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NEED OF PHARMACOECONOMICS IN INDIAN HEALTH CARE SYSTEM: A BRIEF REVIEW

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About Authors:
Hinchagri S S 1*, Halakatti P K2,  Devar S B2, Biradar B S2, Kankanwadi S K2, Patil S D2
1. HKES’s College of Pharmacy, Sedam Road, Gulbarga, Karnataka, India
2. HSK College of Pharmacy, BVVS’s Campus, Bagalkot, Karnataka, India

*shivanand.hinchageri95@gmail.com

Abstract:
In India, nearly 3.1 million households below the poverty line and those are unaffordable for private health care. Cost of medicines are growing constantly as new medicines are marketed and are under patent law, preference of drug therapy over invasive therapy, and the irrational drug prescription. In a developing country like India 85% of total health expenditure is financed by house-hold, out-of–pocket expenditure. The proportion of insurance in health-care financing in India is very low. Many poor people frequently face a choice between buying medicines or buying food or other necessities due to limited resources and high pricing of drug. So medicine prices do matter. The main objective of study is to show the importance of pharmacoeconomic evaluation in Indian health care. Methods to be used for pharmacoeconomic evaluation are Cost-effectiveness analysis, Cost minimization analysis, Cost-benefit analysis and Cost-utility analysis. Review of pharmacoeconomic evaluation sample studies shows the pharmacoeconomics became more important 1. To find the optimal therapy at the lowest price. 2. Numerous drug alternatives and empowered consumers also fuel the need for economic evaluations of pharmaceutical products. 3. The use of economic evaluations of alternative healthcare outcomes. 4. Healthcare resources are not easily accessible and affordable to many patients; therefore pharmacoeconomic evaluations play an important role in the allocation of these resources. The study concludes that in India the pharmacoeconomic evaluation is essential to optimal therapy at lowest price, alternative treatment plans, which help the poor and middle class Indians to obtain well health care services.

Reference Id: PHARMATUTOR-ART-1277

INTRODUCTION:
Pharmacoeconomics is defined as “A branch of health economics which particularly focuses upon the costs and benefits of drug therapy”. Most clinicians have little exposure to health economics, as it is a relatively new discipline in the health sciences. It is important that pharmacoeconomic concept be understood not only by policy-makers, health administrators and health managers, but also by primary care providers. Nowadays, in India, Pharma field with various new drugs, usually of the same family having properties similar to the available (older) drugs. This makes it difficult for the treating physician to judiciously decide which drugs to use. Before prescribing any new drug therapy, two questions must be answered (i) Whether the new drug is equally or more efficacious in the said disease as compared to the standard treatment; and (ii) Does the new drug have any economic advantage over the existing drugs.1

Health-Care System and Health-Care Financing System2,3:
India is the world’s largest democracy. The enormous growth in wealth has not been distributed equally and the gap between the health of the richest and poorest continues to widen in India. The poor and middle class peoples do not have the same level of access to high quality health care as the wealthy.

In Indian health-care practices, allopathic (western), complementary and alternative medicine (ayurveda, unani, siddah and homeopathy) operate side by side. Many patients switch from one practice to another when relief is not adequate. Higher-quality public health-care system exists only in larger cities, but is virtually nonexistent in villages. The many patients are unaffordable for private health care. The challenge before India is to make health care accessible for the majority of its people. Allopathic health care has emerged as one of the largest service sectors in India. India spends only 5% annual gross domestic product (GDP) on health care. Of this, most of the expenditure (about 80%) is private out-of-pocket (OOP). High out-of-pocket costs make health services inaccessible to a significant proportion of Indian households. In India, nearly 3.1 million additional households slip to levels below the poverty line ($1 per day) per annum as a result of hospitalization expenditure. Of the total US $24 million spent on health care in India, the private sector health-care spending is approximately 77% of the total amount (US $18,643 million). Of this, 86% is OOP expenditure. Public sector expenditure is 21% (US $4953 million), and the external aid accounts for 2% (US $565 million). The proportion of insurance in health-care financing in India is very low. Only around 10% of the population is covered through health financing schemes. Selection criteria by suppliers often restrict the poor (and more likely to be ill) from affordable prepayment schemes. The voluntary health insurance market, which is estimated at Rs 4 billion (US $86.3 million) currently. Because India is a highly populated and vast country, health is a state subject. Previous some studies from India have found reasons such as high absenteeism, poor quality of services, rampant corruption and long travel distances as prominent reasons for poor access of public sector health facilities. Those accessing private providers largely encounter unlicensed practitioners who deliver poor quality care. High costs exist in private sector because of a lack of regulation.

