As drug prices soar and drug management budgets decrease, a central question for health care providers is how to make the most of less. And pharmaceutical companies, as well as managed care and government providers, are looking more and more to pharmacoeconomicsthe use of economic analysis in health care and drug comparisonto help decide which drugs or treatment options they should pay for.
Although this kind of information is not required by lawthe U.S. Food and Drug Administration is concerned with efficacy and with marketing claims, not with which drug is most cost-effectivethere is a trend to require pharmacoeconomic analysis, especially in countries with strong socialized medicine systems such as the United Kingdom, Canada, and Australia.
Some see its expanded use in the United States. "Well see a trend of more and more managed care companies requiring this information, especially in oncology, with its large cost drivers," said Michael Johnsrud, Ph.D., associate director of the Center for Pharmacoeconomic Studies at the University of Texas, Austin.
Pharmacoeconomics, rising out of the field of health services research and technology assessment in the 1960s, focuses on analyses of drugs and other disease treatments to determine which is most cost-effective. But it is only in the last decade that scholars have been trying to develop strong standards for its use.
"Money drives these analyses," said Michael B. Nichol, Ph.D., associate professor and chair of the University of Southern California Department of Pharmaceutical Economics and Policy. "We are always maximizing the bang for the buck, trying to do the most with what we have and help decision makers to efficiently spend money. In most cases we are talking about societal resources."
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There are four main kinds of cost analysis involved, from simple to complex, Nichol said. First, there is cost minimization. This analysis assumes outcomes will be the same and focuses completely on finding the most inexpensive treatment. Second, there is cost-effectiveness. This analysis takes a single outcome into account, such as years of life saved, and attempts to determine the cost for each year of those additional years.
Third is cost utility. This analysis is a subtype of cost-effectiveness and incorporates quality-of-life measures that focus on a patients Quality Adjusted Life Year. "This is a critical thing," Nichol said. "We might extend a persons life 4 or 5 years, but what is that life like? Cancer is a perfect example."
The fourth is costbenefit analysis. This analysis puts a dollar amount on additional years of life. Even though this analysis is used all the time in transportation safety issues with airplanes, cars, and roads, health care providers are uncomfortable with it because it deals with the value of a human life, Nichol said.
Oncology pharmacoeconomics differs slightly from pharmacoeconomics for drugs for other diseases, and it wrestles more with a quality-of-life index. "Oncology presents a little twist," Johnsrud said. For most diseases, the majority of pharmacoeconomic analyses are typically for drugs that go head to head in therapeutic areas where there are quite a few choices, as in cardiovascular disease. But in oncology, he said, "there may not be a choicethe emphasis is on saving lives."
Quality of Life
Although quality of life is important for cancer patients, it is not easy to figure a quality-of-life index into the economic equation. "It really is a numbers game," said C. Daniel Mullins, Ph.D., associate professor of pharmacoeconomics at the University of Maryland School of Pharmacy, Baltimore. "If you tell me a drug regimen will cost $120,000 versus another that costs $40,000, we will choose the $40,000." But, he added, does the cost have anything to do with the quality of life for the patient undergoing therapies?
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Developing Standards
"Pharmacoeconomics is a science and discipline that is still developing," said UTs Johnsrud. "Youll see the end users becoming more educated about it. Its a toolnot the end all or be all."
Creating standards is one of the primary goals of the International Society of Pharmacoeconomics and Outcomes Research, an international group of about 2,000 economists, clinicians, and practitioners with members in 29 countries. The organization has seven task forces developing best practices for pharmacoeconomics. It hopes to issue a working report next May to serve as a basis for further discussion in the field.
"Were trying to determine what is clinically good scientific practice," said ISPOR executive director Marilyn Dix Smith, Ph.D. However, she added that the main goal is to bridge a gap between pharmacoeconomic studies and the decision making process. "We need real peoplepatients and health care providersasking real questions so that research being done, and the way its being done, is answering those real questions."
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