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FARMAKOEKONOMI
YUNITA
Departemen Farmasi Praktis
Fakultas Farmasi
Universitas Airlangga
Kuliah Farmasi Masyarakat
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List of Reading
• Elliott R and Payne K. 2005. Essentials of Economic Evaluation in Healthcare.
Pharmaceutical Press
• Bootman JL, Townsend RJ, and McGhan WF. 1996. Principles of
Pharmacoeconomics. 3rd Edition. Harvey Whitney
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What is Pharmacoeconomics
• Research that identifies, measures and compares the costs (resources
consumed) and consequences of pharmaceutical products and services
(Bootman et al, 1989)
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What is Pharmacoeconomics
• Research that identifies, measures and compares the costs (resources
consumed) and consequences of pharmaceutical products and services
(Bootman et al, 1989)

Two Major Components

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Why do We Need Pharmacoeconomics?

→ To work out the best way to allocate scarce health resources
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The Practice
• Most industrialized countries → government is the primary payer for
healthcare services → including prescription drugs
• Pharmacoeconomic guideline by government → Australia, Canada, UK
• Nongovernmental guideline → US
• Australia → the first government to implement pharmacoeconomic
guidelines
• Australian PBS → regulates over 90% of outpatient prescription
dispensed in Australia
COST
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Categories of Costs
Total Cost

Direct Cost Indirect Cost Intangible Cost

Direct Medical Direct Non-

Cost medical Cost
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Categories of Costs
• Direct medical costs:
• Associated with the drug and the medical care → acquisition costs, preparation costs, physicians’
fees, administration of medication, cost of treating an ADR
• E.g. Pharmaceuticals, hospital costs
• Direct non-medical cost:
• Those relevant to providing the therapy, including transportation to health care facilities
• E.g. Home assistance, travel
• Indirect costs:
• Result from lost of productivity (time off work due to sick leave)
• E.g. Lost work days, early retirement, reduced productivity at work
• Intangible costs:
• Associated with pain and suffering of disease
• E.g. Quality of life
PERSPECTIVE
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Perspective
• The costs included depend on the perspective of the evaluation
• Perspective of the study should be stated
• The point of view from which the study is conducted:
• Patients
• Providers (e.g. hospitals)
• Payer (e.g. governments/insurers/employers)
• Employer
• Society (societal perspective)
• The ideal perspective = societal
• Look at the costs from the viewpoint of society as a whole
• Direct, indirect and intangible costs
• Mostly used = health care provider perspective
• Direct medical costs
OUTCOME
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Main Categories of Outcome Measured