History4:
The term Pharmacoeconomics was first time used in public forum was in 1986, at meeting of pharmacist in Toronto, Canada, when Ray Townsend from the Upjohn company, used the term in presentation. Ray and few other had been performing studies using the term pharmacoeconomics within the pharmaceutical industry since the early eighties today pharmacoeconomics research is a flourishing industry with many practioners, a large research and application agenda, several journals and flourishing professional societies including the international society for pharmacoeconomics and outcomes research. Why did the term catch on? The pharmacoeconomics started with a study of the cost-effectiveness of AZT for the treatment of persons with AIDS.

Need of Pharmacoeconomic:
The demand for and the cost of health care are increasing in all countries as the improvement in and sophistication of health technologies. Cost of medicines are growing constantly as new medicines are marketed and are under patent law, preference of drug therapy over invasive therapy, discovering various off label uses of existing drugs (Cooke, 2003) and the irrational drug prescription. All over the world patients are affected by high price of medicines. In a developing country like India 85% of total health expenditure is financed by house-hold out-of–pocket expenditure (Godwin et al., 2007). Many poor people frequently face a choice between buying medicines or buying food or other necessities due to limited resources and high pricing of drug. So medicine prices do matter.5
Pharmacoeconomics has become more important over the past 20 years, due to an increased emphasis on efficient drug therapies for disease, which increase health costs, etc. 1. Rising health expenditures have led to the necessity to find the optimal therapy at the lowest price. Pharmacoeconomics is an innovative method that aims to decrease health expenditures, whilst optimising healthcare results. 2.  Pharmaceutical expenditures, which constitute a large part of healthcare expenditures, have been increasing much faster than total healthcare expenditures. 3. Numerous drug alternatives and empowered consumers also fuel the need for economic evaluations of pharmaceutical products. 4. The increasing cost of healthcare products and services has become a great concern for patients, healthcare professionals, insurers, politicians and the public. 5. This increasing concern has prompted demand for the use of economic evaluations of alternative healthcare outcomes. This escalation in healthcare spending is due to increased lifeexpectancy, increased technology, increased expectations, increased standards of living and an increased demand in healthcare quality and services. 6. Healthcare resources are not easily accessible and affordable to many patients, therefore pharmacoeconomic evaluations play an important role in the allocation of these resources.6

PHARMACOECONOMIC EVALUATION
Issues in pharmacoeconomic evaluation :
All economic evaluation has common structure which involves explicit measurement of inputs (costs) and measure outcomes. The common issues in pharmacoeconomic evaluation are,

General Perspectives:
Economic evaluation is a tool for assisting decision-making given assumptions about how society wishes to maximise the benefits from limited health care spending. Economic evaluation involves identification of the benefits and costs of such spending, where:
*  the benefits include improvements in the maintenance of, or prevention of deterioration in, health status (including improvements in length of life, reductions in illness and improvements in quality of life); and
*  the costs are the resources that are used to generate the benefits.

Economic evaluation aims to identify the extent to which a particular decision or set of decisions meets the goal of promoting efficiency.7
Generally the societal perspective is considered but the health mangers facing problem of low budget concentrates on health service perspective. In the pharmacoeconomic evaluation of back pain treatment health perspective is much more costly and has limited benefit but the societal perspective is beneficial as it enhances working ability of the workers by reducing the working hours.8

Costs
In pharmacoeconomic evaluation costs can be mainly divided into, financial cost (mandatory cost) and economic cost (resource for which no mandatory payment is made) opportunity cost is the benefit foregone when selecting one therapy alternative over the next best alternative. Measuring cost: several costs can be measured when weighing up the cost of any invention. This cost may be, Direct: paid by the health service (including staff costs, capital costs, and drug acquisition costs).

