Basics of Pharmacoeconomics and Outcomes Research: Application to Patient Care

Sara Shull PharmD, MBA

Preview

Economic concepts Data types & sources Types of pharmacoeconomic analyses Perspective Cost-effectiveness and incremental analysis Sensitivity analysis Steps to pharmacoeconomic literature evaluation Case studies for clinical practice and policy building

Opportunity Cost

Time and money as resources can only be spent once choice is unavoidable. O.C. is defined as the amount that a resource could earn in its highest valued alternative use. How do you invest your time? Why take valuable time to learn about pharmacoeconomics and outcomes research?

How Can PE and Outcomes Enhance My Practice?

PE is an aid to decision making with strong potential to:

Mitigate the influence of marketing Puts practitioner in the drivers seat Help set practice priorities Enhances position of practitioner from payers perspective Medicare plans to decrease pay-out to stem tide of budget deficit Private payers actively are developing quality report cards

How Can PE and Outcomes Enhance My Practice?

Statistically more likely to be responsible for better success in clinical care by eliminating poor/ unnecessary care
Ethical framework Fidelity to individual patients & stewardship to the public good

Economics is:

The study of how individuals & society end up choosing, with or without the use of money, to employ scarce resources that could have alternative uses, to produce various commodities & distribute them for consumption now, now or in the future, among various people and groups in society. Paul Samuelson

Pharmacoeconomics and Outcomes Research

Using data to distinguish your practice Data about efficacy clinical and humanistic Data about cost resources consumed to achieve efficacy endpoints (investment)

Efficacy Data

Management of efficacy endpoints based on evidence enables clinicians to maximize prescribing skills

Evidence-based healthcare is a determination of the mix of those services, drug products, and procedures that maximise benefits and reduce risks.

Cost Data

Management of resource consumption enables patients to maximize purchasing power Individual level- managing insurance co-payments Group level- managing insurance premiums across groups and maximizing the number of insured patients Govt level- sustaining public programs

Value Is the Goal of Practice

Minimizing the ratio of cost to efficacy creates value- best return on investment
Enhances your ability to deliver a superior product

Basic Value of Medical Care

Evidenced by general trends:

Increased use of medical care and prescription drugs Mortality rates of certain diseases have significantly declined Mean length of hospital stay has also declined

Despite this general evidence, few specific data regarding the actual costs and benefits attributed to drugs and medical therapies exist

Objectives

Objectives of pharmacoeconomics and outcomes research must originate within three dimensions when considering results and value of healthcare
Acceptable clinical outcomes Acceptable humanistic outcomes Acceptable economic outcomes

Types of Pharmacoeconomic Analysis

Methodology Cost minimization Cost measurement unit Dollars Outcome unit Various- but equivalent in comparative groups Dollars Natural units (life years, mg/dl blood sugar, LDL cholesterol) Quality adjusted life years

Cost benefit Cost effectiveness

Dollars Dollars

Cost utility

Dollars

Common Misconceptions When Applying Pharmacoeconomic Principles

Cost-effective care is initially the cheapest alternative in a manner similar to other investments, least cost option may lead to greater costs downstream Cost-effective care is outcome that generates biggest effect in a manner to similar investments, smaller increments of outcome may be achieved at a lower overall cost

Perspective

The point of view considered in economic analyses influences the outcomes and costs considered to be most relevant:
Provider Patient Payer Society

Comprehensive Definition of Cost-effectiveness

A therapy is deemed to be a costeffective strategy when the outcome is worth the cost relative to competing alternatives. In other words, scarce resources are utilized to acquire the best value on the market.

Average Cost-effectiveness

Specifies the cost of an agent required to achieve each unit of effect. No comparison is made to alternative agents.
Average cost-effectiveness Cost of drug Resulting effect = Cost per unit of effect achieved

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

Incremental Cost-effectiveness Analysis

Makes comparisons to other therapeutic options, standard of care, or doing nothing (placebo) Fundamental ratio Cost optionB Cost optionA Effect optionB Effect optionA
=

Cost to achieve one unit of effect

Incremental Cost Analysis

1.6 1.4 1.2 1 0.8 0.6 0.4 0.2 0 Placebo Agent A Agent B Cost

Incremental Effect Analysis

90 80 70 60 50 40 30 20 10 0 Placebo Agent A Agent B Units of Effect

Comprehensive Incremental Costeffectiveness

$150 - $50 90 50 units =

$100 40 units

$2.50 per unit of effect achieved

Therefore, because Agent A is an available alternative with a lower average cost per unit of effect achieved, the costeffectiveness of using Agent B is diminished. The cost of Agent B is not in line with the product it delivers- a poor value.

