econ in class notes Flashcards
Total cost of Rx products in the US
$600 billion
Total cost of retail Rx products in the US
$400 billion
US annual healthcare budget
$4 trillion
Number of prescriptions written annually in the US
5 billion
Zolgensma cost and usage
New gene therapy drug, used to treat spinal muscular atrophy, sold for 2 million dollars (manufactured by Novartis)
Descriptive economics
Describable factors
Explanatory economics
Cause & effect
Evaluative economics
What actually happened; where money was distributed
Pre-diabetes cases
Predictive economics
US $300 billion drug problem/prescription drug abuse
Involves the abuse of controlled substances (narcotics, opioids, marijuana)
ADR
Adverse Drug Reaction
ADE
Adverse Drug Event
Public insurance
Medicare and Medicaid; government issued
Private insurance
Company and/or occupation based
Medicare
Qualifies at 65 years old, and social security
Medicaid
Income based (lower income qualification)
Inflation Reduction Act (Medicare insulin proposal)
Medicare holders, who are older people with a higher risk and incidence of diabetes, will be able to purchase insulin at discounted prices
Pharmacoeconomics is based primarily on _____
Value; cost-effectiveness
Recession
When output drops consecutively for 2 quarters
BLS
Bureau of Labor Statistics
PDI
Pharmacy Demand Index/Indicator
BEA
Bureau of Economic Affairs
BPS
Board of Pharmacist Specialty
ACPE
Accreditation Council for Pharmacy Education
HEOR
Health Economics and Outcomes Research
DTC
Direct to Consumer advertising
2 countries to allow DTC advertisements
USA & New Zealand
Medication Nonadherence
300 billion dollar problem
What causes a patient to not adhere to their medication plan?
Side effects, cost of medicine, adverse drug reactions and interactions
ACPE
Accredication Council for Pharmacy Education
Why is the ACPE important?
They validate different PharmD programs around the country and ensure all these programs are meeting requirements
Private Insurance
Benefit plans that are paid for by the employer
ex: sju pays for the professor's insurance
Public Insurance
Is paid for by the taxpayers
ex: medicare & Medicaid
What is the goal of pharmacoeconomics?
Finding the most cost-effective products, drugs, and services. The ultimate goal is to optimize healthcare resource allocations by identifying efficient and cost-effective interventions
What are the identifiers of a recession?
two consecutive quarters (6 months) of a decline in GDP (20%)
increase in unemployment
decrease in production
what is GDP?
Gross Domestic Product is the total value of all goods and services produced within a country in a given period.
What is the BEA?
Bureau of Economic Analysis; a government agency responsible for the collection and analysis of economic data, including GDP
BLS
Bureau of Labor Statistics; a government agency responsible for collecting and analyzing labor market data, including unemployment rates.
- Projection for job growth and decline
PDI
Pharmacy Demand Index
A measure of demand for pharmacists in the job market.
(Linked with BLS)
HEOR
** emphasized multiple times in class & on a quiz
Health Economics and Outcomes Research; a field of research that uses economic data to evaluate the value of healthcare interventions, including pharmaceuticals.
Patent
A legal protection granted to inventors, allowing them exclusive rights to produce, use, and sell an invention for a certain period.
Specialty drugs
Specialty drugs are medications that are used to treat complex or chronic medical conditions, such as cancer, rheumatoid arthritis, multiple sclerosis, and HIV/AIDS. These medications are often injectable or infused, and they may require special handling and administration.
Biosimilars
Biologic drugs that are similar to already-approved biologic drugs
Drug A has a patent
Once the patent expires, a different company can produce a biosimilar to Drug A and sell it under a new name
Quality of Life QOL
Refers to an individual's overall well-being and satisfaction with life
Pallative Care
End-of-life care that seeks to improve the quality of life of patients with longterm diseases
Hospice Care
A type of palliative care for patients with less than 6 month life-expectancy to provide care and support for their patients
BPS
Board of Pharmacy Specialities
Shows the different types of fields of pharmacy to go into
What is the total healthcare budget in the most recent year?
4 trillion
What is the annual budget on all prescription drugs?
600 billion
Which of the following is the most expensive drug in America today?
Zolgensma
Pay for performance (PFP)
A payment model that compensates healthcare providers based on the outcomes achieved by their patients.
Direct to consumer (DTC) for commercials
A type of advertising that promotes pharmaceutical products directly to patients. It is only legal in the US and New Zealand.
Formulary
A restricted list of drugs that are approved for use in a healthcare institution or hospital. It is maintained by the healthcare plan.
Inflation Reduction Act
Legislation that aims to reduce the cost of insulin for Medicare patients.
FDA vaccine mandate
A proposal by the FDA to make vaccines mandatory and an annual ritual.
Biologics/ biotech drugs
A type of pharmaceutical product that is derived from living organisms.
Specialty drugs
A type of drug that is used to treat complex, chronic, or rare conditions.
