Department of Pharmacology, SJTPC, Rajkot

Mr. ASHISH KYADA

GUIDED BY:
1
Department of Pharmacology, SJTPC,
Rajkot
2
 1.INTRODUCTION:

NEED FOR PHARMACOECONOMICS:

Rajkot
Department of Pharmacology, SJTPC,
Over the past few years, the
study of PE has experienced
an extraordinary boom within
the health care sectors.

Why?
3
 Initially the decisions regarding the use of
medical intervention was based on clinical safety,
efficacy, and quality of the intervention used (old
paradigm).
But this scenario was suddenly changed into a
different setting which mainly concerned about

Rajkot
Department of Pharmacology, SJTPC,
the cost of the intervention (new paradigm).

Desires and needs are infinite but resources are

limited.

Thus, health economists are trying to find out the

best way to allocate these resources
appropriately in order to maximize the
overall health of the population. 4
 Pharmacoeconomics act as a tool that aids in
decision-making for choosing an economic, safe,
efficacious drugs using the combination of cost

Rajkot
Department of Pharmacology, SJTPC,
(resources used) and consequences (clinical,
economic, humanistic).

Pharmacoeconomics has been defined as the

description and analysis of the costs of drug
therapy to health care systems and society.

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 Questions that pharmacoeconomics may
help to address are as follows:

Which drugs should be included in hospital

formulary?
Which is the ideal drug for a particular patient?

Rajkot
Department of Pharmacology, SJTPC,
Which is the ideal drug for pharmaceutical
manufacturers to develop?
Which drug delivary system is the best for the
hospital?
How do two clinical pharmacy services compare?
What is the cost per quality adjusted year of life
extended by a drug?
Will patients quality of life be improved by a
particular drug therapy decision?
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What is the best drug for particular disease?
 For better understanding consider one
scenario:

Rajkot
Department of Pharmacology, SJTPC,
Suppose, you are a clinical pharmacist, member of
Pharmacy and Therapeutic Committee at a
hospital, and have been given responsibility to
evaluate a new beta blocker product for addition
to the hospital drug formulary.

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In clinical setting:
The consideration must be given to;
Therapeutic effectiveness of the agent for patient
subpopulation,
Impact of therapeutic agent cost or impact on

Rajkot
Department of Pharmacology, SJTPC,
pharmacy budget,
Quality of life.

In industrial setting:
The consideration must be given to;
All the criteria which are having impact on
clinical setting,
Competition with other companies and impact of
drug in market 8
2.TYPES OF PHARMACOECONOMIC
EVALUATIONS:

Cost-Minimization Analysis (CMA):

Rajkot
Department of Pharmacology, SJTPC,
Cost-Effectiveness Analysis (CEA):

Cost-Utility Analysis (CUA):

Cost-Benefit Analysis (CBA):

Cost-of-Illness Evaluation (CIE):

Cost-Consequences Analysis (CCA):

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2.1) Cost-Minimization Analysis (CMA):

When two or more drugs or alternative therapies

have demonstrated equivalent outcomes, then
only costs of these alternatives need to be
compared, such analysis is referred as CMA.

Rajkot
Department of Pharmacology, SJTPC,
Example-1: CARBOPLATIN & CISPLATIN (In
the treatment of ovarian cancer)
Example-2: Comparision of two prescription, one
of which consist of Generic company product
while other is Brand leader. (Molpara and
Crocin)

LIMITATION:
Outcomes must be equivalent for analysis. 10
2.2) Cost-Effectiveness Analysis (CEA):

It is a technique used to aid in decision-making

between alternatives; when the costs are

Rajkot
Department of Pharmacology, SJTPC,
measured in monetary terms (Rupees) but
the outcomes are measured in natural unit
changes in health (life years increased or
number of side effects decreased).
Additional benefit is worth even if the cost is
more.

