Netra Risal

PRN no: 06

Pharmacoeconomics: Health vs. Cost

A brief note on Pharmacoeconomics

n
I
e
H
a
C
u
O
m
p
h
l
r
o
c
t
s
Pharmacoeconomics:

Pharmacoeconomics is a scientific discipline that compares the costs and consequences

(outcomes) of drug therapies and medical interventions.

A pharmacoeconomic study evaluates the cost (expressed in monetary terms) and effects
(expressed in terms of monetary value, efficacy or enhanced quality of life) of a pharmaceutical
product.

ii.
•
•
Exhibit 1: Study of Pharmacoeconomics.

Pharmacoeconomic Analysis:

i. Cost-minimization analysis (CMA):

Cost-minimization is a pharmacoeconomics tool that is applied to compare two

drugs of equal efficacy and equal tolerability.

Example – treating patient w/same therapy in hospital vs. home.

Case Study- 'Murpheys Law', New York in 2004.

Cost-effectiveness analysis :

Example:
Cost-effectiveness analysis (CEA) is a form of economic analysis that compares
the relative costs and outcomes (effects) of two or more courses of action.

Cost-Effectiveness Ratio = Cost of treatment (Rs.)

Therapeutic effect* (Natural units)

Costs and outcomes of antihypertensive:

- Cost per decrease in blood pressure
Higher
Effectiveness

Lower
Effectiveness
Higher Cost Lower Cost

No

Exhibit 2: Decision Making

Yes

?
iii. Cost-benefit analysis:

Cost-benefit analysis (CEA) is a form of economic analysis that compares the

value of all resources consumed (costs) in implementing a program or intervention
against the value of the outcome (benefits) from that program or intervention.

1. Benefit to Cost ratio Effectiveness

= Benefit (Rs.) A>B A=B A<B
Cost (Rs.)
2. Net Benefit A>B Analyze Choose B Choose B
= Benefit (Rs.) – Cost (Rs.)
Cos
A=B Choose A Indifferent Choose B
Examples: t
• AIDS prevention and awareness A<B Choose A Choose A Analyze
programs
• Smoking cessation intervention
• Diabetes drug adherence
• Breast cancer screening
Exhibit 3: Cost Effectiveness Comparison Grid

iv. Cost-utility analysis (CUA) :

Cost-utility analysis (CUA) is a form of economic analysis that integrates both

costs and consequences within the utility analysis framework.

Example:
- Psychological well-being, physical and social functions are important in the
treatment of arthritis.
- Chemotherapy may increase survival but decrease well-being, both quality and
quantities of life are important.

v. Cost of Illness analysis:

“An illness consumes resources and, thus, it has a cost.
The cost of an illness is the sum of three broad components:
- medical resources used to treat the illness,
- the nonmedical resources associated with it, and
- Lost productivity due to illness or disability”.

Comparison of PE Methods:

Method Cost Consequences

Cost of Illness Partial Analysis in Rs.
Cost Minimization Rupees Natural units
Cost Effectiveness Rupees Natural units
Cost Benefit Rupees Rupees
Cost Utility Rupees QALY’s
Exhibit 4: Comparison of PE Methods