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PHRM 3750: Final Exam  Pharmacoeconomics
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Terms in this set (42)
Flow chart for Economic evaluation techniques
Depends on how many outcomes you're comparing and whether you compare costs and/or outcomes for each alternative.
COI
Cost of Illness
 a form of evaluation which computes the current economic impact of a disease, including the costs and consequences of treating that disease.
 No comparisons of treatment modalities is involved.
Partial Evaluation
 only evaluating
costs
= cost analysis (assume outcomes are the same, but do not have proof)
OR
 only evaluating effectiveness (efficacy/effectiveness analysis; doubleblind clinical trials)
When is it appropriate to do a costanalysis?
 in professor's opinion = NEVER, unless you're working for a shady company that wants to cover up bad outcomes
 CA basically ignores outcomes
 performed by accountants all the time
CMA
Cost Minimization Analysis
 just compare
costs
of intervention
 Advantages: easiest because
outcomes are assumed to be equivalent
or the quality of both outcomes is assumed to be irrelevant
 Disadvantage:it cannot be used when outcomes are different
Example: comparing two generics
CEA
Cost Effectiveness Analysis

measures outcomes in natural units
(i.e. mmHg, cholesterol levels, SFDs, years of life saved)
 tx have the same type of outcome, but differing effectiveness
 Advantages: outcomes are easier to quantify when compared with a CBA or CUA and clinicians are familiar with the terms
 Disadvantages: programs with different types of outcomes cannot be compared; side effects from drugs are not taken into account; can't determine whether added costs are worth the added outcomes > no $ value, so = judgement call by pt, dr, decision maker as to whether it is "costeffective"
 Key = a
RATIO of cost to effect
is given
 calculate ACERs and ICERs
SFD
SymptomFree Days
CUA
Cost Utility Analysis
 measures outcomes based on years of life that are adjusted by
"utility" weights, which range from 1.0 (perfect health) to 0.0 (dead)
 when morbidity and mortality are both important outcomes of a treatment, CUA incorporates both into one unit of measure (considers both quantity and quality of life)
 Disadvantages: there is no consensus on how to measure these utility weights, and they are more of a "rough estimate" than a precise measure
 some consider CUA a subset of CEA
CBA
Cost Benefit Analysis

both costs AND benefits are evaluated in monetary terms
 Advantages: clinicians and others can determine whether the benefits of a program will exceed the costs of implementation; clinicians and others can also compare multiple programs with similar or unrelated outcomes
 Disadvantages: difficult to place a monetary value on health outcomes (can't put a value on life); controversial in healthcare
CCA
Cost Consequence Analysis
 for each alternative, the costs and various outcomes are listed, but no ratios are given
= "shopping list of effects"
also known as Cost Outcomes Array (COA)
Fill in 15 on the chart.
1. CMA
2. CBA
3. CEA
4. CUA
5. CCA
What costs are relevant from Society's Perspective?
All direct medical and nonmedical costs: hospitalization, long term care, home care, social welfare services
Productivity losses (indirect costs)
Intangible costs
(rarely studied)
What costs are relevant from the Health Care Provider's Perspective? (Hospital or Clinic)
Include actual costs to treat patient
What costs are relevant from the Payer's Perspective? (Medicare, Medicaid, thirdparty)
eg average reimbursement costs
What costs are relevant from the Patient's Perspective?
costs to patient : patient out of pocket costs, deductible, copays, coinsurance, lost wages (indirect costs), transport
(rarely studied)
What costs are relevant from the Employer's Perspective?
All insurable direct costs
Productivity losses
Disability
(rarely studied)
Direct Medical Costs
 Used directly to provide treatment
Medications (Red Book)
Medication administration /monitoring
Counseling and consultations
Diagnostic tests
Emergency dept. visits
Home medical visit
Ambulance service
Nursing service
Direct Nonmedical Costs
 costs to patients and their families directly associated with treatment but not medical
Travel (cost of parking, taxi fare,
Childcare
Hotel stays
Meals on Wheels, homemaking service
Indirect costs

loss of productivity
due to illness
Wages lost
Unpaid caregiver
Premature mortality
Intangible costs
 costs that are difficult to measure and value but related to illness
Pain & suffering
Fatigue
Anxiety/Fear
(rarely studied)
Which PEC technique(s) could you use to incorporate intangible costs?
CUA or CBA only
Adjustment of costs
 needed when costs are estimated from information collected for more than one year before the study

bring present value to future
Discounting
 needed when costs are estimated based on dollars spent or saved in future years