1. Effectiveness
2. Quality of Life
3. Utility
4. Expressing benefits as monetary values
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1. Effectiveness
• Is the outcome of an intervention or service measured in natural units
• Example:
• General outcome measures:
• Cases successfully diagnosed
• Cases successfully treated
• Life years saved
• Life years gained
• Clinical indicator:
• Number of asthma attacks avoided
• Pain-free days
• Percentage reduction in blood pressure
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1. Effectiveness
Quality of effectiveness information
• Available from medical and health services literature
• The quality of information/hierarchies of evidence:
• I: Properly randomized controlled trial
• II-1a: Controlled trial with pseudo-randomization
• II-1b: Controlled trial without randomization
• II-2a: Cohort prospective study with concurrent controls
• II-2b: Cohort prospective study with historical controls
• II-2c: Cohort retrospective study with concurrent controls
• II-3: Case-control retrospective study
• III: Large differences from comparisons between time and/or places with and without intervention
• IV: Opinion of respected authorities, based on clinical experience, descriptive studies, or reports of expert
commitees
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1. Effectiveness
Effectiveness vs efficacy
• Efficacy is the consequence (benefit) of a treatment under ideal and
controlled clinical outcomes and is the outcome that is measured in
RCTs
• Assess the benefit and harm of the intervention when all other factors are
controlled
• All real live does not behave like an RCTs
• Different types of patients, different treatment processes, different dose, be
monitored less intensively
• Thus: the intervention is likely to be less effective
• Effectiveness: is the therapeutics consequence of a treatment in real-world
conditions
• Effectiveness often < than its efficacy
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1. Effectiveness
Limitations
• Only measure one part of an outcome and may not reflect the overall impact
of the intervention on the patient’s health-related quality of life (HRQoL)
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1. Effectiveness
Mortality used as an effectiveness measure
• Problem associated with mortality:
• People may die from other causes
• Most illnesses affect quality of life rather than mortality → quality of life
improvements due to intervention will not be detected or included in the economic
evaluation
• Mortality is an insensitive measure that requires a study with many patients
followed up over a long period of time
• People of different ages and sex have different risks of mortality, so it is important
that patient groups have similar age and sex profiles if they are to be compared
2. Quality of Life (QoL)
WHO Definition of Health
• Health is a state of complete physical, mental and social well-being and not
merely the absence of disease or infirmity
(WHO, 1948)
Quality of Life
• An evaluation of all aspects of our lives, including such things
as where we live, how we live, how we play, and how we
work
(Bungay, 2005)
• 12 Domains:
• Community - Housing - Self
• Education - Marriage - Standard of living
• Family life - Nation - Work
• Friendships - Neighborhood - Health
Health Related Quality of Life
• HRQoL encompasses only those aspects of our lives that are dominated or significantly
influenced by our personal health or activities performed to maintain or improved health
(Bungay, 2005)
• The concept of health-related quality of life refers to a person or group's perceived
physical and mental health over time
(National Center for Chronic Disease Prevention and Health Promotion)
• Why HRQoL?
• Because medical care is no longer limited to providing only death-averting treatment
• Arthritis, Diabetes → condition having no cure but for which medical treatment is targeted
at controlling disease progression and symptoms
Instruments
• Generic
• Not so sensitive within an individual disease state
• More useful when looking at groups of patients who may have different illnesses
• Can be used to compare outcomes in different patient groups
• E.g: the Short Form 36 (SF-36) health survey
• Diasease specific
• E.g: Audit of Diabetes-Dependent Quality of Life (ADDQOL-18)
(Elliott, 2005)
General Health Status Instruments
Generally evaluating at least 4 key health concepts (Bungay, 2005):
• Physical functioning
• The limitations or disability experienced by the patient over a defined period
• E.g: difficulties in walking, eating, dressing
• Social and role functioning
• Social functioning: the ability to develop, maintain, and nurture mature social relationships
• Role functioning: the impact health has on a person’s ability to meet demands of his or her
normal life role
• E.g.: frequency of visits with friends and relatives, frequency of telephone contacts with
close friends
General Health Status Instruments
• Mental health
• E.g: feeling of anxiety, nervousness, tenseness, depression, moodiness
• General health perceptions
• Overall beliefs and evaluations about health
• Questions covered: health preferences, values, needs, attitudes
• E.g: self-rating of health at present, expectations regarding health in the
future
General Health Status Instruments
• Typical questions asked:
Yes Yes No
Limited Limited Not
a lot a litlle limited
at all
• Walking more than a mile O O O
• Bathing or dressing yourself O O O
• Lifting or carrying groceries O O O
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3. Utility
• Is the value attached by an individual to a specific level of health or a
specific health outcome
• Different individuals may attach different values to the same health state
• E.g:
• Some people may be prepared to tolerate a lot of nausea to allow them to be pain
free.
• Others may prefer to tolerate more pain and to reduce the level of nausea
• Important concept:
• Utility measurement allows patients to value their health status based on their own
preferences
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3. Utility
• Based on interval scales (go beyond generic quality of life measures) →
Enable quantitative comparison
• Utility is used to attach a numerical value to the value a person has for a
particular health state
• Utility can be used to compare outcomes for very different treatments in very
different patients groups
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3. Utility
• Example:
• Treatment A improves a group of patients’ health by an average of 6 points on a utility scale
• Treatment B improves a group of patients’ health by an average of 3 points
• Treatment A = 2 x as effective as treatment B
• Treatment A might be surgery for a ruptured Achilles tendon
• Treatment B might be rhDNase for cystic fibrosis
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3. Utility
1. Direct measurement
• Standard gamble
• Time trade-off
• Rating scales (visual analogue scale)
• Equivalence technique
• Ratio scaling
• Person trade-off
2. Indirect measurement
a. Generic utility instruments
• EQ-5D
• SF-6D (Short Form six dimension)
• HUI (Health Utilities Index)
• QWB (Quality Well-Being)
• 15D (15 Dimension)
b. Disease specific utility instruments
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Time Trade-Off (TTO)