There can be 9 possibilities when comparing two

different drugs or program or intervention: 11
 Rajkot
Department of Pharmacology, SJTPC,
Adopt: More effective, less cost
A: At least as effective at less cost
B: More effective at same cost
C: More effective, more cost
D: Less effective and less costly (reduction in cost is more
than the reduction in effect)
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 Alternative with lower cost to effectiveness ratio is
considered as preferable.
Most studies using CEA have been performed using,

1) ACER (Average Cost-Effectiveness Ratio)

ACER=Total cost/Total effectiveness

Rajkot
Department of Pharmacology, SJTPC,
2) ICER (Incremental Cost-Effectiveness Ratio)
ICER= Diff. in cost/Diff. in benefits

ICER= Cost A Cost B

Effect A Effect B

In other words, ICER means: Added cost per additional

effect gained for one alternative (eg, new drug A ) as
compared to another (eg, old drug B).
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 How CEA can be used in deciding

Cost-effectiveness in a pharmacy
setting:

Example 1:

Rajkot
Department of Pharmacology, SJTPC,
Comparison of four lipid lowering
agent/program:
No drug treatments or dietary modifications-No
Pharmacological program
Drug-A
Drug-B
Drug-C (1)
Drug-C (2) 14
 Four measures of effectiveness:

i) Changes in total cholesterol level

ii) HDL
iii) LDL

Rajkot
Department of Pharmacology, SJTPC,
iv) Triglycerides

Now, any one effectiveness is considered as

common:

Assume decreased total cholesterol level as the

most clinical outcome. Then, a decision could be
made based on drug costs and total cholesterol
level. 15
Example 2: (More detailed)

Deep Vein Thrombosis:

Venous thromboembolism (VTE) comprises both;

Rajkot
Department of Pharmacology, SJTPC,
deep vein thrombosis (DVT) and pulmonary
embolism (PE).
VTE is responsible for appx. 2,50,000
hospitalization in US each year.
20% of people with accute PE present with
sudden death, 30% of people with VTE
syndromes die within 30 days.
Direct costs of VTE reaches appx. 3-4 billion
dollars annualy. 16
 Depending on treatment for VTE, there are
additional costs potentially associated with
therapeutic monitoring.
Furthermore, management of potential side
effects of anticoagulants, including bleeding
and heparin induced thrombocytopenia

Rajkot
Department of Pharmacology, SJTPC,
(HIT) are very expensive.
Cost related to long-term complications of VTE,
including clot recurrence and post
thrombotic syndrome.
A recent cost-effective analysis determined that
use of Fondaparinux for initial DVT therapy
may offer substantial cost savings relative to
Enoxaparin.
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TABLE-1
MODEL INPUTS FOR RATES OF VENOUS
THROMBOEMBOLISM (VTE) RECURRENCE, MAJOR
BLEEDING, AND HEPARIN-INDUCED
THROMBOCYTOPENIA,AND ASSOCIATED COSTS PER EVENT.

Rajkot
Department of Pharmacology, SJTPC,
18
 TABLE: 2
RESULTS OF BASE-CARE COST-EFFECTIVE ANALYSIS
OF FONDAPARINUX VERSUS ENOXAPARIN FOR
TREATMENT OF DEEP VEIN THROMBOSIS (DVT)

Rajkot
Department of Pharmacology, SJTPC,
From these data it is concluded that Fanoparinux offers
greater advantage in DVT compared to other agents.
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 LIMITATIONS:

All years of life are valued equally without

considering QUALITY (Full functional state)of
life.

Rajkot
Department of Pharmacology, SJTPC,
CEA can measure only one measure of
effectiveness.

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2.3) Cost-Utility Analysis (CUA):

It is considered to be an extension of cost-

effectiveness analysis.

Rajkot
Department of Pharmacology, SJTPC,
The main advantage of CUA as compared to
traditional CEA is that it can combine more
than one measure of effectiveness or both
measures of morbidity and mortality into a
single measure.

In CUA, both quality and quantity of life often

measured from patients perspective are merged
into a single unit by calculating
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utility/preference for the alternatives and then
calculating quality-adjusted life year (QALY).
 QALY is not a well defined fixed unit, it changes
from study to study.

Example:

Rajkot
Department of Pharmacology, SJTPC,
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 QALY gain from treatment 7-2.5=4.5 Years

Rajkot
Department of Pharmacology, SJTPC,
To achieve QALY total ` 18,000 need to be spend.
Therefore, per year ` 4,000 is the cost of X drug.
Now, drug X is compared with drug Y, in terms
of total cost and QALY gained from the
treatment.

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 LIMITATION:

Rajkot
Department of Pharmacology, SJTPC,
The only limitation of CUA is that it should not
be applied when single intermediate outcome is
enough to measure effectiveness of therapy.

Example: Restricted days due to disability.

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2.4) Cost-Benefit Analysis (CBA):

It compares the total costs of each alternative

to resultant outcome/benefits of the
intervention measured in monetary units i.e.,
Cost-Benefit Ratio: Total cost/Benefit

Rajkot
Department of Pharmacology, SJTPC,
Benefits are measured using contingent valuation
or willingness to pay method (WTP).

