health economics, as a branch of economics is itself relatively young. Economics, indeed, there are a still health economist who regards the growth of Pharmacoeconomics as an unnecessary over specialization. As a discipline which is still is the process of growth any definition would become outdated by the time this book is published. Earliest definitions of Pharmacoeconomics are very narrowly focused on the “analysis of the cost of drug therapy to health care systems and society”. This perception of Pharmacoeconomics research is solely concerned with cost and does not consider the outcome from the use of pharmaceutical products. Pharmacoeconomics research is about: “Assessing the implications of projected outcomes and costs of pharmaceutical products for the decision whether to continue or stop development of a drug and for global pricing strategy”. This expanded definition has got the advantage of incorporating Pharmacoeconomics research into the process of drug development from inception (pre phase one) up to phase four when post-marketing surveillance is taking place.
KEYWORDS
Health economics, Cost, Adverse Drug Reaction (ADR), Drug therapy, Pharmacoeconomics, Cost minimization analysis
INTRODUCTION
Pharmacoeconomics refer as sub-
discipline of health economics.
Pharmacoeconomics is a scientific
discipline that evaluates the clinical,
economic and humanistic aspects of
pharmaceutical products, services, and
programmes, as well as other health care
interventions.1 Different branches of
Pharmacoeconomics shown in Fig. 1. The
role of pharmacoeconomics plays various
roles at specific phases of drug
development; during the initial phases it
helps to recognize commercially exploited,
while at the later stages it performs
Address for Correspondence: Dr.(Mrs.) Padmini. H. Sharma, Associate Professor, Pad. Dr D Y Patil College Of Pharmacy, D. Y. Patil Education Complex, Sec No. 29, Akurdi, Pune 411 044 Email : pharmabrain20@yahoo.co.in
Pharmacoeconomics : Analysis of The Cost of Drug Therapy to Health Care Systems and Society
© All Rights Reserved by “Journals Club & Co.” 143
function of informing choice of the drugs
which have been developed.
Pharmacoeconomics is an instrument
applied for strategic and operational
decisions about
Fig. 1. Disciplines of Pharmacoeconomics
pharmaceutical enlargement and
expenditure. The aim of
Pharmacoeconomics is to make sure
mainly proficient use of limited resources,
and recuperate the gap among R&D and
marketing departments of the
pharmaceutical companies.
Fig. 2. Study of the role of Pharmacoeconomics and Economics
Burdon of drug related problems “An incident or situation connecting a
patient’s drug treatment that truly, or
potentially, interferes with the success of a
most favorable result”
Commission= prescribing a drug with
a known fatal drug –drug interaction
Omission= failing to prescribe a drug
for a patient’s underlying disease
state
Goals of Pharmacoeconomics2
1. Broad methodologies to offer
information to generate the greatest benefit
in terms of patient outcomes.
2. Device for evidence base decision
making
Adverse drug reaction (ADR) 3
Unintended reactions to a drug that is
usually not anticipated or avoidable
adverse drug event (ADE)
Fig. 3. Drug related problems
Pharmacoeconomics : Analysis of The Cost of Drug Therapy to Health Care Systems and Society
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1. To develop methods for
pharmaceutical interventions:
The extensive, system-based research
methodologies used to create significance
for pharmaceutical intervention.Fig. 4.
shows the methods for pharmaceutical
intervention.
Fig. 4. Methods for Pharmaceutical Interventions
2. Applications of pharmacoeconomics
method:
The applications of pharmacoeconomics
methodologies in various sectors like
R&D, Drug approval & sales revenue
shown in Fig. 4.
Fig. 5. R&D, Drug approval & sales revenue
Health economics 1,4
Health economics is a division of
economics concerned with issues linked to
dearth in the distribution of health and
health care sectors.
Fig. 6. Factors of health Economics
Fig. 7. The scope of health economics by
Alan William’s
Pharmacoeconomics : Analysis of The Cost of Drug Therapy to Health Care Systems and Society
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Health of a country or the residence of that
country is greatly reliant on the geographic
location ,legal and economic stabilities of
the nation. The government body attentive
on the industry enhances the research and
development along with reinforcement to
infrastructure required.
Economics evaluation 2,5
There are four types of economics
evaluation, shown in Fig. 8. The ultimate
aim of methods is to compare the cost and
outcome of substitute regimens, ideally by
generating cost-outcome ratio.