Indirect: cost experienced by patient (family, friends).

The cost can be measured in following ways,

• Cost / unit (cost/tab, cost/vial)

• Cost / treatment

• Cost / person

• Cost / person / year

• Cost / case prevented

• Cost / life saved

• Cost / DALY (disability-adjusted life year)

Outcomes (benefits):
The second fundamental component of a pharmacoeconomic study is outcomes. What is the effect of alternative drug therapies on disease progression, survival, quality of life?
In assessing outcomes, it is also important to take into account both positive and negative outcomes. Positive outcome is a measure of the drug’s efficacy. Negative outcomes include side effects, treatment failure, and the development of drug resistance.8

Objective:
The main objective:
To know the importance of pharmacoeconomic evaluation in Indian health care.

General objective
1.     
The pharmacoeconomic evaluation is essential to find the optimal therapy at the lowest price.
2.      The use of economic evaluations of alternative healthcare outcomes and drug alternatives.

METHODS OF PHARMACOE-CONOMIC EVALUATION

Cost-effectiveness analysis (CEA):
Cost-effectiveness analysis is used to compare two or more treatment options for a specific condition. Cost-effectiveness is dependent on the value in nonmonetary terms that is placed on the outcome in relation to the cost. This analysis compares the unit of effectiveness – i.e. number of years of life saved, number of lives saved, percentage lowering of glucose level, etc. – with the cost of the treatment.
A treatment can be referred to as being cost-effective if it has an outcome that is worth its corresponding cost in relation to alternative therapies. For example, the diuretic hydrochloro-thiazide may be the most inexpensive treatment for hypertension, but it often requires a potassium supplement. The additional cost involved in the therapy means that this drug is not always the most cost-effective therapy.6

Cost minimization analysis (CMA):
When two or more interventions are evaluated and demonstrated or assumed to be equivalent in terms of a given outcome or consequence, costs associated with interventions may be evaluated and compaterd. An example would be prescribing a generic preparation instead of the brand leader(lower cost but same health outcomes).9,10

Cost-benefit analysis (CBA): A cost-benefit analysis compares the costs and outcomes of alternative therapies and the outcome is then expressed in monetary terms.9 CBA is the most comprehensive and the most difficult of all economic evaluation techniques. In this technique, the benefits are also assigned a monetary value so that costs and benefits can be easily compared. Thus, totally different interventions can be easily compared, making it a useful tool (like CUA) for resource allocation by policy-makers. The most difficult and challenging part of CBA lies in calculating the benefits in economic terms. Some benefits are easy to convert, others need subjective judgement. CBA may ignore intangible benefits (pain, anxiety, stress), the benefits of improved patient quality of life, patients satisfaction with the healthcare system theseare difficult to express in monetary terms.1,6

Cost-utility analysis (CUA): Cost-utility analysis is performed in the same manner as cost-effectiveness analysis except that the endpoint differs. The endpoint of cost-utility analysis is described as ‘quality-adjusted life years saved’. This allows costutility analysis to compare therapies for different diseases. Cost-utility analysis integrates both the costs and the consequences of a therapy into its comparison. Cost utility measures the final outcomes in changes of life-expectancy. This method is often used when a programme affects morbidity and mortality.6

LIMITING FACTORS FOR PHARMACOECONOMIC EVALUATION:5
a) Choice of the drugs is given according to the marketed pressure. Pharmacists give drugs as per their will (alternative drugs for prescribed medicine).
b) Drugs are prescribed under promotional pressurizing activities of marketing executives of pharmaceutical firms. Incentives and gifts offered by these firms to doctors have a major impact on prescribing brands.
c) For chronic diseases, bio-availability consideration can have an upper- hand over pharmacoeconomics.

