PHARMACO-ECONOMICS: THE COST OF HEALTH

 

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ABOUT AUTHOR
AK MOHIUDDIN
Faculty of Pharmacy, World University of Bangladesh
Dhanmondi, Dhaka, Bangladesh

ABSTRACT
Pharmacoeconomics has been characterized as the depiction and examination of the cost of medication treatment to healthcare frameworks and society. All the more explicitly, pharmacoeconomic look into is the way toward recognizing, estimating, and contrasting the costs, dangers, and advantages of programs, services, or treatments and figuring out which elective delivers the best wellbeing result for the asset contributed. This data can help clinical chiefs in picking the most cost-effective treatment alternatives. Pharmacoeconomics is a division of results examine that can be utilized to measure the estimation of pharmaceutical care items and services. Pharmaceutical care has been characterized as the mindful arrangement of medication treatment for the reasons for accomplishing unequivocal results.

Graphical Extract

Figure 1. Graphical Extract

Materials and Methods:
Research conducted a year-round comprehensive literature search, which included technical newsletters, newspapers journals, and many other sources. The present study was started from the beginning of 2018. PubMed, ALTAVISTA, Embase, Scopus, Web of Science, and the Cochrane Central Register of was thoroughly searched. The keywords were used to search for different publishers’ journals like Elsevier, Springer, Willey Online Library, Wolters Kluwer were extensively followed. Medicine and technical experts, pharma company representatives, hospital nurses and chemists were given their valuable suggestions. Projections were based on estimates of drug and therapy related cost, cost of being ill and hospitalization and cost of well-being. Pharmacists role in allied areas of cost calculation and minimizing through ADR management, prevent disease and hospitalization and drug selection were given the highest priority.

Reference Id: PHARMATUTOR-ART-2648

PharmaTutor (Print-ISSN: 2394 - 6679; e-ISSN: 2347 - 7881)

Volume 7, Issue 03

Received On: 03/01/2019; Accepted On: 29/01/2019; Published On: 01/03/2019

How to cite this article: Mohiuddin, A.K. 2019. Pharmaco-Economics: The Cost of Health. PharmaTutor. 7, 3 (Mar. 2019), 1-18. DOI:https://doi.org/10.29161/PT.v7.i3.2019.1

INTRODUCTION
Globally patients are affected by the high price of medicines. In many developing countries a high percentage of total health expenditure is financed by household out of–pocket expense. Many poor people frequently face a bitter decision between purchasing medication or buying such necessities as grocery and clothing due to limited resources and the high price of the prescription. Therefore, medication and drug therapy are an important matter to the society mainly those in need of medical services with limited financial resources. Human services costs have been expanding every year more than the normal rate of expansion. This proceeded with increment in costs has brought about a need to see how restricted assets can be utilized most productively and effectively. Pharmacoeconomics role in many developing countries is in early stages with a limited knowledge of the subject matter. Therefore, lack of education and understanding of the topic is limiting the decision making by the health providers and health authorities.

Statement of the problem
Pharmacoeconomics (PE) role in many developing countries is in early stages with a limited knowledge of the subject matter. Therefore, lack of education and understanding of the topic is limiting the decision making by the health providers and health authorities. Thereby, creating incapability in developing a plan for purchasing the maximum amount of benefits for a given resource use. Accordingly, unable to assist clinicians in choosing the most affordable options. Pharmacoeconomics and outcome research have a very significant function in medication expenditure management. Subsequently, healthcare moderateness has turned into a noteworthy issue in the lives of society and their prosperity. For this reason, understanding PE and the importance of its applications are vital in reducing healthcare wastage as explicit methodology, education, and initiative required for its progress.

The General Necessity of Pharmacoeconomics
U.S. NHEA estimated health care spending grew 4% in 2017, reaching $3.5 trillion or $10,739 per person. As a share of the nation's GDP, health spending accounted for 18% (Web CMS). About 12% (over $900 per person) of health care expenditures were for medications in 2010. Health care costs have been increasing each year more than the average rate of inflation. CMC further realized aggregate healthcare spending would grow at a 5.8% average annual rate from 2015 to 2025, or 1.3% higher than the expected annual increase in the gross domestic product. This is causing more interest in new strategies across employers for drugs or administration. Increasing healthcare costs have forced employers to reassess the healthcare benefits they offer to employees (Vogenberg et.al., 2018). This continued increase in costs has resulted in a need to understand how limited resources can be used most efficiently and effectively. Pharmacoeconomics is essential in several sectors such as
1. Healthcare industry in order to decide amongst precise research and development options.
2. Second, it is needed in government to determine program benefits and its operating expense.
3. The third area of need is in the private sector to facilitate the formulation of insurance benefits coverage. Basically, the PE is needful in following manner;
• In Industry, it is useful in deciding among specific research and development alternatives.
• In Government- Determining program benefits and prices paid and in Private Sector it can be used for designing insurance benefit coverage.
4. Additionally, it describes the economic relationship involving drug research, drug production, distribution, storage, pricing and its use by the society. It runs on the thread of our socioeconomic system, which regulates and influences all the sectors involved in pharmaceuticals (Gattani. Et.al., 2009).

