Discussion Questions What to Do About High Drug Costs

1. What can you as a pharmacist do to help your patients? What can our institution do to better control costs? What policies could help moderate drug costs? What role can the formulary play in these efforts? Discussion QuestionsWhat to Do About High Drug Costs 30th Nov. 2013

2. 30th Nov. 2013

3. Wholesalers Providers Clinicians Employers Insurers Generics PBMS Branded Drug Cos Govt’ Govt’ Patients Many People Involved in Pharmaceutical Supply-Chain 30th Nov. 2013

4. WHAT is Economic Evaluation? Definition: Economic Evaluation is ... the identification, measure, and comparison of the costs (i.e. resources consumed) and outcomes (clinical, economic, and humanistic) of interventions (pharmaceuticals, non-drug therapies, public health programs) 30th Nov. 2013

5. WHAT is Economic Evaluation? Economic Evaluation is NOT JUST economics Economic Evaluation is multi-disciplinary, it combines Economics Epidemiology Biostatistics Medicine Pharmacy …. 30th Nov. 2013

6. Why study Economic Evaluation? The pressure of cost containment. The need for methods to evaluate medical interventions. Purpose of economic evaluation  efficient resource allocation NOTE: equity is often not addressed 30th Nov. 2013

7. Who uses Economic Evaluation? Managers in hospital or health care plans (formulary decision) Pharmaceutical companies Government / Policy makers Researchers 30th Nov. 2013

8. Who uses Economic Evaluation? (cont.) Hospital managers (including HMOs and FFS) What drugs should be included on the hospital formulary? Which drug delivery system is the best for the hospital? Pharmaceutical companies What is the best drug for a pharmaceutical company to develop? Shall the company continue a clinical trial? What is the economic benefit of a new product? 30th Nov. 2013

9. Who uses Economic Evaluation? (cont.) Government Which drugs should be included in a Medicaid formulary? Is it cost-effective for Medicare to cover annual mammography? Researchers All of the above How to improve the analytical credibility of economic evaluation ? 30th Nov. 2013

10. Costs can be described in many ways Cost / unit (cost/tab, cost/vial) Cost / treatment Cost / person Cost / person / year Cost / case prevented Cost / life saved Cost / DALY (disability-adjusted life year) 30th Nov. 2013

11. Outcomes Both positive and negative outcomes should be addressed Positive outcomes: drug’s efficacy measure Negative outcomes: ADR and treatment failure 30th Nov. 2013

12. Pharmacoeconomics is a set of methods to evaluate the(ECHO) 1.Economic, 2.Clinical, and 3.Humanistic 4.Outcomes of pharmaceutical products and services(or any health care service) 30th Nov. 2013

13. Outcomes Relationship 30th Nov. 2013

14. Pharmacoeconomics allows us to compare the economic resources consumed(inputs) to produce the health and economic consequences of products or services(outcomes). 30th Nov. 2013

15. Application of Pharmacoeconomics: Pricing of a new drug Re-pricing of an old drug Generation of a data for promotional material Legislative requirement for drug licensing and medical reimbursement Justify clinical pharmacy evaluation Used to justify use of pharmacy products and pharmaceutical care Principle of Pharmacoeconomic also influences health care decision making and individual patient care Earlier clinical decisions were solely based on outcomes. Now cost, outcome, humanistic outcome are also considered 30th Nov. 2013

16. Cost of drug: This is the total resources consumed in producing the drug or drug formulation. It is the amount paid to the suppliers. To evaluate the economics of drug therapy,cost is categorized into: i. Direct cost. ii. Indirect cost. iii. Intangible cost 30th Nov. 2013

17. Direct cost i.)Direct medical cost This is what is paid for specialized health resources and services. It includes the – Physician’s salaries; – Acquisition cost of medicine – Consumables associated with drug administration – Staff time in preparation and administration of medicines – Laboratory costs of monitoring for effectiveness and adverse drug reactions. ii.)Direct non medical cost This includes cost necessary to enable an individual receive medical care such as lodging,special diet and transportation; lost work time(important to employers) such as acute Otitis media in pediatric patients with professional parents who lost work time during the treatment of their kid. 30th Nov. 2013