bring future value to present
 money is worth more now than it will be in the future (but this is NOT based on inflation)
 two different equations: based on comparing costs at END of year vs. BEGINNING of year (same equation except the exponent = t1)
When is discouting NOT appropriate?
When the time frame of a study is less than one year.
Sensitivity analysis
 This should always be included; tests the robustness of the study conclusions, i.e. how confident you are in the conclusion.
 Typically, sensitivity analysis is conducted on large cost items, outcomes, discount rates (eg 0  8%)
 If the researcher still comes up with the same conclusion (eg Tx A is preferred over Tx B), then the results are robust. If the conclusion changes with changes in assumptions, then the conclusions are not robust  less confidence in the decision/recommendation
 Desired result of a sensitivity analysis: robustness, insensitivity to changes in assumptions
 However, just because a sensitivity analysis is not included in the abstract doesn't mean they didn't conduct one
 Don't have to include the exact wording, either: example = "costs were estimated using two methods" = sensitivity analysis
Efficacy vs. Effectiveness
Efficacy = "if a drug CAN work" (ideal situation)
Effectiveness = "if a drug DOES work" (real worldwhat PEC is all about)
What's the first thing you should do before calculating figures for a study?
Place the
costs in increasing order
ACER
 ratio of resources used per unit of clinical benefit
 does not compare one outcome to another
 rarely used to make decisions
ICER
 ratio of the difference in costs divided by the difference in outcomes
 used when one alternative is both more expensive and more effective > tells you the magnitude of the added cost of each unit in health improvement
 used to make decisions
Dominant
 when one option is both
more effective and less expensive than the other,
the ICER will be a negative number
 The more expensive, less effective option is "dominated." (not cost effective)
Extended Dominance
1. List all cost in increasing order
2. Calculate ICERs
3. If ICERs are not in increasing order, then you have extended dominance
When do you perform an ICER?
Two instances:
1. Higher cost, higher effectiveness
2. Lower cost, lower effectiveness
How do you do an incremental costoutcome analysis?
1. List all the options in order of increasing cost
2. List corresponding outcomes
3. Measure change in cost
4. Measure change in outcomes
5. Then do the ratios
utility
does not mean 'usefulness' but desirability, value, preference or worth
QALY
used in CUA
= Q x Time
where Q=quality of life
Example: Chronic condition.
If, Q=0.7 for 10 years (Y=10).
Then, QALY = 0.7 x 10 = 7 QALYs=7years in Perfect health (PH).
Translation: 10 years in a chronic condition is equal to 7 years in Perfect health (PH). Individual is willing to trade (pay) 3 years to live in PH
Q
 aka "Q weight"
 this is a number the patient picks between 0 (death) to 1 (perfect health)
 measure of impact of disability on your life
Change in QALY
If a patient undergoes a treatment program and their Q increases from .5 to .75 for one year, then the chage in QALY is 0.750.5 = 0.25
This means that there was a gain of 0.25 full life years from the program.
Can also measure incremental cost per QALY (change in cost / change in QALYs)
Steps to calculate QALYs:
1. Develop a description of each disease state or condition of interest.
2. Choose the method for determining utilities.
3. Choose subjects who will determine utilities.
4. Multiply utilities by the length of life for each option to obtain QALYs.
How to measure Q weights/utilities
1. RS = Rating Scale
2. SG = Standard Gamble
3. TTO = Time Trade Off
Rating Scale
 line on a page with scaled markings 0 = death, 100 = perfect health
 patient X's between the extremes to indicate preference
 Disadvantage: Doesn't incorporate time
TTO
Time Trade Off
 Subject is offered 2 alternatives, each with No risk (%)
1. Alternative 1  Disease state for specific length of time
t
(life expectancy)
2. Alternative 2  Being in perfect health for time
x
(less than t)
 Time is varied till the subject is indifferent
 Preference score
Q = x/t
Example: Patient is indifferent between 30 years of perfect health or 40 years of life in a disease state: Q = 30/40 = 0.75
Standard Gamble
 "gold standard" because it involves risk
 consistant with what actually happens; provides true "utilities"
 (Chance Board)
Each subject is offered 2 alternatives
Alternative 1: no risk  stay in your current health, e.g. arthritis
Alternative 2: involves risk (%)  Tx with 2 possible outcomes
Perfect health or Death
 The percent chance of success is decreased until the subject is indifferent or unable to choose between the two (the lowest probability of perfect health the patient is comfortable with)
 The probability at this indifference is the utility recorded (i.e. chance of living a normal life after treatment
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