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PHRM 3750: Final Exam - Pharmacoeconomics
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.
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.
- only evaluating
= cost analysis (assume outcomes are the same, but do not have proof)
- only evaluating effectiveness (efficacy/effectiveness analysis; double-blind clinical trials)
When is it appropriate to do a cost-analysis?
- 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
Cost Minimization Analysis
- just compare
- 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
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 "cost-effective"
- Key = a
RATIO of cost to effect
- calculate ACERs and ICERs
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
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
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 1-5 on the chart.
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)
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, third-party)
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
What costs are relevant from the Employer's Perspective?
All insurable direct costs
Direct Medical Costs
- Used directly to provide treatment
Medications (Red Book)
Medication administration /monitoring
Counseling and consultations
Emergency dept. visits
Home medical visit
Direct Nonmedical Costs
- costs to patients and their families directly associated with treatment but not medical
Travel (cost of parking, taxi fare,
Meals on Wheels, home-making service
loss of productivity
due to illness
- costs that are difficult to measure and value but related to illness
Pain & suffering
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
- 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 = t-1)
When is discouting NOT appropriate?
When the time frame of a study is less than one year.
- 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 world-what PEC is all about)
What's the first thing you should do before calculating figures for a study?
costs in increasing order
- ratio of resources used per unit of clinical benefit
- does not compare one outcome to another
- rarely used to make decisions
- 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
- 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)
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?
1. Higher cost, higher effectiveness
2. Lower cost, lower effectiveness
How do you do an incremental cost-outcome 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
does not mean 'usefulness' but desirability, value, preference or worth
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
- 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 0.75-0.5 = 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
- 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
Time Trade Off
- Subject is offered 2 alternatives, each with No risk (%)
1. Alternative 1 - Disease state for specific length of time
2. Alternative 2 - Being in perfect health for time
(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
- "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