COST MINIMIZATION ANALYSIS(CMA)

GROUP 2:

PETER PEDO AKOL

NAOME TURYAHABWE

JOHN BOSCO NINSIIMA

ALIYU HISHAM SULEIMAN

COST MINIMISATION ANALYSIS

Cost minimization analysis: Refers to comparison of two interventions or

strategies which are assumed to have the same outcome or effects to find out which of the two is the least costly option. It focuses on costing each of the options being compared in order to find out which of them has the least cost. Its main aim is therefore to find the most desirable option.

The fundamental assumptions underlying this method are:

The two options being compared have exactly the same effect (identical benefits).

That important alternatives have not been left out.

CMA (2)

It is a tool used in pharmacoeconomics and is applied when comparing multiple drugs of equal efficacy and equal tolerability. Pharmacoeconomics which is a sub-discipline of Health economics refers to the scientific discipline that compares the value of one pharmaceutical drug or drug therapy to another.

CMA (3)

From a broader perspective, it is used to compare two interventions/strategies (not necessarily drugs) with equivalent effectiveness and efficacy.

Of two medicines with equal efficacy, which one is least expensive.

It is the most used cost evaluation method. Most accurate method when comparing

cost between two therapeutically equivalent medicines.

KEY DEFINITIONS

Pharmacoeconomics—the description and analysis of the cost of pharmaceutical therapy to health care systems

Cost—the total resources consumed in producing a good or service

Price—the amount of money required to purchase an item

KEY DEFINITIONS (2) Medicine effectiveness—the effects of a

medicine when used in real-life situations

Medicine efficacy—the effects of a medicine under clinical trial conditions

DIRECT COSTS OF A MEDICINE Acquisition cost Transportation cost Supply management cost (i.e., storage facility

cost) Cost of supplies and equipment to administer

medicines, such as syringes and needles Personnel costs to prepare and administer such

as physicians, pharmacists, and nurses Other direct costs (e.g., ADRs, hospital room

charges, laboratory fees) Nonmedical cost (e.g., patient travel expenses)

INDIRECT COSTS OF A MEDICINE (2) Indirect costs—examples

Cost of illness to the patient Lost time from work Time required to care for somebody

Intangible costs Costs associated with pain and suffering

usually incorporated into utilities assigned to health states which reflect quality of life

PROCESS OF CMA

Obtain acquisition price for each medicine and calculate the price for the course of treatment to be compared- dose per day, number of days of treatment.

Calculate pharmacy, nursing and physician cost associated with the use of each medicine.

Process 2

Calculate equipment cost associated with each medicine.

Calculate laboratory costs associated with each medicine.

Calculate cost of any other significant factor

Calculate and compare total medicine costs for each medicine.

Example 1

Category Medicine A Medicine BAcquisition price USD 8.OO USD 15.00Pharmacist salary USD 2.50 USD I.50Nurses salary USD 2.50 USD 2.00Supplies USD 9.00 USD 2.25Lab services USD 4.00 USD 1.00

TOTAL USD 26.00 USD 21.75

Example 2

For example, we may wish to compare the cost of organizing communal days for periodic impregnation of mosquito nets with distributing individual kits for home use in order to find which of the two options is cheaper. The expected outcome is the treated net for both strategies. The study would now try to establish which of the two options is cheaper.

APPLICATION OF CMA

In situations where the benefits of alternative treatments have been proven to be identical and as such this methodology is perceived as being easy to apply.

It is used in supporting and justifying the introduction of cheaper drugs in the same therapeutic class.

It is used when finding out the activity or output with the lowest cost

Advantages

It facilitates selection of cheaper yet effective drugs or interventions.

It is the simplest of the four types of pharmacoeconomics analysis because the focus is on measuring the left hand side (cost) of the pharmacoeconomics equation.

It is very useful in evaluating the cost of a specific drug

Because it compares the cost of two alternatives, it helps identify the cheapest method/drug to use hence maximized profits/benefits.

It is most useful for comparing generic and therapeutic equivalents or «me too» drugs

Disadvantages

It can only be used to compare two products that have been shown to be equivalent in dose and therapeutic effect.

In many cases, there is no reliable equivalence between two products and if therapeutic equivalence cannot be demonstrated, then cost-minimization analysis is inappropriate (WHO, 2003)

It turns to the assessment of costs only after the benefits of the competing health care technologies have been demonstrated to be clinically equivalent.

It only compares alternatives of the same outcomes.

Its more time consuming since in-order to use it one has to find out the cost of the two different outputs for purposes of comparison

REFERENCES

1. Gold MR, et al, 1996: Cost effectiveness in Health and Medicine, Oxford press, New York.

2. Maynard A, et al, 1994: Something rotten in the state of clinical and economic evaluation? Intern. J of health economic.

3. Span MM, et al, 2006; None inferiority testing in cost minimization studies; practical issues concerning power analysis. Int. J int. J technol assessment healthcare.