Gene/cellular therapy
A technique that modifies a person's genes to treat a disease.
Pillpack
A service that delivers prescription medications to patients in pre-sorted packages.
What are the criteria for the FDA to approve a drug?
Safety, efficacy, quality, economics
Generic medications
Medications that are equivalent to brand-name medications but are sold under their generic name.
Patent expiration
The time period after which a patent expires, allowing other manufacturers to produce and sell generic versions of the drug.
Cutting pills is an example of?
getting patients to adhere to their medication
How many drugs are generics?
5 billion Rxs-- 86% of drugs
Medical CPI
Medical Consumer Price Index is a measure of changes in prices for medical goods and services over time. It reflects the price changes that consumers pay for healthcare.
List prices
The price a manufacturer sets for a drug or medical product.
Patient cost shares
The portion of healthcare costs that the patient is responsible for paying out of their own pocket.
PAPs (Patient Assistance Programs)
Programs offered by pharmaceutical companies to help patients afford the cost of their medications, particularly for expensive specialty drugs.
helps people without insurance or adequate insurance
OOP costs (Out of pocket costs)
The portion of healthcare costs that the patient is responsible for paying out of their own pocket.
Copay
A fixed dollar amount that a patient pays for a covered healthcare service or medication.
Coinsurance
A fixed percentage that a patient pays for a covered healthcare service or medication.
Deductible
The amount of healthcare expenses that a patient must pay before their insurance begins to cover costs.
Premium payment
A recurring monthly payment made to an insurance company in exchange for healthcare coverage.
Pharmacy Benefit Managers (PBM)
Companies that manage prescription drug benefits on behalf of health insurance plans, employers, and other organizations.
AWP (Average Wholesale Price)
A list price for prescription drugs is typically used to calculate reimbursement rates for pharmacies and PBMs.
A1C
A blood test that measures a person's average blood glucose level over the past two to three months. It is often used to monitor long-term blood sugar control in people with diabetes.
Insulin
A hormone produced by the pancreas that regulates the body's use of glucose (sugar) for energy. It is commonly used to treat diabetes.
Iatrogenic problems
refer to problems or complications that arise as a result of medical treatment or procedures, including medication-related issues.
2 C’s that affect pharmacoeconomics
Cost and Consequences
Institutional Drugs
Drugs used in hospitals, nursing homes, outpatient clinics, medical homes, and other healthcare facilities
Community Health Centers
outpatient clinics that provide primary and preventive care to underserved populations
Collaborative Drug Therapy Management
collaborative practice agreement between a pharmacist and a physician to optimize medication therapy
Medication Therapy Management
service provided by pharmacists to help patients achieve the best therapeutic outcomes from their medications
Economies of Scale
Goal is to lower the per unit cost of production, making the total cost more efficient
production Possibility Curve (PPC)
Based on opportunity cost, it depicts the optimal outcome a business or country can achieve
Public goods
Goods that are not private and exclude consumption from people other than the buyer. They are available to everyone and often require government intervention for adequate supply (e.g. national parks, highways, security, education, health care, Medicare and Medicaid)
Causes of Market Failure
Public goods, Externalities, Natural monopolies, Information asymmetry
Natural monopoly
A market structure where one firm is able to produce at a lower cost than any other competitor, often due to high barriers to entry (e.g. patents for pharmaceuticals)
Off-label use
The use or prescribing of a drug for a reason not listed on the label
ex: ozempic (diabetes drug) for weight loss
Orphan disease
Affects less than 200,000 people
3 Main PBMs
CVS Caremark, OptumRX, Express Scripts
ADRs, ADEs, Patient Non adherence, Medical Errors
$600 billion problem in the US
Sovaldi
Created in 2014, treats Hepatitis C, about $1,000 a pill, 96% success rate
HRQOL
Health Related Quality of Life
Purple Book
Used by the FDA to determine biosimilars
What percentage of the 5 billion prescriptions written annually are generics?
86%
Medication Therapy Management
comprehensive approach to managing a patient's medications to optimize therapy and improve outcomes.
CDTM: Collaborative Drug Therapy Management
formal agreement between a pharmacist and prescriber, enabling pharmacists to initiate, modify, or discontinue medication therapy to improve outcomes.
CMR: Comprehensive Medication Review
process where a pharmacist reviews a patient's medication regimen to identify and resolve potential medication-related problems to optimize therapy and improve outcomes.
Out of Pocket Costs
the expenses that you pay for medical care that are not covered by your insurance plan.
Copay
Flat or fixed dollar amount - the amount you pay for a medical service or prescription drug that is typically paid at the time of service.
Coinsurance
Fixed percentage - the percentage of the cost of a covered health care service that you pay after you have met your deductible.
Deductible
"First dollars" that you pay - the amount you pay for covered health care services before your insurance plan starts to pay.