• Simpler alternative to SG
• People are ask to consider relative amounts of time they would be willing to
trade to survive in a range of health states
• Choose between spending a certain amount of time in a defined state of ill
health, or moving to a shorter but healthier life
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Time Trade-Off (TTO)

Example:
• State A:
• Chronic renal failure
• Have dialysis to stay alive
• Provided at local hospital
• Live 10 years
State B:
• 10 years in perfect health
• What state would you choose? State B
• The time in perfect health reduced to 1 year → Choose state A
• Repeated → changing the amount of time in perfect health
• Stop when cannot choose between the 2 states
Example: when time in perfect health = 5 years
• What is the utility value? 0.5
5 years/10 years (time in health state B/time in health state A)
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4. Expressing benefits as monetary value

Willingness to pay (WTP) method
• Measuring outcome which convert benefit to a monetary value
• The contingent valuation (CV), or willingness to pay (WTP) method measure
monetary value for items not typically traded in private market, such as health.
• How much an individual would be willing to pay to avoid an illness or to obtain
benefits of a treatment
TYPES
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Interpretation
More effective

☺ 

 
Less effective

Less expensive More expensive

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Types of Pharmacoeconomics Analysis

• Cost Analysis
• Cost of Illness (COI)
• Cost Minimization Analysis (CMA)
• Cost Effectiveness Analysis (CEA)
• Cost Utility Analysis (CUA)
• Cost Benefit Analysis (CBA)
Cost Analysis
• Analysis the costs of using a pharmaceutical
• The emphasis is on total costs of a treatment
• Note: Acquisition cost of a pharmaceutical is a poor predictor of the total cost
• Does not compare treatments or evaluate the efficacy
Eg. Cost comparison of iv antibiotic administration

• The costs of preparing and administering several iv antibiotics in an Australian

teaching hospital were compared.
• Standard regimens based on AB Guidelines
• Cost included:
• Acquisition cost of the drugs
• Cost associated with drug delivery
• Laboratory monitoring for potential toxicity

Plumridge RJ. Cost comparison of intravenous antibiotic administration. Medical Journal of Australia 1990; 153: 516-8
Cost comparison of iv antibiotic administration
Antibiotic Dose Doses Acquisition Delivery Laboratory Total cost Total cost
per day cost per cost per cost per per dose per day
dose dose dose

Aminoglycosides
Amikacin 500mg 3 $34.82 $9.38 $1.66 $45.86 $137.58
Gentamicin 120mg 3 $0.92 $4.55 $1.66 $7.13 $21.39
Netilmicin 150mg 3 $10.02 $4.55 $1.66 $16.23 $46.69
Tobramycin 120mg 3 $7.20 $4.55 $1.66 $13.41 $40.23

Cephalosporins
Cefotaxime 2g 3 $18.50 $5.63 - $24.31 $72.39
Cefoxitin 2g 4 $19.22 $5.63 - $24.85 $99.40

…………..