To overcome these limitations, the following steps should be taken:
1) State associations should buy medicines directly from the firm/industry and sell to retailers who are associated members. These drugs would cost 30 - 40% lesser than current prices.
2) Retailers should lower their profit margins. There are three layers between drug makers and purchasers; super stockiest, authorized stockiest and semi-wholesalers. Dealing directly with the drug firm and availability of drugs through affiliated drug retailers would lower prices by 10 -12%.
3) Hospitals can buy expensive drugs for cancer and HIV directly from drug firms and sell through their pharmacies. To purchase the drug, select the firm having good marketing practices (GMP) and invite technical bids from them. Avoid the firm selling drugs with very low prices as this does not mean cost -effective drugs.
4) Sensitization of students of health sciences on pharmacoeconomics during their formative years is needed as they are future prescribers. The revised undergraduate medical curriculum stresses on the importance of the essential drug concept and to prescribe a drug tailored to individual needs based on safety, tolerability/suitability, efficacy and price (STEP). The students should be sensitized during their under graduate course to consider the cost of the medicine they would be prescribing (Jana, 2005).
5) Creating awareness of concepts and principles of pharmacoeconomics in existing physicians should also be done. Whether this carries implications for day-to day clinical decision making directly or through clinical practice guidelines formulated by a panel of experts, requires for clinician to understand various methods of evaluations and also to develop skills to interpret and critique results.

Pharmacoeconomic Analysis Sample Studies:
One of the study on cost effective analysis by Hakim Masood et al. shown, they used six different brands of ceftriaxone coded as C-1, C-2, C-3, C-4, C-5, and C-6 with their M.R. Prices 384.33, 149.90, 398.47, 415.80, 285.00, and 300.00 respectively. The clinical isolates namely Escherichia coli, Staphylococcus aureus; Klebsiella pneumonia; Proteus mirabilis; salmonella typhi and Pseudomonas aeruginosa used inthis study show 100% susceptibility againstdifferent brands of the ceftriaxone. The study shown comparison studies of brands verses price show that the C-2 is lowest in price and have similar pattern of antibacterial activity as other brands of the category. Different brands of such antibiotics offer a simple, cost-effective solution to many health problems provided they are available, affordable and properly used. However, effective treatment is lacking in poor countries for many diseases.11

 The study onAntibiotic pharmacoeconomics: an attempt to find the real cost of hospital antibiotic prescribing. The study shown cost of five-day courses of gentamicin, penicillin G, ampicillin, flucloxacillin, cefuroxime, ceftotaxime and erythromycin. For gentamicin, the drug costs and hidden costs account for 35% and 65% respectively of the total cost. The true ratio of hidden cost to antibiotic cost is actually greater in this hospital as pharmacy. Antibiotics which require serum level monitoring, for example gentamicin, have larger hidden costs than those which do not, for example cefuroxime, other factors being equal. Antibiotics administered four times per day, for example penicillin G, will have a higher hidden cost than those administered three times per day, for example cefuroxime. Erythromycin is the most expensive of the regimens costed because each dose costs over eight pounds, because it is administered four times daily, and because it is quite insoluble; a dose of I g requires twenty millilitres of sterile water to dissolve it.12

Cornelis Boersmaet al. as study was done on Pharmacoeconomics of Angiotensin II Antagonists in Type 2 Diabetic Patients with Nephropathy. The study suggest that treatment with ARBs in patients with type 2 diabetes with overt or incipient nephropathy confers health gains and net cost savings compared with conventional (non-ACE inhibitor) therapy. Economic evaluation of  ARBs versus conventional therapy to be cost saving in type 2 diabetes patients with nephropathy, largely because of the high costs of dialysis and transplantation. Cost savings are seen within about 6 years. It is unusual to have an effective new treatment that may unusual to have an effective new treatment that may. This will result in a proper pharmacoeconomic outcome, where both types of drugs can be compared for healthcare decisions.13

Immune globulin intravenous (IGIV) therapy has been reportedly used in the management of patients with autoimmune mucocutaneous blistering disease (AMBD) refractory to Convensional Immune Suppression Therapy (CIST). IGIV has shown to be more clinically beneficial than CIST by bringing about long-term clinical remission and less recurrence. The high cost of the IGIV is of concern to patients, physicians, and insurance companies. In this report, we compare the cost of IGIV to that of CIST in treating a cohort of 15 Mucous Membrane Pemphigoid (MMP), 10 Ocular Cicatricial Pemphigoid (OCP), 15 Bullous Pemphigoid (BP), and 32 pemphigus vulgaris (PV) patients. In each cohort of patients, CIST had significant side effects, many of which were hazardous and required prolonged and frequent hospitalizations. Some of these side effects were severe enough to require discontinuation of the treatment. We consider the total cost of CIST to be the actual cost of the drug, plus the cost of management of the side effects produced by CIST. In the same patient cohort, no significant side effects to IGIV were observed. None of the IGIV treated patients required physician visits, laboratory tests, or hospitalizations specifically related to IGIV therapy. Hence, the total cost of the IGIV therapy is the actual cost of the IGIV only. The mean total cost of treatment of IGIV therapy is statistically significantly less than that of CIST during the entire course of the disease and on an annual basis.14