18. Indirect cost This is the cost incurred by the patient, family,friends or society. Many of these are difficult to measure,but should be of concern to society as a whole. This includes productivity loss in the society; unpaid care givers; lost wages; expenses of illness borne by patients, relatives, friends, employers and the government and; loss of leisure time. 30th Nov. 2013

19. Intangible costs These are costs related with the patient’s pain and suffering; worry and other distress of the family members of a patient; effect on quality of life and health perceptions. For example patients of rheumatoid arthritis, cancer or having terminal illnesses in which quality of life is suffered due to adverse reactions of the drug treatment. These are difficult to measure in monetary terms but represent a considerable concern for both doctors and patients. Quality adjusted life year (QALY)is one method by which intangible costs can be effectively integrated in PE analysis 30th Nov. 2013

20. Costs Direct costs: costs to deliver services topatient; both medical and non-medical Indirect costs: cost of treatment to patient or society Intangible costs: quality of life 30th Nov. 2013

21. 30th Nov. 2013

22. Cost of illness evaluation (COI) Cost minimization analysis (CMA) Cost benefit analysis (CBA) Cost effectiveness analysis (CEA) Cost utility analysis (CUA) Types of Economic Evaluation 30th Nov. 2013

23. Cost of Illness Evaluation Also termed, cost consequence model Description: Estimates the cost of a disease on a defined population Application: Provides a baseline against which various prevention/treatment options may be compared Example: Cost of peptic ulcer disease 30th Nov. 2013

24. Cost Minimization Analysis Description: Identifies the least expensive/costly alternative assuming the alternatives are equal in either consequence or outcome Application: Can only be utilized when consequences or outcomes are identical Costs include more than the price of meds Costs of treatment failure Costs of adverse effects Drug monitoring or other healthcare services 30th Nov. 2013

25. Cost Benefit Analysis Description: Measures benefit in monetary units and computes net gain following considering the costs of the intervention Calculated: Benefit ($)/Cost ($) Application: Compare programs or agents with different objectives Example: Clinical pharmacy service vs. other institutional service Determines whether benefits > cost 30th Nov. 2013

26. Examples CBA AIDS prevention and awareness programs Smoking cessation intervention Diabetes drug adherence Breast cancer screening 30th Nov. 2013

27. Cost Effectiveness Analysis Description: Compares alternatives based on a single therapeutic effect measured in physical units Calculated: Cost ($)/Clinical Outcome (not in $) Clinical Outcomes: Could consist of a higher positive effect, or less negative effect Application: Compare drugs/programs that differ in clinical outcomes but use same unit of benefit Example: Antihypertensive Drug A vs Drug B on mmHg blood pressure ($/mmHg) Application: Focus on Incremental Cost Effectiveness Ratio (ICER). 30th Nov. 2013

28. Incremental Cost Effectiveness Ratio (ICER) is an equation used commonly in health economics to provide a practical approach to decision making regarding health interventions. It is typically used in cost-effectiveness analysis. ICER is the ratio of the change in costs to incremental benefits of a therapeutic intervention or treatment ICER = (C1 – C2) / (E1 – E2) where C1 and E1 are the cost and effect in the intervention or treatment group and where C2 and E2 are the cost and effect in the control care group. 30th Nov. 2013

29. Difference in cost Consider the four possible results arising in a CEA. First, if costs are lower and health benefits higher for one drug relative to another, the former is said to dominate and would be the preferred treatment (quadrant II). Second, the opposite applies, i.e. the new drug is more expensive and less effective, and thus is considered inferior and not recommended (quadrant IV). The third and most common case is where the new drug is both more effective and more expensive than the standard (quadrant I); on the basis of ICERs, a judgment must be made regarding whether the additional benefits are worth the extra costs of the new drug and, therefore, whether it is ‘cost effective’ This might be defined by a previously agreed ICER threshold value. The fourth case is similar to the third, with the roles of the new therapy and the standard reversed (quadrant III); the question now is whether the extra benefits provided by the standard justify the additional costs of retaining it as the preferred treatment when the option of a new, cheaper but less effective drug exists Asia Journal of Pharmaceutical and Clinical Research Vol2, issue 3, July-Sept 2009

