PHAP

Assignment
“5 Analyses of Pharmacoeconomics”

Aira Nykol B. Bayoran

BS PH 3-YB-1

February 23, 2024

 5 ANALYSES OF PHARMACOECONOMICS

1. Cost-Minimization Analysis (CMA)

Definition:
The objective is to identify which alternative technology, with the same efficacy or
safety profiles, will be the least expensive and achieve comparable healthcare
outcomes. The author conducting the study must cite the proof of equivalency, which
should have been completed before the cost-minimization analysis.
Additionally, the cost of preparing and giving a medicine dose, as well as the cost
of giving a medication in various contexts, can be reflected using a CMA. Generic
equivalents are the most beneficial products to compare using the CMA technique since
all products tested in a CMA have to demonstrate an equivalent therapeutic impact.
Comparing therapeutic equivalents is another purpose for a CMA. Though some
contend that a CMA might not be useful for comparing anything other than generic
equivalents or the administration of the same medication in different contexts, others
counter that absolute equivalency is difficult to prove between two non-generic
medicines.

Application:
It is applied in situations where the main goal is to identify the least expensive
solution, regardless of the effectiveness or clinical results of various interventions. Since
the health outcomes of two or more procedures or products are the same or presumed
to be the same, just the treatment costs are evaluated in a comparative medical
analysis (CMA). Cost is the input measure and the outputs are considered to be
equivalent in a cost reduction study. Some contend that the study is not a real CMA
because outcomes were measured, even if they are determined to be similar. In the
same way, costs ought to be compared in a CCA (a comparison of product costs only;
outcomes are not taken into account) rather than a CMA if the results of the products
under comparison are comparable but not the same.

Examples:
When comparing two generic equivalents, a brand-name product to a generic
equivalent, or the administration of the same medication in two different settings
(outpatient versus inpatient), a CMA might be utilized. Making a cost-benefit comparison
between two distinct generic versions of a drug that have the same therapeutic efficacy.
2. Cost- Effectiveness Analysis (CEA)
Definition:
The International Society for Pharmacoeconomics and Outcomes Research
(ISPOR) defines it as a comparison of interventions relating costs in monetary units and
results stated in quantitative non-monetary health units. It is one of the most popular
economic assessment methods utilized worldwide.

Application:
Typically, the CEA uses forecasting tools to predict the future and bases its
consideration of a longer-term time horizon on data from the clinical investigations.
Discounting rates are also applied, and inputs that take the population average into
account. In the event that the CEA is evaluating merely two alternative technologies, the
difference between their costs (incremental cost) and differences in their results
(incremental effect) is divided by the former. It's called the incremental cost-
effectiveness ratio (ICER) for short. If there are more than two options, their ICERs are
used to compare each one pairwise in a systematic manner.
This is the computation for ICER:

The various scenarios that arise during a decision analysis can be illustrated with
a cost-effectiveness plane diagram. It can also be used to clarify the purpose and use of
the ceiling ratio, which is commonly known as proving cost-effectiveness acceptability.
 The costs and effects of a health intervention, in comparison to an alternative,
are graphically displayed as ICERs in this plan diagram. The traditional approach is to
align costs on the top-bottom (north-south) axis and effects on the right-left (east-west)
axis. Positive, negative, or zero consequences are possible in both situations. The costs
of the intervention are greater than those of its alternative, and its benefits are smaller, if
it is located in the upper left quadrant, such as point A (Figure 2). The intervention
should be rejected because it is clearly worse than the alternatives. It is this that is
deemed "dominated." When an option has more expenses without corresponding
increases in benefits or fewer benefits without corresponding decreases in costs, it is
said to be in a dominant or economically efficient state.
Like in the lower right quadrant (point B), a treatment choice "dominates" and
need to be taken into consideration because its benefits outweigh its costs. There is no
dominant choice for either of the top right (point C) or bottom left (point D) quadrants. It
is necessary to compute ICERs in this case, which are expressed as the slope of the
line connecting the origin and the point. The cost per unit of impact gained for point C is
represented by the ICER, but the cost savings per unit of effect lost for point D is what it
stands for.

Examples:
Reductions in death or morbidity, days gained without symptoms, cases avoided,
patients improved, and life years gained are a few examples. A more precise illustration
would be to compare the price for each extra year of life that is acquired from two
distinct therapies for the same medical problem.
Natural health units are represented by measurements such as mmol/l for blood
glucose, mmHg for blood pressure, and symptom-free days (e.g., asthma or ulcer
treatment). It is possible to compare treatment options for the same medical problem
measured in the same natural health units using a CEA. Comparing therapies or
interventions used for various illnesses with various results cannot be done with a CEA.
3. Cost-Benefit Analysis (CBA)
Definition:
This is a comparison of health benefits, risks, and costs; all are measured in
standard monetary units. The goal of a CBA is to determine an intervention's financial
benefit. Both the inputs (cost) and the outputs (result) of a CBA have monetary units of
measurement. Does a program or intervention have greater benefits than costs? This is
one of the two questions that a CBA assists policy makers in answering. Which program
will yield the biggest gains? One way to think about benefits is as avoided or reduced
costs.

