What Is It?
Pharmacoeconomics refers to the scientific discipline that compares the value of
one medicine to another.
Construct evidence
Collect evidence
Manipulate evidence
NATIONAL
MEDICINES
POLICY
TGA - registration
Responsible &
Viable Industry
Quality Use of
Medicines
DSIIR
NPS
1000
1000
880
900
800
800
700
600
COST (US$ MILLION)
500
500
400
$US Mill
400
300
250
270
300
200
200
125
100
55
7.5
10
1950
1960
0
1970
1980
1989
1991
1993
1995
1998
2000
2003
2005
2009
YEAR
You have until the end of patency to pay for the investment of a new medicine
(usually about 15 years).
Governments
are happy
to subsidise new medicines so long as they provide
FUNDAMENTALS
OF PHARMACOECONOMICS
economic benefit to the Government.
NOT TO BE USED WITHOUT THE AUTHORS PERMISSION
82
81
AVERAGE AGE
80
Australia
Canada
79
Sweden
UK
USA
78
77
76
2002
2003
2004
2005
2006
2007
2008
YEAR
FUNDAMENTALS OF PHARMACOECONOMICS
25000
DOLLARS
20000
1987
15000
1999
2004
10000
5000
0
0-18
19-44
45-54
55-64
65-74
75-84
85+
FUNDAMENTALS OF PHARMACOECONOMICS
AGE GROUP
16
15
14
13
% GDP
Australia
Canada
Sweden
12
UK
USA
11
10
7
2002
2003
2004
2005
2006
2007
2008
YEAR
Us has the worst life expectancy, yet spends the highest proportion of GGP on
health at 16%. Australia is at ~8% with better outcomes. This shows the value in
FUNDAMENTALS
OF PHARMACOECONOMICS
Australian health interventions.
SOURCE OECD Health data April 2011
83
78
PERCENTAGE
73
Australia
68
Canada
Sweden
UK
63
USA
58
53
48
43
2002
2003
2004
2005
2006
2007
2008
YEAR
In the US, most of health care is paid by the individual, in comparison to Australia
where the 70% of health care is funded by the government.
SOURCE OECD Health data April 2011
FUNDAMENTALS OF PHARMACOECONOMICS
MOST WESTERN COUNTRIES HAVE SIGNIFICANT OR RISING DEBT
NATIONAL DEBT (% GDP)
75
65
55
PERCENTAGE
45
Australia
35
Canada
Sweden
UK
25
USA
15
1995
2000
2005
2010
2011
-5
FUNDAMENTALS OF PHARMACOECONOMICS
-15
YEAR
90
80
70
60
% using
50
40
30
20
10
0
18-34
35-49
50-64
65-79
80+
AGE GROUP
Shows that as you get older, you start requiring more medicines. At the 80-yearold age group, 100% are using at least 1 prescribed medicine. With an aging
population, were going to have more and more people needing to use medicines.
Increase in life expectancy is thought to be driven by development of effective
medicines.
NOT TO BE USED WITHOUT THE AUTHORS PERMISSION
FUNDAMENTALS OF PHARMACOECONOMICS
VALUE AN INCREASING IMPORTANT DETERMINANT
The reason for discontinuing a medicine is shifting away from efficacy towards
economic reasons, i.e. you might have a safety or efficacy gain in a new drug, but
there is no financial worth to develop it (not cost-effective).
NOT TO BE USED WITHOUT THE AUTHORS PERMISSION
compare medicines.
RCT minimises the likely impact of biases or chance on results
(uncertainty), by tightly specifying the trial environment.
Most medicine RCT focus on safety and efficacy.
ITS ALWAYS
A BALANCING
ACT! in health outcomes, more so than efficacy
Economics
is more interested
measures
Most
medicine
RCT
over
monitor patients
to pick up
signals
Chance
and
bias
is minimise
and certainty
of safety
results
maximised by carefully
designing
&
controlling
the
trial
environment
(INTERNAL
VALIDITY)
Economics is more interested in the benefits and costs of medicine
when high signal,
lowtreating
noise patients, rather than clinical trial populations.
Relevance
to practice ACT
is maximised if we keep the trial environment as close as
ITS
ALWAYS A BALANCING
possible
to
real
life
(EXTERNAL
lowermaximised
signal, higher
Chance and bias is minimise andVALIDITY)
certainty of
results
by noise
carefully designing and controlling the trial environment (INTERNAL
Certainty
of benefit
is maximised
VALIDITY)
high signal,
low noise if we conduct clinical trials which measure
health
outcomes
rather
than
surrogate
measures
of efficacy
Relevance to practice is maximised
if we conduct
clinical
trials which
measure health outcomes rather than surrogate measures of efficacy
However
it may
and several
thousand
subjects
However,
it maytake
takemay
years,years,
and several
thousand
subjects to
detect ato detect a
significant
difference
outcomes
such
mortality
of MI
significant
differencein
in health
health outcomes
such
as as
mortality
of MI.