Plumridge RJ. Cost comparison of intravenous antibiotic administration. Medical Journal of Australia 1990; 153: 516-8
Conclusions Derived from the Study
• The study highlights the need for hospitals to develop a global view of
intravenous drug administration and to acknowledge the
interrelationships between departments
• The cheapest drug is not always the least expensive to administer
• Relatively expensive antibiotics, particularly those which are
administered infrequently (e.g. daily), do not require laboratory
monitoring and have a low side-effect profile, can be effective
therapeutic choices
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Cost of Illness (COI)

• Cost-of-illness (COI) analysis measures the economic burden of disease and
illness on society.
• It is often called burden-of-illness (BOI).
• Analyses can be done from one or several perspectives → which will help in
determining the distribution of disease costs across multiple stakeholders
• COI analyses are used to aid in policy making; resource allocation—that is,
prioritizing resource use for disease treatment and prevention—and as
baseline research from which to determine the potential benefit of new
therapies
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Cost Minimization Analysis (CMA)
• Compares two or more pharmaceuticals/treatments that have equivalent
outcomes
• The least costly is the best value
• Used when the clinical outcomes of the two treatments are identical in
similar populations of patients
• Identical outcome → clinical trial (specify!)
• Duration of treatment, efficacy, toxicity
• The unit of CMA: currency ($, Rp, etc)
Ondansetron vs Tropisetron
• Have equal effectiveness in reducing nausea and vomiting
• Outcomes are the same
• Choose drug with the lowest total cost:
• Acquisition cost of each drug
• Consumables for administration
• Medical and nursing time
Other Examples
• Compare the costs of the same drug administered differently.
• E.g. iv therapy given by nurses compared with the same iv therapy given by doctors
• Compare the cost of the same drug given in different scenarios
• E.g. iv antibiotics administered in hospital compared with the same antibiotic given to
outpatients in a clinic or their home
Cost Effectiveness Analysis (CEA)
• Compares the relative cost of therapies having different outcomes, but where
outcomes can be compared
• Having similar objectives (e.g. prevention or treatment of same disease)
• Outcome is the therapeutic effect
• Measure is usually natural units
• Units are:
• Cost per life year saved
• Cost per infection prevented
Calculating CEA
• Average cost effectiveness
= Total cost
Total outcome
• Antibiotic A:
• Total treatment cost per patient $ 180
• Has a cure rate of 90%
Average cost effectiveness = $ 180 = $ 200 per cured patient
0.90
• Antibiotic B:
• Total treatment cost per patient $ 200
• Has a cure rate of 95%
Average cost effectiveness = $ 200 = $ 210.53 per cured patient
0.95
Comparing Two Treatments
• Incremental Cost Effectiveness
→ the additional cost of a treatment for an additional benefit

• Compare Antibiotic A & B

Antibiotic A : Antibiotic B :
total cost/px $180 total cost/px $200
cure rate 90% cure rate 95%
Incremental = cost of B – cost of A .
cost effectiveness cure rate of B – cure rate of A
of antibiotic A = 200 – 180
0.95 – 0.90
= an extra $ 400 per additional cured px

→ Using antibiotic B costs an extra $400 for each additional patient cured, compared with antibiotic
A
Example
• Misoprostol as prophylaxis for NSAID induced ulcer
• Ceftriaxone vs (Ampicillin + Gentamicin) for sepsis
• Ceftriaxone vs Benzylpenicillin for Community Acquired Pneumonia

The patients → should come from patients groups with comparable

baseline demographics and disease severity
Ceftriaxone vs (Ampicillin + Gentamicin) For Sepsis – Total Treatment Cost

Total Treatment Cost Ceftriaxone Amp + Gent

A. Drug cost ($) 123.26 80.77

B. Administration cost ($) 50.18 389.17
C. Hospitalisation cost ($) 3975.00 3975.00
D. Toxicity cost ($) 22.50 60.00
E. Monitoring cost ($) 0.00 52.31
F. Treatment value cost ($) 186.29 628.72

Total direct cost ($) 4357.23 5185.97

Ceftriaxone vs (Ampicillin + Gentamicin) For Sepsis – Cost Effectiveness

Cost Ceftriaxone Amp + Gent Net cost or

Effectiveness benefit of
Ceftriaxone

G. Cure rate 0.92 0.73

(% patient)
H. Total direct 4357.23 5185.97
Cost ($)