Fig. 8. Types of Economic Evaluation
Fig. 9. Components of economic analysis
Methods of economic evaluation
Economic evaluation is framework which
draws up a balance sheet between costs
and benefits to assist decision making.
Common types of study
The four types of economics evaluation
given in Table.No.1.
Table 1. Methods of Economics Evaluation
Pharmacoeconomics : Analysis of The Cost of Drug Therapy to Health Care Systems and Society
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COST-MINIMIZATION ANALYSIS
Fig. 10. Cost-Minimization Analysis
Cost minimization contains an clear
assumption that the two alternatives attain
the main outcome equally and it may
include additional information to test the
assumption of “all other things being
equal”. This involves measuring costs,
usually only to the health services, and is
applicable only where the outcomes are
identical and need not be considered
separately. An example is prescribing a
generic preparation instead of the brand
preparation .The major outcome of interest
is the same and is achieved similarly by
the alternative regimens, thus allowing the
evaluators of the program to concentrate
on the cost side of the equation and choose
the substitute that has the least costs. An
example is minor surgery for adults who
can be done either as in or out patient
without any significant difference in the
clinical outcome. The tool for successful
cost minimization is that the comparators
must have been shown equivalent clinical
effectiveness before the analysis is carried
out. Although the two options must
achieve the major outcome of interest
equally, they may still have other
outcomes which differ. For example, day
case surgery may be performed with a
higher proportion of local or regional
anesthesia than in-patient surgery, and this
may lead to differences in transient side
effects. A cost minimization analysis
would measure the costs arising from these
differences in anesthesia, while assuming
that the outcome of surgery is identical.
COST-EFFECTIVENESS ANALYSIS
Compares the total relevant cost of therapy
to the effectiveness when the outcomes for
the alternatives are NOT equal
Fig. 11. Cost-Effective Analysis
Example:
Example: Increment CE ratio
Pharmacoeconomics : Analysis of The Cost of Drug Therapy to Health Care Systems and Society
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1. = cost drug A-cost drug B
2. Outcomes drug A-outcomes drug B
3. =$220,000-$20,000
4. 79 Lives-78Lives
5. =$200,000/Life saved
COST-BENEFIT ANALYSIS 7
Evaluates the value of all resources
consumed in implanting a program or
intervention against the value of the
outcome in terms of dollars.
Fig. 12. Cost-Benefit Analysis
The aim is to construct cost/outcomes
ratios to compare alternatives regimens.
Cost-effectiveness analysis cannot be
applied because the alternatives achieve
fundamentally different outcomes. For
example, one prolongs life and improves
quality of life (e.g. coronary artery bypass
grafting) whereas the other only improves
quality of life (e.g. hip joint replacement).
To compare different outcomes (some
positive some negative like adverse effect,
toxicity or adverse drug reaction) we need
a common denominator which is stable,
plausible, consistent and incorporates most
(if not all) possible outcomes. In Cost-
Benefit Analysis , the common
denominator for conversion is money.
Healthcare professionals often feel
instinctively uncomfortable about putting a
financial value on human suffering.
The most controversial aspect of Cost-
Benefit Analysis is to put value on items
like loss of eye sight, impairments of
hearing, renal failure or even loss of
human life; which are perceived to be
inherently invaluable by healthcare
professionals.
In Cost-Benefit Analysis, investigators
usually calculated the costs and benefits;
there are techniques for quantifying the
strengths of individual preferences for
alternatives. However the assets of this
analysis allow comparisons between very
different areas, and not just medical, e.g.
cost benefits of expanding university
education.
Example:
Pharmacoeconomics : Analysis of The Cost of Drug Therapy to Health Care Systems and Society
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COST-UTILITY ANALYSIS 8
Evaluates the value of an involvement or a
program against the value of the outcome
in terms of quality-adjusted life years
(QALYs).
Fig. 13. Cost-Utility Analysis
This is similar to cost effectiveness in that
the costs are measured in money and there
is a
defined outcome (unit of utility e.g. a
QALY). Cost-Utility Analysis can look at
more area of medicines, like cost per
QALY of coronary artery bypass grafting
versus cost per QALY for erythropoietin in
renal disease.
Tables No 2. of QALYs gives comparisons
between ranges of therapies. The values in
such tables have usually been derived at
different ways and are not comparable.