Perspectives of Pharmaco-economics
• Patient Perspective--Patient perspective is paramount because patients are the ultimate consumers of healthcare services. Costs from the viewpoint of patients are basically what patients pay for an item or administration—that is, the segment not secured by protection.
• Provider Perspective--Costs from the provider's perspective are the actual expense of providing a product or service, regardless of what the provider charges. Providers can be hospitals, MCOs, or private-practice physicians. From this perspective, direct costs such as drugs, hospitalization, laboratory tests, supplies, and salaries of healthcare professionals can be identified, measured, and compared.
• Payer Perspective--Payers include insurance companies, employers, or the government. From this perspective, costs represent the charges for healthcare products and services allowed or reimbursed by the payer. The primary cost for a payer is of a direct nature. However, indirect costs, such as lost workdays (absenteeism), being at work but not feeling well and therefore having lower productivity (presenteeism), also can contribute to the total cost of healthcare to the payer.
• Societal Perspective--Theoretically, all direct and indirect costs are included in an economic evaluation performed from a societal perspective. Costs from this perspective include patient morbidity and mortality and the overall costs of giving and receiving medical care. An evaluation from this perspective also would include all the important consequences an individual could experience. In countries with nationalized medicine, society is the predominant perspective (TRASK, 2011).

Framework for assessing the economic value of pharmacovigilance in low- and middle-income countries

Figure 2. Framework for assessing the economic value of pharmacovigilance in low- and middle-income countries.

Countries were classified into four levels. In level 1 (no PV), there are no legal or structural frameworks, no coordinated surveillance activities, and PV activities are not coordinated nationally. In level 2 (basic PV), policy and legal frameworks exist, institutions, guidelines, and procedures exist, and stakeholder roles are recognized albeit poorly coordinated. Additionally, the AE reporting system does not cover all sources of MRPs, signal generation and risk evaluation are poor, and the system lacks active signal evaluation and risk management. In level 3 (semi-functional PV), structural and organizational frameworks exist to collect and collate safety data and evaluate risks and benefits by passive and active surveillance. However, the countries lack risk management, risk prevention, and risk communication capacity. In level 4 (functional PV), a PV structure exists that permits passive and active surveillance, risk evaluation, risk communication, and regulatory action.

Pharmacoeconomic Doctrine
• Pharmacoeconomics search to define and analyze the costs of medication therapy to the healthcare system and society (Power et.al., 2014)
• Principles employed on different ECHO (economic, humanistic, and clinical outcomes) using the methodology of PE (Kozma et.al., 1993; Telser et.al., 2011)
• Health care costs categorized as direct medical, direct nonmedical, in direct nonmedical, intangible, and opportunity costs (Babigumira et.al., 2014)
• In comparing various health care choices, economic valuation methods used, including cost minimization, cost-benefit, cost-effectiveness, and cost-utility analyzes (Jo et.al., 2014)
• Comparisons expressed in monetary units, ratios, or mixed units nine such as dollars per quality - adjusted life-year) (SIAPS and USAID, 2017).
• The cost of illness assessments classifies and estimates the inclusive cost of a particular illness for a distinct population. Nevertheless, COI is not utilized to relate alternative choices (Waning et.al., 2001)
• In pharmacy practice, Pharmacoeconomic methods employed for effective management of formulary, treatment of individual patient, termination of medication program, and resource distribution (Surji, 2015)
Several factors should be measured when evaluating published pharmacoeconomic studies. Such factors are
a) Research objective
b) Education perspective
c) Pharmacoeconomic method
d) Study design
e) Choice of interventions
f) Costs and consequences
g) Discounting
h) Study results
i) Sensitivity analysis
j) Research conclusions
k) Sponsorship (Dubois, 2010)

Pharmacoeconomic challenges
The major challenges for Pharmacoeconomics are to
• Develop a guidelines and procedure for standards of practice.
• Build a framework for well-skilled producers and clients of PE evaluations.
• Continuing education on the pertinent features of this discipline for practitioners, government
• officials, private sector executives.
• Stable funding to support applied pharmacoeconomic research
• Creating a cadre of trained producers and consumers of pharmacoeconomic work.
• Lack of full appreciation of the potential importance and application of Pharmacoeconomics studies.
• Poor technical skills of healthcare professionals, especially of pharmacists.
•  Lack of appropriate database of the healthcare system in order to bring about research adaptation from another country (Ambrosioni, 2001; Chabot, 2008; et.al., 2008; Catić et.al., 2013; Milne, 1994)