Incremental
CE ratio
Ceftriaxone vs (Ampicillin + Gentamicin) For Sepsis – Cost Effectiveness

Cost Ceftriaxone Amp + Gent Net cost or

Effectiveness benefit of
Ceftriaxone

G. Cure rate 0.92 0.73 - 0.19

(% patient)
H. Total direct 4357.23 5185.97 828.74
Cost ($)

Incremental
CE ratio 4736.11 7104.06 - 4361.79
Cost Utility Analysis (CUA)
• Compares treatments that yield different levels of health benefits, and enables
effects of treatment on quality of life and survival to be considered together
• CUA measures:
• Cost incurred
• Effectiveness of treatment
• Effect of treatment on quality of life (Quality- adjusted life years/QALY)
CUA
• Similar to a CEA → but incorporates a quality of life component
• CUA only suitable for the assessment of chronic diseases (e.g. cancer, renal
disease, diabetes, asthma) → acute conditions of short duration (e.g.
infections) do not have enough impact on quality of life
• CUA include an assessment of the patient’s perception of their condition and
treatment
CUA
• Example:
Omeprazole vs Fundoplication for moderate to severe oesophagitis:

Heudebert GR, Marks R, Wilcox CM, Centor RM. Choice of long-term strategy
for the management of patients with severe oesophagitis: a cost-utility
analysis. Gastroenterology 1997; 112: 1078-86
Limitation of CUA
• Not easy to obtain QOL information → QOL assessments for some conditions
do not exist

• Only suitable for evaluating chronic diseases → acute conditions (e.g.

infections) do not commonly impact on long term QOL and would not
significantly alter QALY
Cost Benefit Analysis (CBA)
• Compares costs and outcomes in currency values
• Outcomes are not equal
• The most difficult type of pharmacoeconomics to perform
• Primary problem: putting monetary value on a health outcome (e.g. pain relief
per life years saved)
CBA
• Example:
Prophylaxis of hepatitis A, typhoid and malaria in travellers: a cost benefit
analysis

Behrens RH, Robert JA. Is travel prophylaxis worthwhile? Economic appraisal

of prophylactic measures against malaria, hepatitis A, and typhoid in travellers.
British Medical Journal 1994; 309: 918-22
Steps in Conductiong a CBA
• Step 1
• Identify the intervention, program, therapeutic regimen and research questions
• Step 2
• Identify and value all of the resources consumed or cost of providing each
intervention, program, or regimen
• Step 3
• Identify and value the benefit
• Step 4
• Sum the value of all cost and sum the value of all benefit
Steps in Conductiong a CBA
• Net Benefits = Total Benefits – Total Costs
• Cost Benefit Ratio = Total Benefits
Total Costs
• Cost Benefit Ratio = Σnt = 1[Bt/(1+r)t]
Σnt = 1[Ct/(1+r)t]
Bt = total benefits for time period t
Ct = total costs for time period t
r = discount rate
n = number of time periods
The decision:
If B/C > 1, benefits exceed costs → socially valuable
If B/C = 1, benefits equal costs
If B/C < 1, benefits are less than costs → not socially beneficial
• Net Present Value (NPV)
Benefit – Costs = NPV = Σnt = 1 [(Bt-Ct)/(1+r) t]
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Comparison Table
Type Description Output Typical Unit
Cost Measures total cost of a Cost Currency
analysis healthcare program
CMA Compares 2 interventions (Potential) Currency
having equal efficacy cost saving
CEA Compares interventions with Cost per unit Currency per unit of
different health benefits of clinical outcome
outcome e.g. $ per mmHg drop in
BP
CUA Measures the cost per life-year Cost per unit Currency per unit of utility
gained, adjusted for quality of of utility e.g. cost per QALY
life
CBA Compares interventions with Benefit-to-cost A ratio or a total cost
different health outcomes, in ration, or saving in currency units
purely monetary terms (potential) cost
savings
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If a therapy is not clinically effective,

it cannot be cost-effective