Introduction to Pharmacoeconomics (PE)

Introduction to Pharmacoeconomics (PE) cost Definition but Importance and clinical relevance Relationship to other research Types of PE studies Relevance to pharmacy students Rascati (Chapter 1) 3 Introduction • New health technologies, including pharmaceuticals (drugs), are being developed each year • Are these technologies/drugs worth their cost? and advantage usually at higher cost ―New intervention may provide modest →High prices of specialty medications • Sofosbuvir (Sovaldi®)- a revolutionary drug for hepatitis C, priced at $84,000 (12 weeks of treatment) • Luxturna®- gene therapy for blindness, priced at $850,000 (one-time treatment) • Zolgensma®-gene therapy for spinal muscular atrophy, priced at $2.1 million (one-time treatment) Ab to the • How do you compare the value of a health intervention cost of the intervention? Ding ―Pharmacoeconomic analysis helps you achieve this Ga G service 5 What is Pharmacoeconomics? •Pharmacoeconomics is the identification, measurement, and comparison of the costs and outcomes of pharmacy Go products (e.g., drugs) or services ok it ―Bootman, 2005 Qualy • PE is a type of “outcomes research” ―However, not all outcomes research are PE research 7 What is outcomes research? • Outcomes research seeks to understand the end results of particular health care practices and interventions • End results include effects that people experience and care about, such as ―improved ability to function (e.g., activities of daily living, ADL) ―increased quality of life (e.g., for people with chronic condition) Source: Agency for Healthcare Research and Quality (AHRQ), 2000 8 Examples of health outcomes • Examples of health outcomes include ―Physiologic measure (e.g., blood pressure) ―Clinical events (e.g., stroke, myocardial infarction) ―Mortality (e.g., infant mortality rate) ―Symptoms (e.g., difficulty breathing) ―Functional measures (e.g., ADL, evaluated using a health survey such as SF-36) t medicalmentalhealth ―Patient’s experiences with care (e.g., satisfaction with care, evaluated using a health survey such as Consumer Assessment of Health Plans) Source: Agency for Healthcare Research and Quality (AHRQ), 2000 9 Classification of PE analysisIs it true or partial PE analysis? • How PE analysis is classified depends on what is measured and compared between two options (or alternatives): If 1. Only costs are measured and compared? → cost analysis (partial PE evaluation) 2. Only outcomes are measured and compared? → clinical or health outcomes study (partial PE evaluation) 3. Both costs and outcomes are measured and compared? (full or true PE evaluation) 12 Relationship of PE to other research Relationship of PE to other research sin I field • PE is a multidisciplinary ―Several professionals such as pharmacist, doctors, economists, public health, etc., can receive training in PE method • The field of PE is relatively new ―The term first appeared in the literature in the mid-1980s →However, the concepts and methods are borrowed from other, more established disciplines and research areas • PE overlaps with both health care economics and pharmacy-related clinical or humanistic outcomes research ―Health economics include topics such as supply and demand for health care resources and the effects of health insurance ―Clinical or humanistic outcomes research identifies, measures, and evaluate the end results of health care services, including patient’s health status (QoL) and satisfaction with health care 14 Importance/relevance of PE do 1. Health care cost/expenditure is increasing each year at a rate higher than the inflation95rate ―In 2022, the U.S. national health expenditure grew by 4.1% (2.7% in 2021), to $4.5 trillion ($4.3 trillion in 2021), or per-person health care expenditure of $13,493 ($12,914 in 2021) ―The overall share of the U.S. economy (i.e., gross domestic product, GDP) devoted to health care spending in 2022 was 17.3% (18.3% in 2021) →The huge healthcare spending diverts money away from education, infrastructure, and other vital investments r v health care • Therefore, PE analysis can help assess if scarce resources are being spent wisely Source: Centers for Medicare and Medicaid Services, 2022 16 Importance of PE 2. PE analysis can be used to determine the best treatment (or medication) for each patient, taking into account clinical and economic considerations →Would a patient be willing to pay extra $50 for a more expensive newer drug (out-of-pocket cost=$100) compared to an older, less expensive drug (out-of-pocket cost=$50) because • Newer drug has a more convenience dosing (once a day vs. twice a day for the older drug), OR • Newer drug has a reduced side effects (e.g., no diarrhea, no daytime drowsiness, etc.)? 