Pharmacoeconomics

From Theory to Practice

Renee J. G. Arnold

• Publisher: CRC Press
• Year: 2020
• eBook ISBN:
  9780429957673
• Topic: Medicine
• Subtopic: Health Care Delivery

In this era of finite budgets, healthcare rationing, medication shortages, and the global aging and burgeoning of populations, numerous stakeholders in the healthcare arena must understand the basic principles of pharmacoeconomics and how these may be correctly applied to facilitate drug development, rationing, patient segmentation, disease management, and pricing model development.

Pharmacoeconomics: From Theory to Practice, Second Edition focuses on how to more efficiently and rationally leverage these healthcare resources, not by restricting access to necessary services, but by using them more efficiently. This updated volume arms decision makers with the tools they need to make wise choices in an area where the stakes are extremely high—the health of the global population.

Key Features:

• Introduces the major concepts and principles of Pharmacoeconomics
• Gives updated information about pharmacoeconomic models, value-based pricing, novel modelling methodologies and international utilization of these modalities in government, the pharmaceutical industry, and health care settings
• Demonstrates the full range of ethical and moral issues, as well as overall public health and commercial concerns that are often involved in decisions entailing pharmacoeconomic issues
• Presents both theory and methodology discussions, including real-world examples, in each chapter

'The methods and application of pharmacoeconomics are rapidly evolving, so the new edition of this textbook is very timely. It provides an excellent introduction for those new to the field, whether they be students, professionals within the pharmaceutical industry, or health care professionals more generally. A particularly useful feature of the book is that it gives an introduction both to the main methods used in pharmacoeconomics studies and how these studies are used in decisions about the reimbursement or appropriate use of medicines in several countries.'

- Michael Drummond, Professor of Health Economics, University of York

1 Introduction to Pharmacoeconomics

William F. McGhan, PharmD, PhD

Health Decision Strategies, LLC

Tampa, FL, USA

University of the Sciences

Philadelphia, PA, USA

Renée J.G. Arnold, PharmD, RPh

Icahn School of Medicine at Mount Sinai

Arnold Consultancy & Technology, LLC

New York, NY, USA

TABLE OF CONTENTS

1.1 Introduction

1.2 Analytical Perspectives

1.3 Code of Ethics

1.4 Overview of Economic Evaluation Methods

1.5 Quality of Life and Patient Preferences

1.6 Decision Analysis and Modeling

1.7 Ranking Priorities: Developing a Formulary List

1.8 Incremental Analysis and Quadrants

1.9 Fourth Hurdle and Drug Approvals

1.10 From Board Room to Bedside

1.11 Conclusions

References

1.1 Introduction

Practitioners, patients, and health agencies face a multitude of conundrums as the development of new therapies seems boundless; however, the funding for these cures is limited. How does one decide which are the best medicines to use within restricted budgets? The continuing impact of cost-containment is causing administrators and policy makers in all health fields to closely examine the costs and benefits of both proposed and existing interventions. It is increasingly obvious that purchasers and public agencies are demanding that health treatments be evaluated in terms of clinical and humanistic outcomes against the costs incurred.

Pharmacoeconomics is the field of study that evaluates the behavior or welfare of individuals, firms, and markets relevant to the use of pharmaceutical products, services, and programs [1]. The focus is frequently on the cost (inputs) and consequences (outcomes) of that use. Of necessity, it addresses the clinical, economic, and humanistic aspects of healthcare interventions in the prevention, diagnosis, treatment, and management of disease. Pharmacoeconomics is a collection of descriptive and analytic techniques for evaluating pharmaceutical interventions, encompassing the spectrum of individual patients to the healthcare system as a whole. Pharmacoeconomic techniques include cost-minimisation, cost-effectiveness, cost–utility, cost–benefit, cost of illness, cost-consequence, and any other economic analytic technique that provides valuable information to healthcare decision makers for the allocation of scarce resources. Pharmacoeconomics is often referred to as “health economics” or “health outcomes research,” especially when it includes (a) comparison(s) with non-pharmaceutical therapy or preventive strategies such as surgical interventions, medical devices, or screening techniques.

Pharmacoeconomic tools are vitally important in analyzing the potential value for individual patients and the public. These methods supplement the traditional marketplace value as measured by the prices that the patient or patron is willing to pay. With government agencies and third parties’ continuing concern about the higher expenditures for prescriptions, pharmaceutical manufacturers and pharmacy managers are highly cognizant that pharmaceutical interventions and services require comparative cost-justification and continual surveillance to assure cost-effective outcomes [2–5].