Big, long term studies are costly and patent terms are at most 20 years
Big, long term studies are costly and patent terms are at most 20 years
INTERNAL VALIDITY
CERTAINTY
EXTERNAL VALIDITY
TIME and COST
Increasing effectiveness
over time
5HT uptake inhibitors, D2
antipsychotics
EFFICACY
Decreasing effectiveness
over time
TZD, minoxidil, class 1
antiarrythmics
TIME TO OUTCOME
This
demonstrates
efficacy against
effectiveness.
Efficacy, no
matter when
you measure it,
is going to
remain the
same.
Effectiveness
can increase or
decrease over
time.
UNCERTAINTY
Uncertainty
increases in
three main
ways,
determined by
the type of
clinical trial
that we are
looking at.
Uncertainty
increases
doubt in
funding a drug.
DATA
Meta-analysis
Effectiveness trial
Health Outcome
RCT
Observational
Regulatory trial
Opinion
Intermediate surrogate
Efficacy surrogate
iii Procedures
i Survival
Target
group
ii Other drugs
ii QOL
i Hospitalisations
Alternative
therapy
ii Other drugs
Impact on health care costs
iii Procedures
FUNDAMENTALS
OF PHARMACOECONOMICS
Probability of getting
the outcome you want and the cost of achieving the
outcome according to the probability
ECONOMIC VALUE
SAVINGS
COMPARATOR
PRICE
DIFFERENTIAL
CLINICAL
BENEFITS
HOSPITALISATIONS
VALUE
SURVIVAL/QOL
BENEFITS
BP
TREATMENT FAILURES
MONITORING
CV MORTALITY
CV RISK
CV MORBIDITY
MICROALBUMIN
QALYS
VALUE IN USE
COMPLIANCE
PRODUCTIVITY
PREDICTABILITY
DOCTOR VISITS
900
600
7000
200
300
5000
Comparator
price based
on equal
safety &
efficacy
Cost savings
due to
avoidance SAE
Cost
savings due
to reduced
CV risk
Cost
savings
due to
avoided
dialysis
Cost saving
due to fewer
dr visits, path
tests
$600/year due to decreased doctor visits and less liver testing with new
drug
Cost-Minimisation
Used when no significantly significant difference in outcome between two
medicines can be qualified
In theory, efficacy and safety profile must be the same
Best underpinned by equivalence trial
Price of new medicine same as comparator
Cost Effectiveness
Used when both medicines affect the same physiological or disease pathway
(same outcome measures are used)
Cost effectiveness of a medicine cannot be compared across diseases or
conditions a medicine which lowers cholesterol cannot be compared to one
that reduces BP (but can if we are measuring CV risk)
If the new medicine produces an incremental gain in benefits, a price premium
may be justified
Cost Utility
Used to integrate effectiveness and patient satisfaction or preference
Usually a better way of establishing value because of assessing patient
needs and QoL (government will pay for this if they think it is important
CUA not only measures the change in disease or condition, but also the patients
perception or preference for this change
Better economic tool because youre including preference
Quality of life is a common method which measures the outcome of a medicine
on the patients physical, social and physiological functioning and well being
Other Considerations
METFORMIN
Probability of Success
90
80
$120
$60
Probability of ADE
10
$100
$120
FUNDAMENTALS OF PHARMACOECONOMICS
Outcome
Continue
GLUCEZE
Success
$70
$70
0.1
ADE
0.9
FUNDAMENTALS OF PHARMACOECONOMICS
Failure
Outcome
GLUCEZE
Continue
0.9
ADE
0.1
0.1
0.9
GLUCEZE
Insulin
0.1
Metformin
Probability 0.1
Cost X P
Insulin
Continued
success
$120
Success
with ADE
$120 +
$100
Failure
$70
Success
0.1
Metformin
Cost
0.9 X 0.9 =
0.81
0.98
$97.20
0.9 X 0.1 =
$19.80
Continue
0.98
0.09
0.1
TOTAL
Continue
$124
0.02
ADE
0.8
Metformin
$7.00
Success
0.8
ADE
Continued
success
0.02
Failure
Success
Failure
Insulin
0.2
Continued
success
$120
Success
with ADE
$120
$100
Failure
$70
GLUCEZE
Success
Failure
Cost
0.9
0. 2
0.2
$60
0.8 X 0.98
= 0.784
Insulin0.8 X .0.02
with ADE
$60 +
$120
= 0.016
Failure
$70
0.2
TOTAL
$47.04
$2.88
0. 2
$14.00
$63.92
TOTAL
Metformin
Continued
success
$60
Success
with ADE
$60 +
$120
Failure
$70
TOTAL
Spending $601/year to get one extra patient with good diabetes control,
therefore cost effective for government
FUNDAMENTALS OF PHARMACOECONOMICS
Contributors of CV risk
SMOKING
BP
BSL
REDUCTION IN CVD
HDL-C
WEIGHT
LIPID MODIFIER
LDL- C
HDL- C
CV RISK
REDUCTION IN
CVD/MORTALITY
ANTIHYPERTENSIVE
BP
CV RISK
REDUCTION IN
CVD/MORTALITY
HYPOGLYCAEMIC
FPG
HbA1c
CV RISK
REDUCTION IN
CVD/MORTALITY
ONCOLOGY AGENT
TUMOUR SIZE
PROGRESSION FREE
PERIOD
QALYS
So say we have a new lipid lowering drug, in trials we measure LDL and HDL
levels, and so on for the others. The intermediate surrogate that links all these
together is the CV risk and the ultimate outcome is a decrease in CVD and
FUNDAMENTALS
OFthe
PHARMACOECONOMICS
mortality.