30. The cost-effectiveness plane Med Decis Making 1990 10:212–214.

31. Cost Utility Analysis Description: Compares alternatives based on therapeutic effects measured in utility units (not physical units). Utility scores integrate patient preferences and quality of life/functional status Calculated: Cost ($)/QALY (quality adjusted life years) Application: Compares drugs/programs that are life extending with serious ADRs or those producing reductions in morbidity Example: Cancer chemotherapy regimens: 4 years at 25% QOL = 1 year at 100% QOL 30th Nov. 2013

32. Considerations for Designing or Evaluating Pharmacoeconomic Studies Costs E.g., Direct medical/nonmedical, indirect, opportunity, intangible Perspective E.g., Patient, Provider, Payer, Society Discounting-Value of money changes depending on when it is exchanged (i.e. Inflation) Sensitivity Analysis-Challenges results by altering certain variables independently Accuracy and transparency E.g., Alternatives, study population, study design 30th Nov. 2013

33. Cost-Effective ≠ Cost-Saving!!! 30th Nov. 2013

34. Cost-Saving vs. Cost-Effective Cost-saving An intervention that has a lower total cost than an alternative intervention Cost-effective An intervention that is sufficiently effective relative to its total cost when compared with an alternative intervention 30th Nov. 2013

35. 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 driver’s seat Help set practice priorities Enhances position of practitioner from payer’s perspective Medicare plans to decrease pay-out to stem tide of budget deficit Private payers actively are developing quality “report cards” 30th Nov. 2013

36. Types of Economic Evaluation 30th Nov. 2013

37. 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 30th Nov. 2013

38. Perspective The “point of view” considered in economic analyses influences the outcomes and costs considered to be most relevant: Provider Patient Payer Society 30th Nov. 2013

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

40. How should I treat my patient? NSAIDs are inexpensive compared to Cox-II inhibitor: But won’t 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% Spiegel MR et al. Annals Internal Medicine 2003; 138:10(795-806) 30th Nov. 2013

41. 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 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 1-2% for overall ulcer complications 1% for serious hemorrhage and perforation Spiegel MR et al. Annals Internal Medicine 2003; 138:10(795-806) 30th Nov. 2013

42. Cost-effectiveness analysis Spiegel MR et al. Annals Internal Medicine 2003; 138:10(795-806) 30th Nov. 2013

43. Cardiovascular Effect of Cox-II Inhibitors Spiegel MR et al. Annals Internal Medicine 2003; 138:10(795-806) 30th Nov. 2013

44. 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 Spiegel MR et al. Annals Internal Medicine 2003; 138:10(795-806) 30th Nov. 2013

45. 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 cost-effectiveness 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 Spiegel MR et al. Annals Internal Medicine 2003; 138:10(795-806) 30th Nov. 2013

46. Cost-effective Outcomes Decrease drug–drug and drug–lab interactions Increase the percentage of patients in therapeutic control. Reduce the overall costs of the treatment by utilizing more efficient modes of therapy Reduce the unnecessary use of emergency rooms and medical facilities Contribute to better use of health manpower by utilizing automation, telemedicine, and technicians Decrease the incidence and intensity of iatrogenic disease, such as adverse drug reactions J Clin Oncol 23(10):2123–9

47. Primary reason for pharmacist intervention Decrease potential adverse event Increase efficacy Reduced morbidity or mortality Symptom control Cost savings Decrease actual adverse drug effects Assist compliance Formulary reasons 30th Nov. 2013

48. Change in drug therapy or management Change in dosage of drug Drug treatment initiated Drug treatment discontinued Alteration to patient monitoring Change from one drug to another 30th Nov. 2013

49. Impact of pharmacist-initiated change in drug therapy or management quantified British Journal of Clinical Pharmacology 57(4), 513-521

50. Benefit of pharmaceutical care The potential savings quantified arose from pharmacist-initiated interventions that resulted from only 3.8% of pharmacist’s clinical practice time. Benefits of other activities performed were not quantify : drug information, patient medication counselling, staff education, drug use evaluation, research, student education and training, dispensing and administrative. On the five areas quantified in this study : every dollar spent on a pharmacist, approximately $23 save. British Journal of Clinical Pharmacology 57(4), 513-521 30th Nov. 2013