Economic Evaluation of Pharmacy Services

By Zaheer-Ud-Din Babar

Economic Evaluation of Pharmacy Services provides the latest on the trend to a more product-centered and service-centered practice, eschewing traditional economic evaluation techniques that focus on product-to-product comparisons in favor of evaluating processes that measure costs and health outcomes.

Complete with examples focusing on best practices, including various study designs, types of pharmacy services, and types of outcomes being evaluated, the book emphasizes case studies and examples that help readers understand economic evaluation techniques. Many of these techniques are transferable across countries, especially where there are advanced and stable health systems in place. With the help of this practical guide, readers will gain a thorough understanding of the application of economic evaluation of pharmacy services.

• Delivers a practical guide for conducting economic evaluations of hospital and community pharmacy services
• Documents the literature around health economic evaluation and innovative pharmacy services
• Guides the development of a standardized health economic evaluation tool to evaluate these services

• Language: English
• Publisher: Academic Press
• Release date: Oct 15, 2016
• ISBN: 9780128037003

Zaheer-Ud-Din Babar

Professor Zaheer-Ud-Din Babar is Professor in Medicines and Healthcare and the Director of Centre of Pharmaceutical Policy and Practice Research at the University of Huddersfield, United Kingdom. He is globally known for his work in pharmaceutical policy and practice, including quality use of medicines, clinical pharmacy practice, access to medicines and issues related to pharmacoeconomics. He has published in high impact journals such as PLoS Medicine and the Lancet and has acted as a consultant for World Health Organization, Royal Pharmaceutical Society, Health Action International, International Union Against Tuberculosis and Lung Disease, World Bank, European Union, International Pharmaceutical Federation (FIP) and for the Pharmaceutical Management Agency of New Zealand. His edited work includes "Economic evaluation of pharmacy services", “Pharmaceutical prices in the 21st century”, “Pharmaceutical policies in countries with developing healthcare systems ", “Global Pharmaceutical Policy”, “Pharmacy Practice Research Methods” and “Encyclopedia of Pharmacy Practice and Clinical Pharmacy”. Published by Elsevier and Adis/Springer, the work is used in curriculum design, policy development and for referral all around the globe. Professor Babar is also the Editor-in-Chief of BMC Journal of Pharmaceutical Policy and Practice and can be contacted at [e-mail]

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Preface

Zaheer-Ud-Din Babar

Services managed by pharmacists in both hospital and community pharmacy settings are vital and can improve the quality use of medicines significantly. Pharmacists are the most accessible health care professionals and are well placed to manage cases of high blood pressure, diabetes, stroke, smoking cessation, weight loss, contraception, anticoagulation, etc. Also community private retail pharmacies are considered a key route to deliver health care programs. The pharmacies also serve as a place to access services for those patient groups, who are not registered with the general practitioners.

Though governments in the United States, Australia, the United Kingdom, and Canada are increasingly investing in these services; however, there is no clear evidence whether these pharmacy services are cost-effective or otherwise.

There is an enthusiasm that pharmacists can contribute toward wider role in health care, however well-defined research is needed to support this argument, as most of the evidence is based on small studies. These studies assume that pharmacist’s role is effective; for example, pharmacist can play a key role in improving patient’s medicines regime or increasing patient’s adherence to medical programs.

However, critiques argue that the majority of these studies are being conducted by pharmacists themselves, generally with little insight into the increasingly sophisticated methodological approaches used in health services research. In this context and also with the increasing cost in health care, having an economic evaluation of a pharmacy service could demonstrate its true value.

This book presents a mix of topics; ranging from synthesis of research, case studies as well as application of economic methodologies on pharmacy services and programs. The book highlights economic evaluation studies in high-income western countries as well in the context of low- and middle-income countries. The book also narrates commonly used economic evaluation methodologies and how an economic evaluation could be undertaken in practice setting.

This book would be useful for pharmacists, academics, researchers, funders, policy makers, and for health services researcher who are working in this area.

I hope that the information provided would be helpful to build cost-effective approaches toward pharmacy and health care.

August 2016

Chapter 1

An Introduction to Economic Evaluation of Health Care Programs

C. Jommi¹,²,    ¹Università del Piemonte Orientale, Novara, Italy,    ²CERGAS Bocconi, Milano, Italy

Abstract

This chapter introduces readers to the rationale for economic evaluation applied to health care products and programs, its main aspects (evaluation of costs, evaluation of consequences/outcomes, economic evaluations techniques), methodological issues and recent developments (study design, health assessment, evaluation of economic consequences, definition and use of thresholds for the Incremental Cost-Effectiveness Ratio), and main issues derived from its application to pharmacy services.

Keywords

Economic evaluation; health care products and programs; methodological issues; recent developments; application to pharmacy services

Chapter Outline

Rationale for Economic Evaluation 1

Economic Evaluation: Costs, Outcomes, Techniques 2

Economic Evaluation: Methodological Issues and Recent Developments 6

Economic Evaluation and Pharmacy Services 7

References 9

Rationale for Economic Evaluation

Health market is characterized by an unbalance between supply of health services (resources used to deliver services, including people, time, facilities, equipment, and knowledge) and demand for health services, which is driven by economic growth, increase in life expectancy, technological innovation, and rising health expectations.

This unbalance may be found in other markets as well. In these markets, the excess of demand over the supply is managed by market mechanisms. In a purely competitive environment, suppliers will be forced to reduce prices to absorb the demand excess. In a monopolistic market, consumers who are not willing to pay for services will be excluded from the market. In health care markets, market mechanisms do not work well (information are incomplete and asymmetric, consumers are not rational, demand may be induced by the supply) or their consequences are not acceptable (e.g., access to services would depend on consumer income).