WTP measures an individuals desirability or

utility (Preference) for a program by determining
how much money he/she is willing to pay in
order to gain improved health. 25
 Example:
The value of a new antidepressant, Moclobemide,
in comparison to TCAs (Amitryptiline,
Imipramine, etc.) which have equivalent efficacy
but a higher incidence of adverse events.

Rajkot
Department of Pharmacology, SJTPC,
LIMITATION:
CBA is difficult to perform because it requires both
cost and benefits to be measured in monetary
terms

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2.5) Cost-of-Illness Evaluation (CIE):

Cost-of-illness studies are important to PE

evaluation of new therapies.

Rajkot
Department of Pharmacology, SJTPC,
By evaluating the humanistic impact of
disease and resources used in treating a
condition prior to discovery of a new intervention,
the pharmacoeconomist can effectively establish
a baseline for comparison.

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2.6) Cost-Consequences Analysis (CCA):

A cost-consequence analysis has been defined as

one in which costs and effects are
calculated but not aggregated into quality

Rajkot
Department of Pharmacology, SJTPC,
life adjusted years or cost-effectiveness
ratios.

In simple words, this type of analysis comprises a

listing of all relevant costs and outcomes of
drug therapy or healthcare intervention
including direct medical costs, direct non-medical
costs, indirect costs, clinical outcomes, utility
impacts, and quality of life impacts. 28
 It provides most comprehensive presentation of
information describing the value of an

Rajkot
Department of Pharmacology, SJTPC,
intervention and has an advantage of being
more readily understandable and more likely
to be applied by healthcare decision-makers.

In this application, weigh of different costs and

benefits is left to each decision-maker.

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`
LIMITATIONS:

A possible drawback for disaggregated

presentation of health outcomes is that
decisions made at the individual decision-

Rajkot
Department of Pharmacology, SJTPC,
makers level might not be made in patients
or societys best interests.

Another potential drawback of cost-consequence

analysis is that all of the data are not always
of comparable quality.

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 3. TYPES OF INPUTS AND OUTPUTS
IN PHARMACOECOMONIC STUDIES:
Inputs:
Healthcare Sector (C1):

Rajkot
Department of Pharmacology, SJTPC,
Cost of providing care by the program (i.e.
organizing and operating costs within the
health sector). It also include continuing care
(Hospitalization).
Patient and Family (C2):
Out of pocket cost, co-payment cost, cost due to
time spent in treatment/unemployement.
External costs (C3):
This category includes all resources consumed
in other sectors (Other than healthcare sector 31

for e.g., Volunteer sector, Kitchen, Caregiver

sector (nurses) etc..)
 Outputs:
Economic outcome:
Reduction in resources use or savings, this may
occur to health sector (S1), patient and family
sector (S2), non-health sector (S3).
Clinical outcome/Physical effects:

Rajkot
Department of Pharmacology, SJTPC,
E: Physical effects in natural units for e.g.,
number of lives saved, number of deaths prevent,
number of disability days reduced.
H: Humanistic outcome.
V: Changes in health related quality of life
measures (HRQOL) and other values.
U: QALY (Quality adjusted life-years) based on
valuation of health state preferences
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W: Willingness to pay or Contingent valuation
W: Global willingness to pay
 Cost-Minimization Analysis (CMA):
(C1-S1) Or (C1+C2+C3)-(S1+S2+S3)
PHARMACOECONOMIC
4. EQUATIONS FOR

Cost-Effectiveness Analysis (CEA):

EVALUATIONS

Rajkot
Department of Pharmacology, SJTPC,
(C1-S1)/E; [(C1+C2+C3)-(S1+S2+S3)]/E

Cost-Utilization Analysis (CUA):

(C1-S1)/U; [(C1+C2+C3)]/U

Cost-Benefit Analysis (CBA):

(W)-(C1+C2+C3);
[(W+V+S1+S2+S3)-(C1+C2+C3)] 33
 Department of Pharmacology, SJTPC,
Rajkot
34
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 Sincere Thanx to,

Dr. Manish Rachchh,

Dr. Rina Gokani,
Mr. Pinakin Jadav,

Rajkot
Department of Pharmacology, SJTPC,
&

Mr. Ashish Kyada

35
 RNDr. Marta Megyesiov

Rajkot
Department of Pharmacology, SJTPC,
36
I have finished my presentation you can get up!!!