Pharmacoeconomics

Question 1

What is Pharmacoeconomics?

Answer 1

Pharmacoeconomics is a discipline that aims to assess the impact of medicines on the health system, in terms of both costs and the health gains for the money spent

Question 2

When buying the drug, the govt is really just what?

Answer 2

When buying the drug, the govt is really just buying the outcome. As such, the govt does not give two shits about anything else except for efficacy, tolerability and cost, i.e. the overall outcome. Most PE analysis takes the perspective of the govt, meaning they do not take into account the costs on patients themselves (e.g. driving to the doctors), only the money the govt has to spend

Question 3

The opportunity cost is an economics term that can be simplified to?

Answer 3

What are you willing to forgo in order to buy something else? A patient example could be ‘What would you normally do with the time it takes to go to the pharmacy and get your meds?’ Meanwhile, a government application of this idea is: ‘If we buy this drug, what else can we spend this money on?’

Question 4

What is meant by Opportunity Cost?

What is Important?

Answer 4

Any expenditure will be at the expense of something else.

Therefore, it is important for a company to display that their drug is cost effective, or else if the government were to consider buying it, they would be missing out on too much to gain relatively little outcomes and so they won’t buy your shitty drug

Question 5

What are the Types of Costs?

Answer 5

Direct Costs (products and services consumed)

Indirect Costs (productivity)

Intangible Costs

Question 6

Types of Costs: What are Direct Costs?

Answer 6

Medical (drugs, fees for professional services, diagnostic tests, hospitalisation, ADRs)

Non-medical (transportation to hospital)

Question 7

Types of Costs: What are Indirect Costs?

Answer 7

Morbidity and mortality

Question 8

Types of Costs: What are Intangible Costs?

Answer 8

Pain, suffering and grief; hard to quantify

Question 9

What is Quality of Life (QoL)?

Answer 9

Quality of life (QoL) refers to the overall functional effect of an illness upon a patient, as perceived by patients in similar situations

Question 10

QoL is comprised of what?

Answer 10

Physical functioning: e.g. how much can they move, do activities etc.

Psychological functioning: e.g. anxiety, depression, happiness with life etc.

Social functions: e.g. ability to maintain social relationships or work productively.

Question 11

Quality of life is rated on a scale of what?

Answer 11

Of 0 to 1. 0 being dead, and 1 being perfectly healthy. If QoL is less than 0, this refers to a state worse than death

Question 12

What are QALYs?

Answer 12

Quality adjusted life years (QALYs) are a combination of life years extended and the quality of life during those years

Question 13

How do you Calculate QALY?

Answer 13

Number of Years Gained * QoL of those years

Question 14

What are DALYs?

Answer 14

Disability adjusted life years (DALYs) are a measure of the burden of disease and are not related to medications/interventions – only the disease itself. DALYs give an idea of the years of life lost to living in disability

Question 15

As the government is interested in buying outcomes, they need to be able to quantify these somehow. Outcomes can be either?

Answer 15

Clinical: life years gained, decrease in blood pressure, decrease in blood glucose (Natural Units)

Humanistic: quality of life, as reported by the patient.

Question 16

What is meant by Net Clinical Benefit?

Answer 16

The net clinical benefit represents the overall benefit gained from a treatment, taking into account any detriments that the treatment may cause

• How much does the intervention extend lifespan?
• How much does the intervention improve quality of life?

Question 17

Net clinical benefit can be influenced by what?

Answer 17

Time and subgroups

Question 18

Net Clinical Benefit: How does Time influence Net Clinical Benefit?

Answer 18

The balance of risk and benefit may change over time, so therefore the net clinical benefit can change over time as well. An example is with anticoagulants, the risk of bleeding will stay constant over time, but the benefit will slowly reduce as the patient ages

The result of this is a change in the risk:benefit ratio and hence a reduction in net clinical benefit

Question 19

Net Clinical Benefit: How do Subgroups influence Net Clinical Benefit?

Answer 19

The risk:benefit ratio may change substantially between subgroups. The reason for this is a different baseline risk. You are more likely to see a benefit of a treatment on an outcome with a subgroup with an already high baseline risk of that outcome. This is also known as treatment effect modification

Question 20

Discuss Costs associated with outcomes

Answer 20

Drugs usually save money in the long run by preventing costly outcomes, despite costing a lot to begin with

Question 21

What is Cost Minimisation?

Answer 21

In this type of analysis, we accept that in terms of outcomes, the new drug is no worse than the previous drug that was already found to be cost effective.

That leaves the only difference between the drugs to be their cost. Thus, in this type of analysis, we compare only the costs of the two treatments. If the new drug costs the same or less, it will be confirmed to be cost-effective.

Question 22

What is Cost Effectiveness?

Answer 22

The key difference here is that this analysis does not make the assumption that the new drug has equivalent outcomes to the comparator. As such, we now need to compare outcomes in addition to comparing the cost. Outcomes are measured in natural units

“is the net clinical benefit gained value for money?’

Question 23

What Natural Units are Outcomes Measured in in Cost Effectiveness?

Answer 23

• Average duration of life extended (e.g. anti-hypertensives)
• Average number of additional symptom free days (e.g. anti-asthmatics)

Question 24

What is the Willingness to Pay Threshold?

Answer 24

The maximum amount the government is willing to pay for the outcome(s)

It is how much they are willing to pay to avoid one event, extend lifespan by a year, gain a QALY etc. The threshold tends to be around $50,000 to $75,000 per QALY gained. The government does not often pay more than this amount to gain a QALY as it simply costs too much