Drummond et al.15 evaluated the costs, consequences, and cost-effectiveness of sequential IV and oral moxifloxacin (Avelox) monotherapy compared with amoxicillin-clavulanate with or without clarithromycin (Biaxin and others) in hospitalized patients with community-acquired pneumonia who needed parenteral treatment. Treatment with moxifloxacin resulted in more patients achieving clinical cure within 5 to 7 days after therapy, increased the speed of response, and reduced length of stay by 0.81 days. Treatment with moxifloxacin was found to be cost-effective, mainly as a result of the reduced length of stay.

Walters et al.16 attempted to determine the costeffectiveness of three regimens—(1) sequential IV-tooral ciprofloxacin plus IV metronidazole, (2) IV ciprofloxacin plus metronidazole, and (3) IV imipenem- cilastatin (Primaxin)—in hospitalized patients with intra-abdominal infections. Decision tree analysis was used to compare the regimens. Among patients able to receive oral therapy, sequential IV-to-oral treatment with ciprofloxacin and metronidazole was more cost-effective than the comparator regimens. Among patients unable to receive oral therapy, no differences were found among the three regimens.

Samsa et al.17 compared azithromycin (Zithromax and others)–based and levofloxacin-based protocols for treating patients hospitalized with community-acquired pneumonia. The regimens were determined to be equally efficacious based on demonstration of clinical equivalency during the study. Data on medical resource utilization were collected through the 30 days following hospital discharge; costs of the study medications, hospital stay, home care, postdischarge medical utilization, and lost work days were included. The azithromycinbased protocol was associated with lower costs than the levofloxacin-based protocol.

In a recent analysis of US patients hospitalized with complicated skin and skin structure infections, Mallick et al.18 compared hospital length of stay between those treated with IV tigecycline (Tygacil) and those treated with IV vancomycin plus IV aztreonam (Azactam). Treatment with tigecycline was associated with a shorter hospital stay after adjusting for identified risk factors. Given similar efficacy between the two treatment groups19, these researchers performed cost-minimization modeling to determine the economic implications of this reduction in length of stay. Based on daily costs of hospitalization for patients with complicated skin and skin structure infections identified from a US  multihospital audit ($794)20, modeling showed that the above reduction in length of stay with tigecyline versus vancomycin/aztreonam translated to an expected cost savings of $1,469 ($794 _ 1.85 days)19.

Conclusion:
The study concludes that in India the pharmacoeconomic evaluation is essential to obtain optimal therapy at lowest price, alternative treatment plans, which help the poor and middle class Indians to obtain well health care services.
In India many households bellow poverty line and those are unaffordable for private health care. Costs of the medicines are growing constantly.In a country with scarce resources and an ever growing population with diverse health care needs, health economics (pharmacoeconomic evaluation)plays a pivotal role in determining the delivery of equitable and cost-effective health services.

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12.    Kerr JR, Barr JG, Smyth ETM, Hare JO, Bell PM and Callender ME. Antibiotic pharmacoeconomics: an attempt to find the real cost of hospital antibiotic prescribing. The Ulster Medical Journal April 1993;62(1):50-57.
13.    Boersma C et al. Pharmacoeconomica of Angiotension II Antagonists in Type 2 Diabetic Patients with Nephropathy. Pharmacoeconomics 2006;24(6):523-535.
14.    Daoud YJ, Amin KG. Comparison of cost of immune globulin intravenous therapy to conventional immunosuppressive therapy in treating patients with autoimmune mucocutaneous blistering diseases. International Immunopharmacology. 2006; 6: 600– 606.
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