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Basics ofPharmacoeconomics and
Outcomes Research:Application to Patient Care
Sara Shull PharmD, MBA
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Preview
Economic concepts Data types & sources Types of pharmacoeconomic analyses
Perspective Cost-effectiveness and incremental
analysis Sensitivity analysis
Steps to pharmacoeconomic literatureevaluation Case studies for clinical practice and policy
building
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Opportunity Cost
Time and money as resources canonly be spent once choice isunavoidable.
O.C. is defined as the amount that aresource could earn in its highestvalued alternative use.
How do you invest your time? Why take valuable time to learn
about pharmacoeconomics andoutcomes research?
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How Can PE and Outcomes
Enhance My Practice?
PE is an aid to decision making with strongpotential to:
Mitigate the influence of marketing Puts practitioner in the drivers seat
Help set practice priorities
Enhances position of practitioner from payersperspective Medicare plans to decrease pay-out to stem
tide of budget deficit Private payers actively are developing
quality report cards
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How Can PE and Outcomes
Enhance My Practice?
Statistically more likely to beresponsible for better success in clinical
care by eliminating poor/ unnecessarycare
Ethical framework
Fidelity to individual patients &stewardship to the public good
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Economics is:
The study of how individuals &society end up choosing, with orwithout the use of money, to employ
scarce resources that could havealternative uses, to produce variouscommodities & distribute them for
consumption now, now or in thefuture, among various people andgroups in society. Paul Samuelson
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Pharmacoeconomics and
Outcomes Research
Using data to distinguish yourpractice
Data about efficacy
clinical and humanistic
Data about cost
resources consumed to achieveefficacy endpoints (investment)
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Efficacy Data
Management of efficacy endpointsbased on evidence enables cliniciansto maximize prescribing skills
Evidence-based healthcare is adetermination of the mix of thoseservices, drug products, andprocedures that maximise benefitsand reduce risks.
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Cost Data
Management of resourceconsumption enables patients tomaximize purchasing power-
Individual level- managing insuranceco-payments
Group level- managing insurance
premiums across groups andmaximizing the number of insuredpatients
Govt level- sustaining public programs
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Value Is the Goal of Practice
Minimizing the ratio of cost toefficacy creates value- best return oninvestment
Enhances your ability to deliver asuperior product
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Basic Value of Medical Care
Evidenced by general trends:
Increased use of medical care and prescriptiondrugs
Mortality rates of certain diseases havesignificantly declined
Mean length of hospital stay has also declined
Despite this general evidence, few specific
data regarding the actual costs andbenefits attributed to drugs and medicaltherapies exist
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Objectives
Objectives of pharmacoeconomicsand outcomes research mustoriginate within three dimensions
when considering results and valueof healthcare
Acceptable clinical outcomes
Acceptable humanistic outcomes
Acceptable economic outcomes
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Types of Pharmacoeconomic
Analysis
Methodology Cost measurementunit
Outcome unit
Cost minimization Dollars Various- butequivalent in
comparative groups
Cost benefit Dollars Dollars
Cost effectiveness Dollars Natural units (lifeyears, mg/dl blood
sugar, LDLcholesterol)
Cost utility Dollars Quality adjusted lifeyears
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Common Misconceptions When
Applying Pharmacoeconomic
Principles
Cost-effective care is initially the cheapest alternative
in a manner similar to other investments, least costoption may lead to greater costs downstream
Cost-effective care is outcome that generatesbiggest effect in a manner to similar investments,smaller increments of outcome may be achieved at a
lower overall cost
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Perspective
The point of view considered ineconomic analyses influences theoutcomes and costs considered to be
most relevant: Provider
Patient
Payer
Society
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Comprehensive Definition of
Cost-effectiveness
A therapy is deemed to be a cost-effective strategy when the outcomeis worth the cost relative tocompeting alternatives. In otherwords, scarce resources are utilized
to acquire the best value on themarket.
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Average Cost-effectiveness
Specifies the cost of an agentrequired to achieve each unit ofeffect. No comparison is made to
alternative agents.
Average cost-effectiveness
Cost of drug
Resulting effect = Cost per unit of effectachieved
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Average Cost-effectiveness
Average cost-effectiveness of Agent A
$50.00
50 units of effect = $1.00 per unit
Average cost-effectiveness of Agent B
$150.00
90 units of effect = $1.60 per unit
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Incremental Cost-effectiveness
Analysis
Makes comparisons to othertherapeutic options, standard ofcare, or doing nothing (placebo)
Fundamental ratio
Cost optionB Cost optionA
Effect option
B
Effect option
A
= Cost to achieve one unit of effect
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Incremental Cost Analysis
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
Placebo Agent A Agent B
Cost
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Comprehensive Incremental Cost-
effectiveness $150 - $50 $100
90 50 units = 40 units
=
$2.50 per unit of effect achieved
Therefore, because Agent A is an availablealternative with a lower average cost per
unit of effect achieved, the cost-effectiveness of using Agent B isdiminished. The cost of Agent B is not inline with the product it delivers- a poorvalue.