Grid Representing All Possible Relationships of Cost to Effect Between Two Competing Alternatives
Cost of alternative A relative to alternative B Lower Equal Higher

Effectiveness alternative A Lower relative to alternative B Equal

Higher

+/Trade off
+ + Domina nt

Dominated +/Trade-off

Arbitrary

Measuring Efficacy Data Variables

What product (effect) can be consistently expected from use of drug or health service? Usually determined from clinical trials
Seek direct relationship to morbidity and mortality

May rely on surrogate probably related to final outcome to enhance feasibility of analysis

Survival/ death Myocardial infarction avoided

Randomized controlled clinical trial is gold standard for deriving efficacy data

Hemoglobin changes LDL cholesterol changes Intimal vessel wall thickness changes

Measuring Cost Data Variables

What resources are consumed to produce one unit of the effect? Direct costs drug product acquisition costs drug preparation & administration costs drug monitoring costs treatment costs of adverse effects Indirect costs example of institution indirect cost

Discounting Costs

In order to draw most valid conclusion about costs generated over time to achieve an effect in the future, it is necessary to consider that there is a time preference associated with money Time-value of money adjustment
Money in hand is worth more than the same amount sometime in the future (we like to be paid as soon as possible, but prefer to pay at the last possible moment) Therefore future costs must be adjusted to reflect present value.

A $1000 cost one year from now requires only $930.00 in hand today assuming a 7% return on investment.

Sensitivity Analysis

Conclusions drawn from an economic analysis may change, depending on the uncertainty of cost and effects considered. S.A., by altering important variables & then recalculating results, tests the validity of conclusions: Would Agent A still be most cost-effective if the effect of Agent B was greater than measured in clinical trial? Would Agent A still be most cost-effective if the monitoring costs of Agent B were actually lower? S.A. becomes increasingly important as assumptions are made to a greater degree.

Steps to Pharmacoeconomic Literature Evaluation

Evaluate:

The quality of the journal Qualifications of authors Title and abstract- unbiased? Study methodology

Sponsorship- could bias be introduced? Incremental results

Perspective, study design, outcomes and appropriate alternatives, costs and appropriate discounting, sensitivity analysis, & data sources

What is the conclusion and does it differ between subgroups? How much does allowance for uncertainty change conclusion?

Vogengerg, FR editor. Introduction to Applied Pharmacoeconomics, 2001

Cases for Development

Formulary decision making (policy)

Clinical decision making for acute therapy (bedside)

Appropriate place for eplerenone (Inspra) and spironolactone (generic) on Inpatient formulary of tertiary care academic medical center

Clinical decision making for chronic therapy (bedside)

Other suggestions?

Choosing between low molecular weight heparin or unfractionated heparin for the treatment of acute proximal deep vein thrombosis

Choosing between selective cyclooxygenase inhibitor and traditional non-steroidal anti-inflammatory agent for management of osteoarthritis pain

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

How should I treat my patient?

NSAIDs are inexpensive compared to Cox-II inhibitor:

But wont the more expensive agent pay for itself many times over by preventing an expensive GI bleed in my patient?

Dyspeptic symptoms are decreased by 15% Clinically significant ulcer complications are reduced by 50%

Risk of GI bleed: How Much Can It Be Altered?

Not all osteoarthritis patients have an equal risk of developing a GI bleed

How much can the risk of GI bleed be altered by using a Cox-II inhibitor instead of an NSAID?
What value is really purchased for the extra cost? The relative risk reduction of GI complications with Cox-II inhibitor catches our eye- but actual risk reduction is small

Is paying extra for GI protection justified in all patients?

1-2% for overall ulcer complications 1% for serious hemorrhage and perforation

Spiegel MR et al. Annals Internal Medicine 2003; 138:10(795-806)

Cost-effectiveness analysis
Population Drug Total Annual Cost Qualys Gained Incremental cost per Qualy gained

No Hx of GI ulcer ulcer

Naproxen $4859

15.2613 -

Cox-II $16,443 15.3033 $275,809 inhibitor Hx of GI Naproxen $14,294 14.7235 -

Cox-II inhibitor

$19,015 14.8081 $55,803

Spiegel MR et al. Annals Internal Medicine 2003;138:10(795-806)

Cardiovascular Effect of Cox-II Inhibitors

How do cardiovascular problems affect my choice of using Cox-II inhibitors or NSAIDs?