Premiums
Recurring/monthly payment regardless if you receive care - the amount you pay for your health insurance plan each month. This is separate from the costs of medical services you may receive.
Medical CPI
The Consumer Price Index (CPI) for medical care, which tracks the cost of medical services and goods over time.
Average Wholesale Price
the list price or "sticker price" of a drug, often inflated compared to actual market prices.
Family premium
The total amount paid annually by a family for health insurance coverage.
RRRR
four key elements of medication safety: Right Patient, Right Drug, Right Time, and Right Route of Administration.
Prescribing errors
Errors that occur during the prescribing process, including incorrect drug selection, dosage, frequency, or route of administration.
Administration errors
Errors that occur during the administration process, including incorrect drug selection, dosage, timing, or route of administration.
Prior Authorization
A process used by insurance companies to determine if a medication will be covered fully or partially based on medical necessity, formulary, and other factors.
Step Therapy
A strategy that requires patients to try cheaper treatment options before more expensive ones, often used for chronic conditions.
Utilization Management
The process of ensuring medications are used appropriately, including monitoring adherence, safety, and cost-effectiveness.
Tiered Drug Formulary
A system of drug classification that divides medications into multiple tiers based mostly on price, with the lowest tiers representing the lowest cost medications.
Open Formulary
A formulary that does not have restrictions on medications covered, allowing patients to have more options for their treatment.
Closed/Restricted Formulary
A formulary that has restrictions on medications covered, based on factors such as safety, efficacy, and economics, allowing for more cost-effective drug choices.
Moral Hazard
A situation where a party lacks the incentive to guard against a financial risk due to being protected from any potential consequences.
ex: I have car insurance so I will drive less carefully because I know my insurance will cover the costs
Nominal GDP
The value of all final goods and services produced in a country measured in current dollars, without any adjustment for inflation.
Real GDP
The value of all final goods and services produced in a country adjusted for inflation, allowing for comparison of economic output over time.
Per Capita GDP
The total GDP of a country divided by its population, giving an average output per person and an indication of the country's standard of living.
Expenditure Approach
A method of calculating GDP by adding up all the actual amounts of money spent on final goods and services during a specific period, providing a more accurate representation of GDP.
GDP = C + I + G + (X-M)
where:
C = Personal Consumption Expenditures (household spending)
I = Gross Private Domestic Investment (business investment)
G = Government Consumption and Gross Investment (government spending)
X = Exports
M = Imports
Income Approach
A method of calculating GDP by adding up all the earnings at people's disposal during a specific period, which tends to overestimate GDP since it does not account for saving.
Trade Balance
The difference between a country's imports and exports, which can be positive (trade surplus) or negative (trade deficit).
Elasticity
A measure of the responsiveness of demand or supply to changes in price or income, with elastic goods having a higher sensitivity to price changes and inelastic goods having a lower sensitivity.
Healthcare Spending
The amount of money spent on healthcare, which represents 18.3% of the US GDP, with $4.3 trillion spent on healthcare in 2020, and an average of $12,914 per person per year in healthcare premiums.
Capital Stock
The total value of all physical assets (e.g. buildings, machinery, and equipment) owned by a business, which is currently worth around $85 trillion in the US, and represents business growth rather than economic growth.
Production Possibility Curve
A graph that shows the maximum combination of two goods that can be produced given a fixed amount of resources and technology, which depends on how fast the capital stock grows.
Depreciation
The loss of value of a capital stock over time due to wear and tear, aging, and other factors, which reduces its productive capacity and affects the production possibility curve.
Bulk Drugs
Raw materials used to make pharmaceutical products, which can be cheaper to import from other countries than to produce domestically.
Net Import
The value of a country's total imports minus the value of its total exports.
Factor Markets
Markets for the factors of production, including labor, land, and capital.
Substitutable goods
Goods that can be replaced by other similar goods
Complementary goods
Goods that are consumed together: like peanut butter and jelly
Inferior goods
Goods for which demand decreases as income increases, such as generic brands
Superior goods
Goods for which demand increases as income increases, such as luxury vehicles
Normal goods
Goods for which demand increases as income increases, such as food and clothing
Income & Goods
Choosing to purchase more luxurious items depends on your income level
As income rises, the likelihood of purchasing superior goods also rises
What is the purpose of taxes?
Taxes are collected for government spending
What is a regressive tax?
A tax system where individuals with higher incomes pay a smaller percentage of their income in taxes. Examples include social security, payroll taxes, and state and local sales tax.
Progressive tax
A tax system where individuals with higher incomes pay a higher percentage of their income in taxes. This type of tax is designed to make income distribution more equitable.
FICA
A payroll tax that includes both social security and medicare taxes.
Social Security
A transfer income program designed to provide financial assistance to retired individuals.
Property tax
A tax on the value of property, typically paid by homeowners.
Federal poverty level (FPL)
A measure of income used to determine eligibility for certain federal programs.