From pharmaceutical research, we have seen significant therapeutic advances and breakthroughs. From healthcare delivery entrepreneurs, we have seen numerous expanding roles for pharmacists, nurses, and physician assistants, with services such as home intravenous therapy, drug-level monitoring, parenteral nutrition management, hospice care, self-care counseling, and genetic screening for customizing therapy, among other innovations. The use of valid economic evaluation methods to measure the value and impact of new interventions can increase acceptance and appropriate use of such programs by third-party payers, government agencies, and consumers [2–5].

There is increasing scrutiny over all aspects of health care as we attempt to balance limited finances and resources against optimal outcomes. Cost-effectiveness evaluations of pharmaceutical options are becoming mandatory for attaining adequate reimbursement and payment for services [2–6]. Pharmacoeconomic methods document the costs and benefits of therapies and pharmaceutical services and establish priorities for those options to help in appropriately allocating resources in ever-changing healthcare landscapes and reimbursement environments/schema.

1.2 Analytical Perspectives

Point of view is a vital consideration in pharmacoeconomics. If a medicine is providing a positive benefit in relation to cost in terms of value to society as a whole, the service may not be valued in the same way by separate segments of society. For example, a drug therapy that reduces the number of admissions or patient days in an acute care institution is positive from society’s point of view but not necessarily from that of the institution’s administrator, who depends on a high number of patient admissions to meet expenses. Thus, one must determine whose interests are being served when identifying outcome criteria for evaluation. When considering pharmacoeconomic perspectives, one must always consider who pays the costs and who receives the benefits. A favorable economic analysis that showed savings in clinic utilization from the employer perspective would probably not be viewed positively from the clinic’s budget perspective. More broadly, what is viewed as saving money for society may be viewed differently by private third-party payers, administrators, health providers, governmental agencies, or even the individual patient. Historically, it has been suggested among health economists that the societal perspective be discussed in an evaluative report, even though the focus of the report might deal with other segments such as hospitals or insurance agencies. Recent articles, books, and healthcare frameworks, however, discuss the importance of the individual payer perspective as well [5, 7]. Indeed, although the societal perspective is appropriate in single-payer countries, in the United States, with many different healthcare delivery and payer approaches, this can be complicated, and analyses are often done from multiple perspectives to assist adjudication by myriad stakeholders.

1.3 Code of Ethics

The International Society for Pharmacoeconomics and Outcomes Research (ISPOR) has published a code of ethics that is vital to the honesty and transparency of the discipline [8]. The code encourages pharmacoeconomists to maintain the highest ethical standards because the organization recognizes that activities of its members affect many constituencies. These include but are not limited to: (1) patients, caregivers, and patients’ as...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• Preface
• Acknowledgments
• Editor
• Contributors
• Chapter 1. Introduction to Pharmacoeconomics
• Chapter 2. Decision Modeling Techniques
• Chapter 3. Cost of Illness
• Chapter 4. Markov Modeling in Decision Analysis
• Chapter 5. Retrospective Database Analysis
• Chapter 6. What Is Cost-Minimisation Analysis?
• Chapter 7. Cost-Effectiveness Analysis
• Chapter 8. Budget Impact Analysis
• Chapter 9. Multicriteria Decision Analysis for the Healthcare Decision Maker
• Chapter 10. DICE Simulation: A Unifying Modeling Approach for Pharmacoeconomics
• Chapter 11. Some Problems/Assumptions in Pharmacoeconomic Analysis
• Chapter 12. Patient-Reported Outcome Measures
• Chapter 13. Sensitivity Analysis
• Chapter 14. Use of Pharmacoeconomics in Drug Reimbursement: What Can We Learn from International Experience?
• Chapter 15. Value-Based Pricing of Pharmaceuticals in the US and Europe
• Chapter 16. Pharmacoeconomics in Disease Management: Practical Applications and Persistent Challenges
• Chapter 17. From Machine Learning in Drug Discovery to Pharmacoeconomics
• Chapter 18. Speculations on the Future Challenges and Value of Pharmacoeconomics
• Chapter 19. Pharmacoeconomics in the Era of the Novel Coronavirus
• Index