Week 2

Question 1

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When outcomes of treatments are measured in life years saved,which pharmacoeconomic analysis is most appropriate?

A. Cost benefit
B. Cost minimization
C. Cost effectiveness
D. Cost utility

Question 2

_______
Economists attempt to estimate the resources (inputs) used in the production of a good or service
* The ‘true’ cost is its ‘opportunity cost’, the value of the best-foregone option or next best option
-Volunteer time
-Adding work to current employee

Answer 2

Costs

Question 3

– amount ‘listed’ by provider

Answer 3

Price/Charge

Question 4

• _____________ – amount contracted with the third-party insurer (lower than price)

Answer 4

Allowable charge

Question 5

_________– what it actually costs the provider to provide the product or service – harder to measure

Answer 5

Cost

Question 6

Charge>price>allowable charge >cost

Question 7

What is paid for specific healthcare
services, such as pharmaceuticals,
physician services, hospitalization
* Ex: costs of clinic visits, physical
therapy, drugs, drug monitoring,
diagnostic tests

Answer 7

Direct medical costs

Question 8

Costs necessary to enable patients to receive
medical care
* Ex: transportation to and from visits, lodging,
baby-sitters, special diet (e.g., celiac disease);
paid formal home-health care, costs of
modifications to house, car

Answer 8

Direct nonmedical costs

Question 9

Measure of the patient’s lost productivity
plus the lost productivity of unpaid
caregivers
* Ex: time off from work, less productive
days, spouses/adult children take time off from
work

Answer 9

Indirect costs

Question 10

Reflect the patient’s level of pain
and suffering. These are hardest
to measure
Ex: Anxiety, chronic pain, loss of
functioning

Answer 10

Intangible costs

Question 11

A daughter takes a week off from work to attend to her ill
father
A. Direct medical costs
B. Direct non-medical costs
C. Indirect costs
D. Intangible costs

Question 12

Taxi fare to emergency department
A.Direct medical costs
B. Direct non-medical costs
C.Indirect costs
D.Intangible costs

Question 13

Inpatient charge of $4589 per day for acute care
A.Direct medical costs
B. Direct non-medical costs
C. Indirect costs
D.Intangible costs

Question 14

What type of cost is this?

_____________________
-medications
-outpatient/professional services
-inpatient services
-long-term care

Answer 14

Direct medical costs

Question 15

What type of cost is this in regards to costs for schizophrenia?

-law enforcement
-shelters

Answer 15

Direct non-medical

Question 16

What type of cost is this?
-unemployment
-reduced productivity at work
-premature mortality (suicide)
-caregiver time

Answer 16

Indirect costs

Question 17

Perspective
Whose costs?
Patients
Providers
Payers
Society

Question 18

____________
-in case the data collected over more than one year back in time

Answer 18

Inflation

Question 19

______________
- if program or therapy extends more than one year in the future, “discounting” is needed
- -used even if inflation rate is zero

Answer 19

Time preference

Question 20

Adjustments for Inflation
Two alternatives:
1. Count number of services/resources used and multiply
units by standard costs at one point in time
2. Use inflation rate for the past years times cost from the
past years

Question 21

_______________________
A time preference is associated with money
* Current and future costs are not valued the same
* If the treatment costs (and outcomes) extend for more than one year, discounting should be conducted to account for this difference

Answer 21

Discounting

Question 22

Average costs= total costs/total units
* Incremental = change in total costs / change in units
* Example: Drug A is $500 per patient and is 95% effective while Drug B is $750 per patient and 97% effective

To calculate do: (750-500)/(0.97-0.95)=$12,500

Question 23

Incremental Cost-effectiveness Ratio associated with using more Expensive Drug (Drug B )
A. $125
B. $12,500
C. $247
D. $500

Question 24

When outcomes of treatments are the same which pharmacoeconomic analysis is most appropriate?

Answer 24

Cost minimization analysis

Question 25

Types of Costs of Schizophrenia

______________

-unemployment
-reduced productivity at work
-premature mortality (suicide)
-caregiver time

Answer 25

Indirect Costs

Question 26

PV=FC / (1+r)n
FC= Future costs (or benefits)
N=number of years
r = discount rate per year

Question 27

Average costs= total costs/total units
* Incremental = change in total costs / change in units
* Example: Drug A is $500 per patient and is 95% effective while
Drug B is $750 per patient and 97% effective

Question 28

Drug A is $750 per pt and is 95% effective while Drug B is $500 per pt and 97% effective
Incremental Cost-effectiveness ratio associated with using Drug B is:
A. $125
B. $12,500
C. $247
D. Cannot be calculated

Question 29

_____________________________
Usually entails work measurement to estimate time (to fill an order, to administer medication etc.)
* Opportunity costs may be involved
* Must add fringe benefits to wage calculations

Answer 29

Personnel Costs

Question 30

__________________(AWP) is most commonly used to estimate drug costs. Readily accessible (e.g., Lexi comp-
>Preparations-> Pricing) – but often overestimation.
* Other: Wholesale Acquisition Cost (WAC), Average Manufacturer Price (AMP)

Answer 30

Average Wholesale Price

Question 31

For these services (office visit, surgery etc.) two
alternatives commonly used:
➢ Amount charged
➢ Allowable charge

Answer 31

Physicians costs

Question 32

Hospitalization Costs
Several ways :
1. Per Diem (daily average)
2. Disease-specific per diem
3. Diagnosis-related Group (DRG)
4. Micro-costing: separate ancillary and routine services
5. OR Use of cost-to-charge ratio (CCR)
Charge=$1800
CCR=0.15
Estimated Cost=1800*0.15=$270

Question 33

Sensitivity Analysis
For any costs ‘estimates’ that are uncertain, a sensitivity analysis
or ‘what if’ analysis should be conducted
* How do we know the discount rate is 5%?
✓ Vary the rate from 0% to 10% and see if the decision of ‘least
costly’ alternative still holds
✓ Or vary cost of hospitalization by area

Question 34

When determining costs the following needs to be
considered:
What is the perspective?
Any relevant/realistic costs included?
Is discounting or adjustment appropriate?
Is a sensitivity analysis conducted for certain
values?

Question 35

Which perspective did the study adopt?
Both payer and society

Question 36

Compared to alternatives (nitrofurantoin and TMP), fosfomycin to treat uncomplicated UTIs was :
A. More effective and less expensive
B. More effective and more expensive
C. Less effective and less effective
D. It is unclear from the data provided