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Grid Representing All Possible
Relationships of Cost to Effect Between
Two Competing Alternatives
Cost of alternative Arelative to alternative
B
Lower Equal HigherEffectivenessalternative Arelative toalternative B
Lower+/-
Tradeoff
--
Dominated
Equal + Arbitrary -
Higher+
Domina
nt
++/-
Trade-off
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Sensitivity Analysis
Conclusions drawn from an economic analysismay change, depending on the uncertainty ofcost and effects considered.
S.A., by altering important variables & then
recalculating results, tests the validity ofconclusions:
Would Agent A still be most cost-effective ifthe effect of Agent B was greater thanmeasured in clinical trial?
Would Agent A still be most cost-effective ifthe monitoring costs of Agent B were actuallylower?
S.A. becomes increasingly important as
assumptions are made to a greater degree.
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Steps to Pharmacoeconomic
Literature Evaluation Evaluate:
The quality of the journal Qualifications of authors Title and abstract- unbiased?
Study methodology Perspective, study design, outcomes and appropriate
alternatives, costs and appropriate discounting,sensitivity analysis, & data sources
Sponsorship- could bias be introduced?
Incremental results What is the conclusion and does it differ between
subgroups? How much does allowance foruncertainty change conclusion?
Vogengerg, FR editor. Introduction to Applied Pharmacoeconomics, 2001
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Cases for Development
Formulary decision making (policy) Appropriate place for eplerenone (Inspra) and spironolactone
(generic) on Inpatient formulary of tertiary care academicmedical center
Clinical decision making for acute therapy
(bedside) Choosing between low molecular weight heparin orunfractionated heparin for the treatment of acute proximaldeep vein thrombosis
Clinical decision making for chronic therapy(bedside)
Choosing between selective cyclooxygenase inhibitor andtraditional non-steroidal anti-inflammatory agent formanagement of osteoarthritis pain
Other suggestions?
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Treatment of Pain Resulting from
Osteoarthritis Pain results in significant disability and resource utilization
affects 15% of US population
results in > 100,000 hospitalizations annually
NSAIDs
effective pain relief
24 30% the cost of Cox-II inhibitors
associated with a significant risk of adverse effects
Dyspeptic symptoms
More serious non-dyspeptic effects- symptomatic ulcers,ulcer hemorrhage, ulcer perforation
Cox- II inhibitors
effective pain relief
substantially more expensive than NSAIDs
associated with lower risk of GI side effects
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How should I treat my patient?
NSAIDs are inexpensive compared toCox-II inhibitor:
But wont the more expensive agent pay
for itself many times over by preventingan expensive GI bleed in my patient?
Dyspeptic symptoms are decreased by 15%
Clinically significant ulcer complications arereduced by 50%
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Risk of GI bleed: How Much Can It
Be Altered? Not all osteoarthritis patients have an
equal risk of developing a GI bleed Is paying extra for GI protection justified in all
patients?
How much can the risk of GI bleed bealtered by using a Cox-II inhibitor insteadof an NSAID? What value is really purchased for the extra
cost?
The relative risk reduction of GI complicationswith Cox-II inhibitor catches our eye- butactual risk reduction is small 1-2% for overall ulcer complications 1% for serious hemorrhage and perforation
Spiegel MR et al. Annals Internal Medicine 2003; 138:10(795-806)
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Cost-effectiveness analysis
Population Drug TotalAnnual
Cost
Qualys
Gained
Incrementalcost per
Qualy gained
No Hxof GIulcer
Naproxen $4859 15.2613 -
Cox-IIinhibitor
$16,443 15.3033 $275,809
Hx of GIulcer
Naproxen $14,294 14.7235 -
Cox-IIinhibitor
$19,015 14.8081 $55,803
Spiegel MR et al. Annals Internal Medicine 2003;138:10(795-806)
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Clinical Decision Making
Risk reduction for GI complicationsseen with Cox-II inhibitors is unlikelyto offset their increased cost in the
management of average risk patientswith osteoarthritis pain
With no history of GI bleed, choose
naproxen With history of GI bleed, choose Cox-II
inhibitor
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Clinical Decision Making
In all patients with osteoarthritis, thedecision to use Cox-II inhibitorshould be made with awareness of
the effect of the added risk forcardiovascular events on cost-effectiveness
Currently, there is not enoughinformation available, but it may beprudent to avoid these drugs in patientswith cardiovascular history, even in
patients with history of GI bleed
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Treatment of Acute Deep Vein
Thrombosis VTE
> 200,00 new cases reported annually in US Mortality attributed to PE 100 200,000 deaths annually
Unfractionated heparin
Effective for treating VTE Daily cost for IV therapy is low Requires close monitoring of clotting time/ dose titration
and, therefore, hospitalization
Low molecular weight heparin
Effective for treating VTE Daily cost for SQ therapy is high Routine clotting time monitoring not required unless
obese or manifestations of renal compromise present Early discharge or outpatient treatment for VTE is
possible
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How Should I Treat My Patient?