2―In other words, PE analysis can help evaluate if the added benefit is worth the added cost for the patient 17 Importance of PE 3. Formulary decision Organizations such as hospital systems (e.g., Kaiser Permanente), managed care organizations (e.g., United Healthcare, Blue Cross Blue Shield), or governmental health plans (e.g., California MediCal, VA, Medicaid, Medicare) often use PE analysis as a tool to make formulary additions 3 more expensive medication is often not recommended for →e.g., insurance coverage unless a less expensive medication is tried first 18 Importance of PE 4. A community pharmacy can use it to evaluate the costs and benefits of providing, or not providing, a particular clinical pharmacy service ―The additional cost of providing a specific clinical pharmacy service is balanced against the added value of the service →Cost of service – e.g., the added cost of hiring a clinical pharmacist that is Boardcertified in diabetes care →Value of service – improved patient outcomes that decrease the need for other costly services • For example, medication therapy management (MTM) of diabetes to reduce diabetes-related emergency room visits and hospitalizations 19 Importance of PE WI't process (before advent of PE analysis) 5. Drug reimbursement Clinical Trials Phase II Phase III FDA Approval Phase I Access 20 Importance of PE Drug reimbursement process (after advent of PE analysis) Clinical Trials Demonstrate value Phase I Cost Effectiveness Analysis (CEA) Access Other studies Reimbursement Phase III FDA Approval Phase II 21 Types of PE Analysis • There are four basic types of PE analysis: 1. 2. 3. 4. Cost-minimization analysis (CMA) Cost-effectiveness analysis (CEA) ow Cost-utility analysis (CUA) Cost-benefit analysis (CBA) • All measure costs in dollars, but they differ in how the outcome is measured ―Unit of cost is dollars for all, but unit of outcome is different for each 23 IER si G Op Ar Types of PE Analysis PE analysis Cost unit Outcome unit Summary measure Cost-minimization analysis (CMA) Dollars Assumed to be equal between the two alternatives (could be clinical units or utility) Dollars: difference in cost Cost-effectiveness analysis (CEA) Dollars Natural/clinical units (e.g., life year gained, mmHg blood pressure, A1C, etc.) Cost-utility analysis (CUA) Dollars Utility (e.g., quality adjusted life year, QALY) Cost per effectiveness: difference in cost divided by difference in outcome Uniform measure Cost per QALY Cost-benefit analysis (CBA) Dollars Dollars OB adjust Quality utility x249 Net gain or loss inrigger dollars: does benefit outweigh the cost? 24 Summary: types and classification of economic evaluations Are both costs and outcomes of alternatives examined? Is there a comparison of two or more alternatives ? e.g., Drug A vs. Drug B No No Yes Yes Examines only outcomes Examines only costs Examines both costs and outcomes 1A: Partial Evaluation (outcome description) 1B: Partial Evaluation (cost description) 2: Partial Evaluation (cost-outcome description) 3A: Partial Evaluation (efficacy or effectiveness analysis) e.g., RCTs 3B: Partial Evaluation (Cost analysis) 4: Full Economic Evaluation (CEA, CUA, CBA, CMA?)  Adapted from Drummond, et al., 2015. Methods for the economic evaluation of health care programmes Questions that PE can help answer 1. Should a new, expensive medication be added to the formulary? 2. Should a clinical pharmacy service be implemented? 3. How do different medications impact a patient’s health-related quality of life (HRQoL)? 4. Is this immunization or vaccine plan cost-beneficial? 5. Should hospital administrators purchase each and every piece of new diagnostic equipment? 26 Relevance of PE to pharmacy students 1. Pharmacy students may specialize and practice as Health Economics and Outcomes Research (HEOR) Managers ―Function: develop cost-effectiveness economic models to help support product portfolios • Areas of Practice ―Pharmaceutical Industry (e.g., Amgen, Eli-Lilly, Pfizer) ―Pharmaceutical Consulting (e.g., Xcenda, Evidera, Healthcore) • Requirements: PharmD + 1-2 years of HEOR Postdoctoral Fellowship • Benefit: Very competitive salary package, more flexible work schedule, fast-paced environment 27 Relevance of PE to students 2. Pharmacy students may specialize/practice as Pharmacy Benefit Managers (PBMs) pass decisions ―Function: formulary and resource allocation • Areas of practice ―Health insurance companies and managed care organizations (MCOs) →Aetna →Blue Cross Blue Shield →Humana →United Healthcare ―Hospital systems (e.g., Kaiser Permanente) ―Government hospitals (e.g., VA) • Requirements: PharmD (with or without HEOR Postdoctoral Fellowship) • Benefit: Competitive salary, more flexible work schedule, fast-paced environment Conclusion • PE compares costs and outcomes between two or more pharmacy products or services ―These two or more products or services are called “alternatives” • There are 4 main types of PE analysis. They are different in the way the outcome is measured. Cost is measured in dollars for all ―CMA (outcome= assumed to be the same between the two alternatives) ―CEA (outcome = natural clinical units such as BP, A1C, life-years gained) ―CUA (outcome = quality adjusted life-years, or QALYs) ―CBA (outcome = dollars) • Each type of PE analysis has its advantages and disadvantages 29