Drug Annual Cost Qualys Gained Incremental cost per Qualy gained

Population

All patients

Naproxen $5,037
Cox-II

15.2539 -

$16,620 15.2832 $395,324

Spiegel MR et al. Annals Internal Medicine 2003;138:10(795-806)

Clinical Decision Making

Risk reduction for GI complications seen with Cox-II inhibitors is unlikely to offset their increased cost in the management of average risk patients with osteoarthritis pain
With no history of GI bleed, choose naproxen With history of GI bleed, choose Cox-II inhibitor

Clinical Decision Making

In all patients with osteoarthritis, the decision to use Cox-II inhibitor should be made with awareness of the effect of the added risk for cardiovascular events on costeffectiveness
Currently, there is not enough information available, but it may be prudent to avoid these drugs in patients with cardiovascular history, even in patients with history of GI bleed

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

How Should I Treat My Patient?

Unfractionated heparin is a less expensive option compared to low molecular weight heparin.
But wont the more expensive agent pay for itself by bypassing routine coagulation monitoring? Also, cant I lower the risk of nosocomial infection and error by sending my patient home after establishing low molecular weight therapy?

Cost-effectiveness Analysis
Treatment setting Both agents admin in inpatient setting
Low molecular weight heparin primarily admin in outpatient setting

Drug
Unfractiona ted heparin Low molecular weight heparin Unfractiona ted heparin Low molecular weight heparin

Total costs of course of therapy

Qualys Gained

Incremen tal cost per Qualy gained

$26,361

7.978

$26,516
$26,361

7.998
7.978

$7,750
Costsaving

$25,559

7.998

Gould MK et al. Annals Internal Medicine 1999;130(10):789-799

Clinical Decision Making

Decreased monitoring costs with low molecular weight heparins and the attenuated risk of future complications with these agents do result in costeffective 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

Clinical Decision Making

For patients that can receive in-home treatment and support, establish low molecular weight heparin therapy on first day of hospitalization, then send the patient home. (analysis includes cost of home health visits) For patients that must remain hospitalized, low molecular heparin should be selected before unfractionated heparin as therapy for treatment of VTE.

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

Inpatient Reimbursement

Most heart failure patients are insured by Medicare Medicare reimburses on prospective case basis; monetary amount determined by diagnosis Hospital is motivated to develop cost-effective formulary with goal of decreasing mortality rate, hospital length of stay, and preventing readmissions

Formulary Considerations

Two agents are effective & safe in reducing the risk of death and hospitalization 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 More specific mechanism of action Lower incidence of gynecomastia, but greater incidence of hyperkalemia requiring hospitalization

Eplerenone (considered for formulary addition)

Indirect Comparison of Clinical Trial Results

Variable Spironolactone Eplerenone

Relative risk of death due to heart failure Per patient cost of drug (36 months)
Cost of drug per death prevented

75.2%

86.2%

$50.28

$1,230.00

$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

Policy Decision Making

Eplerenone is not cost-effective across entire heart failure population However, length of stay and readmission rates increase as severity of heart failure increases Stratification of eplerenone efficacy indicates mortality and hospitalization rates fall more dramatically when heart function is more compromised (ejection fraction < 40%)

Policy Decision Making

Extra cost of eplerenone may be justified in sicker patients or in patients that cannot tolerate cheaper spironolactone due to gynecomastia/ breast pain Add eplerenone to Inpatient formulary but limit use within these two patient populations only

Eplerenone is not allowed for treatment of hypertension (despite FDA indication) as many effective, safe alternatives are available at significantly lower cost.

Ejection fraction < 40% Cannot tolerate or fails spironolactone

Conclusion

Time and money can only be spent oncechoice is inevitable. Whether done unconsciously or with a consistent process, health care professionals are constantly evaluating patient care choices & acting on them. Pharmacoeconomics and outcomes research can enhance the quality of your practice by strengthening your evaluation process and increasing the probability that you deliver better value in patient care.