Lecture 16: Intro to Pharmacoeconomics

Question 1

Pharmaco-economics (PECON)

Answer 1

1. A compilation of methodologies that evaluate ECONOMIC, CLINICAL, AND HUMANISTIC OUTCOMES (ECHO) of pharmaceutical products and services
2. Efficiency, Efficacy, and Effectiveness, are frequently used terms

Question 2

SEVERAL TYPES OF COSTS CAN BE USED IN PECON STUDIES:

Answer 2

a) DIRECT MEDICAL COSTS
b) DIRECT NONMEDICAL COSTS
c) INDIRECT COSTS
d) INTANGIBLE COSTS

Question 3

ECO Model for Health outcomes

Answer 3

Economic outcomes
Clinical outcomes
Humanistic outcomes

Question 4

“Medical Resources”

Answer 4

“Direct Medical Costs”:
 costs paid directly for the medical products
 hospitalization(s), MD visits, Rxs

Question 5

“Non-Medical Resources”

Answer 5

“Personal non-medical costs”
 transportation, child care
“System non-medical costs”
 Special education programs

Question 6

Indirect Costs

Answer 6

 costs of “morbidity” & “mortality”
 lost wages or productivity
 premature death

Question 7

Intangible Costs:

Answer 7

cost of non-financial “humanistic” outcomes
 cost associated with pain & suffering
 associated with measuring quality of life

Question 8

Pharmacoeconomics

Answer 8

describes a compilation of methodologies that
evaluate economic, clinical, and humanistic outcomes of pharmaceutical products
and services

Question 9

PECON employs

Answer 9

techniques from public economics

Question 10

PECON studies are used

Answer 10

to evaluate a variety of areas that involve pharmaceuticals
 Selection of formulary products
 Treatment guidelines and disease management
 Prior authorization, step-therapy policies and prescription benefit plans

Question 11

Efficacy

Answer 11

“Therapy or medication works” under controlled conditions

Question 12

Effectiveness

Answer 12

“Therapy or medication works in the real world”

 Works for individuals for whom it was intended

Question 13

Efficiency

Answer 13

Lowest cost per unit output

 Best allocation of resources that optimize productivity

Question 14

Steps for Conducting a PECON Analysis- COSTS

Answer 14

1. Identify, measure, and value costs
   Identifying relevant costs
    Identify costs of all relevant resources consumed
    A relevant cost is one not incurred if it were not for the product or service that is being studied

Question 15

Cost categories to consider

Answer 15

Direct medical costs
 Direct nonmedical costs
 Indirect costs
 Intangible costs

Question 16

PERSPECTIVE:

Answer 16

Different costs are borne by different parties: Patients, payers, practitioners

Question 17

Discounting

Answer 17

Costs of products or services may extend over more than one year
 Time value of money must be taken into account
 Interest and inflation
 Medical Consumer Price Index (MCPI) is often used to estimate inflation rates
 Present value of costs is also used

Question 18

MCPI

Answer 18

Medical Consumer

Price Index

Question 19

Sensitivity Analysis- Conducting a PECON Analysis

Answer 19

Testing the variability of outcome or cost assumptions under different plausible scenarios

-Account for uncertainty in PECON evaluations

Question 20

Data Used in Performing PECON STUDIES

Answer 20

Data can come from RCTs, observational studies, literature, each with distinct advantages and disadvantages
- Critical evaluation of PECON studies involves a series of steps including a detailed
evaluation of input values (COSTS AND OUTCOMES) used to arrive at estimate
results

Question 21

Randomized controlled trials

Answer 21

Patients are recruited, randomly assigned to different groups receiving different treatment alternatives
- Costly and results are not reflective of “real world
- Standardized treatment protocol followed
- Patients and investigators are blinded and do not know which treatment they
have been assigned to or what treatment they are receiving

Question 22

Naturalistic designs

Answer 22

 Patients are still recruited and randomly assigned
 However patients recruited and care delivered/received are representative of that seen in routine
practice

Question 23

Decision analysis

Answer 23

 Systematic approach to decision making under conditions of uncertainty
 Clinical and resource data are collected from literature and utilized in a statistical model that
simulates variability in the decision making process
 2 main types – Decision Trees and Markov Models

Question 24

Retrospective analysis

Answer 24

Uses observational data (i.e. actual claims)

Question 25

Advantages of Retrospective analysis

Answer 25

it reflects actual costs of routine care (“real world”), comprehensive, large sample

Question 26

Disadvantages of Retrospective analysis

Answer 26

claims are designed for billing purposes not for research

Question 27

CMA

Answer 27

Cost minimization analysis
Outcome: Clinical measure of life-years gained

• Used when two or more therapeutic interventions are equivalent in terms of their
  outcomes or consequences
  -Ex: Branded versus generic version of same drug,
  different routes of drug administration for same drug

Question 28

CEA

Answer 28

Cost effectiveness analysis
Outcome: Clinical measure of life-years gained

-Most commonly used PECON methodology
Outcomes / consequences are measured as outcomes
such as life-years gained, hospital days, etc. rather than monetary units

Question 29

CUA

Answer 29

Cost utility analysis

Outcome: Quality-adjusted life years

Question 30

CBA

Answer 30

Cost benefit analysis

Outcome: $/Monetary Units

Question 31

CCA

Answer 31

Cost consequence analysis

Outcome: Multiple

Question 32

COI

Answer 32

Cost of Illness Studies

Outcome: Not assessed