Scope of Pharmacoeconomics
1) To Pharmaceutical manufacturers: Pharmacoeconomics can be a very useful tool long before a drug is approved for use by the FDA. Pharmaceutical manufactures need to spend enormous resources in the drug development process. If proper pharmacoeconomic research is conducted the manufactures can avoid spending vast resources to the development of a drug that does not provide competitive advantage. Competitive advantage in the present healthcare environment may be defined as a drug that is cost effective. Cost effective can mean a drug that is
• Less costly and at least as effective as an alternative;
• More effective and costlier than an alternative, but improved health outcomes justify additional expenditures, or
• Less effective and less costly than an existing alternative, but a viable alternative for some patients.
• Cost efficacy and QOL components can be incorporated into appropriate phase III studies to provide additional information regarding a drugs impact on patient outcome.
If such parameters are applied systematically to all new treatment candidates, the scientific basis of drug therapy decision making will increase substantially.

Data Flow Diagram Clinical Trial Data Management (CDM) Plan

Figure 3. Data Flow Diagram Clinical Trial Data Management (CDM) Plan (Source: crossfithartford.com)

CDM is the process of collection, cleaning, and management of subject data in compliance with regulatory standards. The primary objective of CDM processes is to provide high-quality data by keeping the number of errors and missing data as low as possible and gather maximum data for analysis. If proper pharmacoeconomic research is conducted the manufactures can avoid spending vast resources to the development of a drug that does not provide competitive advantage (Krishnankutty B, Bellary S, Kumar NB, Moodahadu LS. Data management in clinical research: An overview. Indian J Pharmacol. 2012;44(2):168-72).

2) To Healthcare Practitioners: One of the primary uses of PE in clinical practice is to aid clinical and policy decision making. Complete pharmacotherapy decisions should contain three basis evaluation components;
* Clinical
* Economic
* Humanistic outcomes
• Through the appropriate application of Pharmacoeconomic principles and methods incorporating these three critical components into clinical decision can be accomplished. Pharmacoeconomic data can be a powerful tool which supports various clinic decisions, including
* effective formulary management,
* individual patient treatment,
* medication policy, and resource allocation.
• Pharmacoeconomic data can support the inclusion or exclusion of a drug on or from the formulary and support practice guidelines that promote the most cost-effective or appropriate utilization of pharmaceutical products. Various strategies can be used to incorporate PE into formulary decision making.
• In fact, the pharmacoeconomic assessment of formulary action is becoming a standardized part of many pharmacy and therapeutic (P&T) committee decision making process, when competing for hospital resources, PE can provide the data necessary that a pharmacy service maximizes the resources allocated to it by hospital administration.

the relationship between STGs and EMLs

Figure 4. the relationship between STGs and EMLs and how these affects respectively the use and the availability of medicines (Source: Web WHO. Drug and Therapeutics Committees - A Practical Guide).

Strict adherence to a formulary list alone will not improve treatment practice if drug selection is not based on STGs (i.e. if there is no consistency between the formulary list and the STGs). Furthermore, essential medicines can also be used inappropriately if there are no guidelines for disease management. Ideally, a formulary list should be developed after the appropriate treatment guidelines for common diseases have been identified or developed. In many countries, there are already national STGs and other texts on standard treatment protocols that can be followed and used as a starting point when developing a hospital formulary list or local STGs. Once a formulary list is established, a formulary manual, containing information on all the medicines in the formulary list, can be developed.

3) To Pharmacists:
Drug use evaluation is one of the important services provided by pharmacists. Ideally, that value should be translated into patient and financial outcomes. Apart from concentrating on inappropriately prescribed therapy and overprescribing, drug use evaluation focuses on the most cost-effective therapy. A high degree of sophistication is required in order to make such determination fairly, considering patient factors, disease factors, and other issues. Drug formulary services, Pharmacy and therapeutics committees are viewed as a means of reducing drug budgets and have had some value in encouraging drug therapy cost considerations, but they do not provide incentives to take into account overall medical costs, nor do they necessarily consider all consequences such as potential drug interactions, adverse reactions, and treatment response rates. Conducting cost-effectiveness studies allows an evaluation of total costs and consequences from various perspectives (Jo, 2014; Scaria et.al., 2015; Ahmad et.al., 2013; Trask, 2011;    McGhan et.al., 1978)

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