Just measuring
intermediate otcomes gives no real idea whether, I
isolation, efficacy surrogates alone fix health outcomes.
It was assumed that rosiglitazone would reduce CVD risk in diabetic patients, based on
glycaemic impact.
Seven years after first marketing, a meta-analysis ny Nissen and Wolski demonstrated that
patients taking rosiglitazone have a 43% increased risk of MI, and 64% increased risk of CV
death
Sensitivity analysis
o In any model, the issue of uncertainty in the data must be
addressed
o Generally, the uncertainty associated with outcome variable
increases as the quality of evidence use to estimate the outcome
decreases
o For example, if you ask n economists a question you get n+1
answers
o However, even RCT have outcome uncertainty which is
MENTALS OF PHARMACOECONOMICS
represented by confidence intervals around the point estimate
The standard approach to managing uncertainty is to perform a
FUNDAMENTALS OFo PHARMACOECONOMICS
sensitivity analysis
o Using an RCT the base case would use the point estimate from the
ITY ANALYSIS
SENSITIVITY ANALYSIS trial, with the upper and lower 90% CI values used I the sensitivity
analysis
hypoglycaemic
example
New
oral hypoglycaemic
example
Outcome
GLUCEZE
Lower CI
Outcome
Cost
TOTAL
GLUCEZE
Upper CI
Cost X P
BaseBase
case Cost
P = $124
caseX Cost
XP
= $124
Continued
success
$120
$120 +
$100
$120 +$70
Failure
$100
TOTAL
$70
0.84 X 0.9
= 0.756
$90.72
0.84 X 0.9
$90.72
0.84 X 0.1
$18.48
= 0.756
= 0.084
0.840.16
X 0.1
= 0.084
$18.48
$11.20
0.16
$11.20
GLUCEZE
Upper CI
$120.40
$120.40
Continued
success
$120
0.95 X 0.9
= 0.855
$102.60
Success
with ADE
$120 +
$100
0.95 X 0.1
= 0.095
$20.90
ContinuedFailure
$120
success
Success
with ADE
Probability
Cost X P
with ADE
Failure
Probability
GLUCEZE
Lower CI
Continued
$120
success Success
Success
with ADE
Cost
0.950.05
X 0.9
= 0.855
$102.60
$3.50
$120 +
$100
0.95 X 0.1
= 0.095
$20.90
$70
0.05
$3.50
TOTAL
$70
$127
base = $601
lower = $1412
=
upper base
= $421
$601
lower = $1412
upper = $421
cost
effectiveness of drug A is sensitive
to the proportion of patients
reaching HbA1c target
Failure
TOTAL
Discounting
$127
o When the costs and benefits of a medicine extend over time
(generally over several years), the future costs and benefits should
be discounted to reflect todays value NOT TO BE USED WITHOUT THE AUTHORS PERMISSION
o The assumption is that people prefer to receive money (and
benefits) today rather than at a later time
For example, if you lent $1000 you would expect $1000 +
CPI in 2 years time to retain the same value
o There is no standard discount rate applied to pharmacoeconomic
evaluations, but current interst rates are often used.
FUNDAMENTALS OF PHARMACOECONOMICS
CONSIDERATION
Patient Population
Comparator
Sulfonylurea
or TZD or gliptan rather than placebo
Outcome
Costing