Pharmacoeconomics

Background

Pharmacoeconomics has ties to both economic evaluation and health outcomes research. Many of the theoretical methods have roots in social welfare and cost-benefit analysis that are found in public finance and environmental economics. The field is also related to decision analysis and corporate finance principles often used in evaluating corporate business decisions.

Categories of Study Methods

Within pharmacoeconomics, there are four general subcategories of study methods: (1) cost-minimization analysis (CMA), (2) cost-effectiveness [Page 923]analysis (CEA), (3) cost-utility analysis (CUA), and (4) cost-benefit analysis (CBA). These four subcategories are differentiated according to how health outcomes are measured: CMA requires that the health effects of the alternatives in question are equal. CEA measures health outcomes in some natural unit (e.g., life years). CUA is very similar to CEA except that the unit of health is quality-adjusted life years (QALYs). These units are formed by assigning health status (e.g., mild angina) a preference-based utility score, typically between 0 and 1, where 1 represents perfect health and 0 represents death, and then multiplying life years in a particular health state by the preference score of that health state (e.g., 10 years in a health state with a utility score of 0.7 results in 7 QALYs). The scores themselves come from survey-based methods, and there are various methodologies for obtaining the utility scores. Finally, CBA measures health effects in dollars, which often involves some means of translating health gains into a dollar value. All four subcategories consider costs measured in dollars.

Data Sources

There are numerous potential sources of data for quantifying costs and outcomes for use in a pharmacoeconomics analysis, ranging from prospective data collection to analyses of administrative databases to information based on surveys of experts. In addition, information from randomized clinical trials or from pharmacoepidemiologic studies can be examined in combination with cost information. Any pharmacoeconomic study is limited by the availability of data related to what treatments it sets out to compare. In addition, data are typically available from a particular patient population, a particular time period, and a particular setting. Consequently, studies often involve the use of models to project results across patient populations, and to project costs and outcomes into time horizons beyond the research of existing data.

Determining Costs

A key aspect of pharmacoeconomics is consideration of costs beyond just the simple cost of the drug. Examples of other costs that can be included are the personnel, equipment, or facilities used in administering treatment, the cost of treating side effects, the costs associated with healthcare utilization (e.g., physician office visits or hospitalizations), or the cost of patient time that is spent during treatment, to name a few. Finally, the costs of pain and suffering from a treatment or disease can be considered. Note, that a central element of a pharmacoeconomic analysis is the choice of the study perspective, where a societal perspective is generally felt to be the most relevant in terms of informing national policy (other perspectives include the payer perspective, the provider perspective, and the employer perspective). The study perspective fundamentally determines what costs are included in the analysis, which is a reason that studies that take a broad perspective, such as a societal perspective, are considered to be of greater importance. However, data availability and available budgets for research may limit the perspective that research can cover. More important, it is the research question (or decision to be made) that dictates the appropriate perspective.

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