Use of published probability of an
outcome event and its associated cost to
project the average expected cost per
patient for the alternatives being compared
Relatively fast??
Inexpensive
Can use external or internal
Tables. 2. Calculation of QALYs
With Treatment X Without
Treatment X Estimated
survival=10years
estimated
survival=5 years
Estimated quality of
life
estimated quality
of life (Relative to ‘perfect
health’)=0.7
(relative to ‘perfect
health’) =0.5
QALY gain from treatment X= 7-
2.5=4.5QALYs
If the cost of treatment X is £18,000 then
the cost per QALY is £4,000 per QALY
Decision Analysis Models
Use of published probability of an
outcome event and its associated cost to
project the average expected cost per
patient for the alternatives being compared
Relatively fast??
Pharmacoeconomics : Analysis of The Cost of Drug Therapy to Health Care Systems and Society
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Inexpensive
Can use external or internal
DRUG DEVELOPMENT PROCESS
(Shown in Fig. 14.)
1. Test 5,000-10,000 compounds, to
identify candidates for further
development
2. Send approximately 250 for pre
clinical testing
3. Enter approximately 5 into:
Fig. 14. Clinical Trials
1. Approval of the new drug: license
10+ years after identification for
development
Cost incurred per NCE=$600 million
2. Pricing & reimbursement discussions
OBSERVATIONS:
Process is long, costly and risky
Highly regulated industry:
Gather drug profile information for
regulatory authorities to make decisions
(license, price, reimburse)
Some information then used for
promotional claims to persuade customers
to make decisions(also regulated)
Phase IV :
During this phase, investigators are
looking for additional information,
including the drug or treatment's risks,
benefits, and optimal use. This trial may
occur after the drug or treatment has been
approved for use by the FDA. Trials may
be conducted to determine better dosing
guidelines, new formulations, effects on
different populations or new indications.
Studies or trials conducted after a medicine
is marketed to provide additional details
about the medicine's efficacy or safety
profile. Different formulations, dosages,
durations of treatment, medicine
interactions, and other medicine
comparisons may be evaluated. New age
groups, races, and other types of patients
can be studied. Detection and definition of
previously unknown or inadequately
quantified adverse reactions and related
risk factors are an important aspect of
many Phase IV studies. If a marketed
medicine is to be evaluated for another
(i.e., new) indication, then those clinical
trials are considered Phase II clinical trials.
The term post marketing surveillance is
frequently used to describe those clinical
studies in Phase IV (i.e., the period
following marketing) that are primarily
observational or non-experimental in
Pharmacoeconomics : Analysis of The Cost of Drug Therapy to Health Care Systems and Society
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nature, to distinguish them from well
controlled Phase IV clinical trials or
marketing studies.
Fig. 15. Drug development process
SCOPE OF
PHARMACOECONOMICS-
Fig. 16. Scope of Pharmacoeconomics
Conclusion and summary
Pharmacoeconomics is an upcoming
stream in Health care Pharmacy industry
which acts as a bridge which connects
pharmacy with economics. In today
competitive world one maintains
pharmaceutical product identity, integrity
and dignity, by providing their product
with good quality, quantity and maintain
cost effective. Pharmacoeconomics refers
to the scientific discipline that compares
the value of one pharmaceutical drug or
drug therapy to another. Which evaluates
the cost (expressed in monetary terms) and
effects (expressed in terms of monetary
value, efficacy or enhanced quality of life)
of a pharmaceutical product. Different
participants of Pharmacoeconomics shown
in Fig. 17.
Fig. 17. Pharmacoeconomics provides
weapons to health care
The premises upon which both health
Economics and Pharmacoeconomics are
based are virtually indistinguishable to
those of conventional Economics. The
fundamental problem in economics is to
discover a socially suitable solution to
Pharmacoeconomics : Analysis of The Cost of Drug Therapy to Health Care Systems and Society
© All Rights Reserved by “Journals Club & Co.” 151
people’s limitless demands and society’s
restricted ability to react to these demands
with production of goods and services.
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HOW TO CITE THIS ARTICLE
Sharma, P.H., Kalasare, S.N., Kamble, R.A., Powar, P.V., Ambikar, R.B. (2014). Pharmacoeconomics : Analysis of The Cost of Drug Therapy To Health Care Systems and
Society. Journal Club for Pharmaceutical Sciences (JCPS), 1(I), 142-151.