CHAPTER:2PHARMACOECONOMICS

BYMrs. K.SHAILAJA., M. PHARM.,LECTURERDEPT OF PHARMACY PRACTICE,SRM COLLEGE OF PHARMACY

Introduction

Compares the value of one pharmaceutical drug or drug therapy to another.

To guide optimal healthcare resource allocation, in a standardized and scientifically grounded manner.

Evaluation provides us with the methodology to determine those treatment options, which will yield the maximum health gain per unit of currency spent.

Definition:

Pharmaeconomics have been defined as “the description and analysis of the costs of drug theraphy to health care systems and society”. sub-discipline of health economics .study evaluates the cost (expressed in monetary terms) and effects (expressed in terms of monetary value, efficacy or enhanced quality of life) of a pharmaceutical product.

Types of pharmacoeconomic evaluations:

Cost-minimization analysis (CMA)

Cost-benefit analysis (CBA)

Cost-effectiveness analysis (CEA)

Cost-utility analysis (CUA)

Uses tools for examining the impact (desirable, undesirable) of alternative drug theraphy and other medical interventions.Share the common feature of comparing inputs (cost) with outcomes (benefits) resulting from drug intervention .Cost of drug therapy relates not only to the price of the drug but also includes direct and indirect costs.Direct costs:-costs of staff and capital.Indirect costs:-include loss of earnings, loss of productivity and cost of travel to hospital.

Quality Adjusted Life Year (QALY) is a measure of health outcome which includes quality and quantity of life.

Cost minimization analysis:

Measures and compares input costs, and assumes outcomes to be equivalent.Simplest method ,to compare costs of alternative therapies that have: identical clinical effectiveness (including adverse reactions, complications and duration of therapy), but different costs choose the least cost alternative among equivalent or equally efficacious alternatives .

Example:The evaluation of two generically equivalent

drugs in which the outcome has been proven to be equal, although the acquisition and administration cost may be significantly different.

Cost effectiveness analysis:

If two or more drug therapies have the same treatment objective but different degrees of efficacy then cost-effectiveness analysis may be performed.Assigns a monetary value to the measure of effect .

Incremental Cost Effectiveness Ratio = Cost A - Cost B(ICER) Effect A – Effect B

Disadvantages1.It is a narrow measure as only one outcome is being measured.2. It is not useful in assessing a single programme.3. It cannot be used to compare more disparate alternatives

Cost Benefit Analysis

CBA, sometimes called benefit–cost analysis (BCA), is a systematic process for calculating and comparing benefits and costs of a project, decision or government policy .To improve the decision making process in allocation of funds to health care programs.

DisadvantagesUse is limited by need to place monetary valuations on health outcomes.Cost utility analysis is more widely used as results are presented in terms of cost per QALY.

Cost Utility Analysis:

An adaptation of cost effectiveness analysis.Measures an intervention's effect on both quantitative and qualitative aspects of health (morbidity and mortality).Focuses on increased quality of life.Expressed as cost per quality-adjusted life years (QALY).

DisadvantageIt is not helpful in assessing a single programme.

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