Marketing and

Pharmacoeconomics
0204420
L4 PART 1
Dr. Asim Ahmed
College of pharmacy
Program of Clinical Pharmacy
AL Ain University
PHARMACOECONOMIC EVALUATION TYPES

• Imagine a scenario !!!

You are a hospital a manger and you are considering to hire a clinical
pharmacist..

• What might be the most urging questions?

QUESTIONS TO CONSIDER
• Does it actually work ? i.e. evidence of effectiveness

• Is it better than the existing pharmacy service ? i.e. more output, but
how is output to be measured ?

• Can we afford to pay for it ? i.e. How much will it cost/ save ?

• Does it represent an efficient use of resources? Is it worth

transferring resources from another health care area to pay for?
HOW WE CAN ANSWER THESE
QUESTIONS
• Health economic evaluations help us to Answer
theses question and aid in decision making

• Economic evaluation: A comparative analysis of

alternatives in term of costs and consequences
Cost minimisation analysis (CMA)
• The analysis of the comparative costs of alternative treatments or
health care programmes for which the consequences of the
interventions have been shown to be therapeutically equivalent
Cost minimisation analysis (CMA)
• Nice in theory
• Simple to implement
• Used when buying the same service from different Providers e.g.
tendering for services
• Not really suitable for new health interventions
• Outcomes are rarely identical
• Effects are multi-factorial
REMEMBER FROM LAST TIME!!
• Example: Comparing laparoscopic cholecystectomy versus
open cholecystectomy
• Different methods to remove the gallbladder
• Health outcomes for the two techniques were considered
equivalent
• Is this a CMA?
Cost-effectiveness analysis (CEA)
• CEA is the most common type of economic evaluation employed in
healthcare
• The term “cost effective” is one of the most overused and
inappropriately applied.
• Is one form of full economic evaluation
• Costs are measured in monetary terms and consequences are
measured using the most appropriate ‘best spoke outcome’
PHARMACY-SERVICE-SPECIFIC OUTCOMES THAT COULD
BE
USED FOR A COST EFFECTIVENESS ANALYSIS
EXAMPLE
• Let us once again consider which medicines should be used to treat
hypertension.
• Drug A causes a 10 mmHg drop in blood pressure and costs 120 AEDs per
year
• OR
• Drug B causes a 15 mmHg drop in blood pressure but costs 180 AEDs per
year.
• Can we use cost minimisation?
• We cannot use a cost-minimisation analysis in this instance because the
outcome achieved is different.
COST-EFFECTIVENESS
• Cost-effectiveness depends on the value placed on a health outcome
relative to its cost
• CE ratio: The lower the ratio. i.e. the lower the cost per unit of
effectiveness, the more this treatment is preferred
• However, Doesn’t provide an assessment of the relative costs and
consequences of alternative treat.
• i.e. can be misleading in comparative decision making
 Comprehensive Definition of
Cost-effectiveness

• A therapy is deemed to be a cost-effective 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.

• Scarcity refers to the basic economic problem, the gap between limited –

that is, scarce – resources and theoretically limitless wants. ...
Any resource that has a non-zero cost to consume is scarce to some
degree, but what matters in practice is relative scarcity. Scarcity is also
referred to as "paucity."
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

= $1.00 per unit

• Average cost-effectiveness of Agent B

$150.00
90 units of effect = $1.60 per unit
 Incremental Cost-effectiveness Analysis
• L2 recall
• Incremental costs: additional costs incurred to obtain additional unit of benefit from an
alternative strategy
e.g.
• Additional costs of spending a week in Canada rather than staying home
• The additional administration cost for cartridge vs. penfil form of a medicine
• 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
Cost
0.6
0.4
0.2
0
Placebo Agent A Agent B
Incremental Effect Analysis
90
80
70
60
50
40 Units of Effect
30
20
10
0
Placebo Agent A Agent B
Comprehensive Incremental Cost-effectiveness
• $150 - $50 $100
90 – 50 units = 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 cost-effectiveness of
using Agent B is diminished. The cost of Agent B is not in line with
the product it delivers- a poor value.
COMPARE COST-EFFECTIVENESS?
SEC 62 MONDAY 25 JAN 2021
• When considering the cost-effectiveness of an intervention,
dominance of the intervention or the control should be evaluated

• Graphically this can be illustrated by the cost-effectiveness plan

INCREMENTAL COST-EFFECTIVENESS RATIO
(ICER):
61 SEC SUNDAY
• ICER: The ratio of the change in costs to the change in effects of the
intervention

• ICER: more accurate and more meaningful since it represents the

costs and benefits of each new treatment compared with an existing
one.
PIGGYBACK’ ECONOMIC EVALUATIONS

• RCTs usually formal requirement for licensing

• Often seen as the gold standard in determining effectiveness:
– Patients are randomised between treatment groups;
• There are strict eligibility criteria
• randomisation eliminates bias (High internal validity).
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