Unfractionated heparin is a lessexpensive option compared to lowmolecular weight heparin.
But wont the more expensive agent payfor itself by bypassing routinecoagulation monitoring?
Also, cant I lower the risk of nosocomial
infection and error by sending mypatient home after establishing lowmolecular weight therapy?
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Cost-effectiveness Analysis
Treatmentsetting Drug
Total
costs ofcourse oftherapy
QualysGained
Incremen
tal costper Qualygained
Both agentsadmin ininpatientsetting
Unfractionated heparin $26,361 7.978 -
Lowmolecularweightheparin
$26,516 7.998 $7,750
Lowmolecular
weightheparinprimarilyadmin inoutpatientsetting
Unfractionated heparin $26,361 7.978 -
Lowmolecular
weightheparin
$25,559 7.998Cost-saving
Gould MK et al. Annals Internal Medicine 1999;130(10):789-799
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Clinical Decision Making
Decreased monitoring costs with lowmolecular weight heparins and theattenuated risk of future complications
with these agents do result in cost-effective care.
The higher acquisition cost is justified.
Treating the patient on outpatient basis
creates best value. Better outcomes are achieved at a lower
overall cost- the best possible situation.
Gould MK et al. Annals Internal Medicine 1999;130(10):789-799
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Clinical Decision Making
For patients that can receive in-hometreatment and support, establish lowmolecular weight heparin therapy on first
day of hospitalization, then send thepatient home. (analysis includes cost ofhome health visits)
For patients that must remain
hospitalized, low molecular heparin shouldbe selected before unfractionated heparinas therapy for treatment of VTE.
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Drug Selection for Inpatient
Formulary Addition
Congestive heart failure
Afflicts > 4.6 million people in US
Disease and cost burden rapidly
increasing
Primary reason for hospitalization in US
Length of stay & readmission significant
cost drivers High mortality rate
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Formulary Considerations
Two agents are effective & safe inreducing the risk of death andhospitalization of heart failure patients.
Spironolactone (available on Inpt formulary) Daily cost is 50-90% lower than eplerenone
Gynecomastia/ breast pain occurs in 10% of males
Eplerenone (considered for formulary addition)
More specific mechanism of action
Lower incidence of gynecomastia, but greaterincidence of hyperkalemia requiring hospitalization
C f C
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Indirect Comparison of Clinical Trial
Results
Variable Spironolactone Eplerenone
Relative risk of
death due toheart failure 75.2% 86.2%
Per patient costof drug (36
months)
$50.28 $1,230.00
Cost of drug perdeath prevented
$440.00 $53,000.00
Pitt B et al. The New England Journal Medicine 1999;341(10):709-717
Pitt B et al. The New England Journal Medicine 2003;348(14):1309-1321
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Policy Decision Making
Eplerenone is not cost-effective acrossentire heart failure population
However, length of stay and readmission
rates increase as severity of heart failureincreases
Stratification of eplerenone efficacyindicates mortality and hospitalization
rates fall more dramatically when heartfunction is more compromised (ejectionfraction < 40%)
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Policy Decision Making
Extra cost of eplerenone may be justifiedin sicker patients or in patients thatcannot tolerate cheaper spironolactonedue to gynecomastia/ breast pain
Add eplerenone to Inpatient formulary butlimit use within these two patientpopulations only Ejection fraction < 40% Cannot tolerate or fails spironolactone
Eplerenone is not allowed for treatment ofhypertension (despite FDA indication) asmany effective, safe alternatives areavailable at significantly lower cost.
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Conclusion
Time and money can only be spent once-choice is inevitable. Whether doneunconsciously or with a consistent
process, health care professionals areconstantly evaluating patient care choices& acting on them.
Pharmacoeconomics and outcomes
research can enhance the quality of yourpractice by strengthening your evaluationprocess and increasing the probability thatyou deliver better value in patient care.