On the one hand, if this unbalance is not managed, there is a risk that health expenditure would increase exponentially. In fact, health care expenditure has been growing faster than the gross domestic product (GDP) in all main OECD countries in the last 25 years (Fig. 1.1). The incidence of health care expenditure over GDP has grown on average from 7.3% in 1990 to 10.8% in 2015.

Figure 1.1 Health expenditure over GDP (%; 1990–2015). From OECD Health Data (http://www.oecd.org/els/health-systems/health-data.htm, last access 11/7/2016).

On the other side, in the last 5 years (2010–15) the increase of ratio of total health expenditure to GDP dropped. It is obvious that cost-containment has dominated the agenda of public health care payers and economic crisis has negatively influenced private expenditure (Table 1.1).

Table 1.1

Health Expenditure Over GDP (%, Absolute Variation—Δ)

Source: OECD Health Data (http://www.oecd.org/els/health-systems/health-data.htm, last access 11/7/2016).

In this context, a systematic and appropriate evaluation of economic consequences is necessary. Otherwise there is a risk that scarce resources are not efficiently allocated, when decisions are taken on long-term programs (e.g., Should we invest in a scoliosis screening program in secondary school? Is it worth investing in a clinical pharmacy service? Should public payers cover vaccines against Human Papillomavirus? Should a new drug at the price required by the pharmaceutical company be listed on the formulary?) or day-by-day action (Is it worth treating a patient with a new drug instead of an older one?). Economic analysis may support this decision-making process.

Economic evaluation, comparing costs and consequences of different courses of action, provides an answer to the following question: Does the new course of action (compared with the existing one) provide value for money (i.e., do added benefits justify added costs)? [1]. Budget impact estimates the impact on payers budget of a new course of action, thus providing evidence on its sustainability [2]. Integrating economic evaluation with budget impact, decision-makers are expected to take more rational decisions that incorporate economic arguments.

Economic Evaluation: Costs, Outcomes, Techniques

A full economic evaluation stands for a comparative analysis of costs and consequences of alternative courses of action (alternative ways of using scarce resources). Courses of action include different products (e.g., two drugs for the same therapeutic indication), different pathways (e.g., two different drug sequences), and different programs (implementing a community pharmacist-led diabetes management education program compared to the standard of care). In brief, two features characterize a full economic evaluation: (1) costs and consequences are simultaneously estimated and (2) to take decisions on alternative ways of using scarce resources.

Costs included into an economic evaluation analysis depend on the perspective used. The perspective may range from one of the health care payers (only health care services are included), other payers (e.g., payers of social care), the patient/family (out-of-pocket expenses, transportation costs, informal care provided by the family to patients are considered), and the society as a whole (this perspective includes also productivity lost due to temporary or permanent absence from work, premature mortality, and presenteeism, i.e., working while sick). The ideal perspective is the societal one. It includes all costs, it drives intersector optimal resource allocation, and it is more consistent with the principles of welfare economics, which places emphasis on the principles that what counts is the value attached by individuals [1]. However, in many studies a narrower perspective is used because health care payers often require this perspective. For example, the National Institute for Health and Care Excellence, which uses economic evaluation to recommend new drugs/health technologies in England, requires that the perspective of health and social care payers is used.

The two main consequences of a health program are its impact on patient’s health state (life-years gained; quality of life gained) and the costs saved, i.e., the costs that would have been incurred if the program would have not been implemented. A third consequence is represented by the value created by a heath care program, which does not directly affect the patient’s health state (e.g., the value of patient’s reassurance of a screening program).

Consequences of health care programs drive the economic evaluation technique used in the analysis. A cost-effectiveness analysis is performed if the consequences of alternative courses of actions are measurable in a common physical unit (e.g., life of years saved, avoided hospitalization, number of relapses avoided, number of adherent patients). If the quality of life is an important dimension of patient’s health state, a cost–utility analysis is carried out: the increase in life expectancy and the impact on quality of life are integrated into a common outcome indicator, named QALY (Quality Adjusted Life Years saved). Outcomes are monetized through a cost–benefit analysis if the consequences are different and either cannot be represented using a single indicator or they go beyond QALYs (Table 1.2).

Table 1.2

Different Economic Evaluation Techniques

aIncremental cost-effectiveness ratio.

bIncluding saved costs.

cEffect in physical units (e.g., life years gained, avoided hospitalization).

Cost-effectiveness analysis supports the allocation of scarce resources within the same health problem. For example a recent study [3] compared tocilizumab with adalimumab in patients with rheumatoid arthritis. The impact of drugs was measured using improvement criteria suggested by the American College of Rheumatology (ACR Score). The ACR Score integrates different criteria used to measure rheumatoid arthritis severity, including tender joints, swollen joints, results of test for inflammation (erythrocyte sedimentation rate or C-reactive protein blood test). The authors estimated a 6-month incremental cost (from the US payer perspective) using tocilizumab instead of adalimumab ranging from $6570 per additional low disease activity score achiever (ACR) with 20% improvement to $14,265 per additional ACR with 70% improvement. This ICER cannot be compared with economic evaluation studies carried out for other diseases.

Cost–utility analysis allows for comparisons across different health problems, because it relies on a parameter (QALY), which is comparable across health areas. The study mentioned before used a patient-level simulation to estimate the lifetime incremental cost per QALY of tocilizumab versus adalimumab. The authors converted ACR responses into Health Assessment Questionnaire (HAQ) score and mapped the HAQ score to utility to estimate QALYs, finding a lifetime $36,944/QALY ICER. This result can be compared with the ones from drugs with different indications and/or possible thresholds for ICER set by