Brief History of Pharmacoecon omics

Brief History of Pharmacoeconomics

Pharmacoeconomics is a subdivision of Health Economics and results from that discipline coming of age through consolidation to diversification. Health Economics, as a branch of Economics is itself relatively young. One can hardly find any systematic reference to it before the mid 1960s and the first reading book on this subject was published in 1973. The premises upon which both Health Economics and Pharmacoeconomics are based are virtually identical to those of mainstream economics. The central problem in Economics is to find a socially acceptable solution to peoples unlimited demands and societys limited ability to respond to these demands with production of

Or, to put it concisely as Fischer and Dornbush do: "Economics is the study of how society decides what gets produced, how, and for whom It is important to note that this definition emphasises the role of society and societal views on What ?, How ?, and for Whom ? Goods and services are produced. An extended definition of Economics by Samuelson contains all of the above elements and more: "Economics is the study of how men and society end up choosing, with or without the use of money, to employ scarce productive resources that could have alternative uses, produce various commodities and distribute them for consumption, now or in future, among various people and groups in society. It analyses the costs and benefits of improving patterns of resource

Some of the important issues raised in the definition above are recurrent sources of confusion and misunderstanding of what Economics is about. These are as follows: Resources, everywhere, no matter how rich a society is, are limited. There are unlimited competing demands on these limited, scarce, productive resources Men and society have choices about how resources are used for production, distribution or other purposes With each choice comes a cost associated with that choice. The cost is that resources once used cannot be used again or to be more precise, there is an opportunity cost associated with economic decisions. Opportunity cost is the amount lost by not using economic resources (labour, capital, building, management, etc.) in its best

The aim of economics is to define the most efficient use of our limited resources, recognising the costs associated with the choices made. Health Economics, as suggested by Mooney is the discipline of economics as applied to the topic of health, and as such is more than a bag of tools, it is a way of thinking about the problems and dealing with them Health Economics treats healthcare as an economic commodity, whilst acknowledging the fact that there are significant differences between health care and other conventional economic commodities Pharmacoeconomics was originally established as a sub-discipline of health economics. Indeed, there are still health economists who regards the growth of Pharmacoeconomics as an unnecessary over specialisation.

As a discipline which is still in 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 costs of drug therapy to health care systems and society ". This perception of pharmacoeconomic research is solely concerned with costs and does not consider the outcome from the use of pharmaceutical products. In a recent article by Clemens et al., the authors take a much broader view of what pharmacoeconomic 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

This expanded definition has got the advantage of incorporating pharmacoeconomic research into the process of drug development from inception (pre phase one) up to phase four when post-marketing surveillance is taking place. Of course, the role of Pharmacoeconomics does not remain the same during the different phases of drug development. For example, during the early phases it helps to identify commercially viable options and find the market niche which could be commercially exploited, while at the later stages it performs the function of informing decision making with regards to appropriate use of the drugs which have been developed.

Pharmacoeconomics is a tool of management which should be applied to strategic and operational decisions about pharmaceutical development, production or consumption. The focus of emphasis in the earliest phase is on informing decisions about product development (essentially go/no go decisions) whilst the emphasis at the later stage shifts to rational prescribing and utilisation. The aim throughout is to ensure the most efficient use of limited resources. On the whole Pharmacoeconomics should be thought of as an ongoing process which not only bridges the existing gap between the R&D and marketing departments of the pharmaceutical companies, but perhaps more importantly, is likely to change the structure of the industry from within.