Application:
It is used to assess if an intervention is cost-effective and whether, from a social
standpoint, it should be put into action. A benefit of a CBA is that, in contrast to a CEA,
a wide range of outcomes may be compared because the benefits are expressed in
monetary terms. It is a pretty thorough analysis if done appropriately. In order to
maximize resources, the intervention with the best benefit to cost ratio would probably
be chosen when treatments for various disease states are evaluated (for example, an
asthma clinic against a diabetic clinic). The fact that it is challenging to place a monetary
value on some outcomes (such as lives saved), which makes the analysis harder to do,
might be seen as a drawback to this benefit.

The following are the Steps in a CBA:

 Step 1 is to determine the type of intervention or service that is to be analyzed,
such as the implementation of a diabetes service.
 Step 2 is to determine the comparator. Comparators can include doing nothing,
providing a similar service, or providing a different service.
 Step 3 is to determine the perspective of the study (i.e., whose cost are you
measuring?).
 Step 4 is to identify the costs and the benefits.
 The input costs usually consist of Direct medical costs and Direct nonmedical
costs. The benefits or outcomes can be represented as Direct benefits
(medical and nonmedical), Indirect benefits (productivity costs), and
Intangible benefits (e.g., reduction in anxiety associated with illness)
 Step 5 is to display the cost and benefit calculations. A CBA can be presented as
Net benefit or net cost calculation, Benefit-to-cost ratio or cost-to-benefit ratio,
Internal rate of return
 Equations:
 Net Benefit = Total Benefit – Total Cost
 Net Cost = Total Cost – Total Benefit

Examples:
Evaluating a vaccination program's financial impact by weighing its expenses
against its financial gains, which may include reduced medical expenses and higher
productivity. Another instance of this may be the cost-benefit analysis in a CBA of a mail
order pharmacy service for stable chronic patients, which aims to reduce clinic wait
times. Having their medications delivered to their home eliminates the need for the
patient to miss work, which is one advantage of the mail order service. When there's no
line at the clinic, you can spend the extra hours working. A mail-order pharmacy
intervention's indirect impact is higher productivity. In a CBA, we assign a monetary
value to the time saved by avoiding the clinic line and, consequently, to the advantage
of higher productivity that stems indirectly from it. The wage rate per hour that would
have been lost if the patient had been unable to work as a result of the lengthy clinic
wait is the monetary value that is associated with the enhanced productivity.
4. Cost-Utility Analysis (CUA)
Definition:
A type of CEA where expenses are stated in monetary terms and health
outcomes—expressed in QALYs—are compared in terms of utility and mortality.
Because it enables decision-makers to allocate resources efficiently by using the same
health result for all therapies and diseases, this form of economic evaluation is chosen.
Like in the case of the CEA, the ICER in the CUA is determined by comparing the costs
to the benefits. In this case, the Quality Adjusted Life Years (QALYs), in this calculation.
One ICER is generated for two or more medications for the same medical
condition in a CEA, however in a CUA, several medical conditions can be compared
using the QALY as an outcome measure. This is the advantage of a CUA over a CEA.
One benefit of the CUA over the CBA is that there is no requirement for the result
measure to be expressed in monetary terms. The fact that the QALY can be a
challenging concept to understand and is not commonly employed by physicians and
decision makers is one of the main drawbacks of a CUA.
One potential limitation to the CUA is lost productivity, which might not be
included in the morbidity component of a QALY. It's not always easy to decide if the
expense per QALY justifies itself. Setting a WTP for a cost per QALY is a challenging
ethical problem. In contrast to the natural health units used in a CEA, for instance, the
QALY is a subjective unit that is developed from data from many patient groups.

Application:
It is especially helpful for comparing interventions across several illness domains
and enables a more comprehensive evaluation of the influence on a patient's quality of
life. CUA is regarded as a subset of CEA in which QALY, a special outcome measure
that accounts for morbidity and mortality, is used to measure the result. The patient's
quality of life is taken into account while calculating the length of life preserved. This is
significant because many medical procedures can prolong a patient's life, but because
of drug side effects or other circumstances, the patient's quality of life may deteriorate
significantly. A DALY, which accounts for both the number of years lost and the number
of years lived with the handicap, can likewise be used as the outcome measure in a
CUA.

Examples:
Comparing two chronic condition therapies and taking into account the effects on
the patient's quality of life in addition to the clinical results.
5. Cost-Consequences Analysis (CCA)
Definition:
A study wherein numerous effects and incremental costs are calculated without
attempting to combine them. This type of CEA does not aggregate or assign weights to
the costs and health outcomes; instead, it provides them in discrete categories. It is an
economic evaluation that, without combining them into a single metric, shows the
expenses and a variety of pertinent outcomes connected to various actions. The use of
cost-consequence analysis, or CCA, is becoming more common among scholars. As
opposed to CEA, which examines outcomes along a single parameter, CCA has the
advantage of evaluating the complete program of care in addition to incorporating
several outcome measures.

Application:
Therefore, disease state management plans and practice guidelines can be
assessed using CCA. A comparative effectiveness analysis (CCA) may yield results that
are displayed as a matrix that illustrates the relative benefits of competing therapies or
programs along several dimensions. Nevertheless, the variety of outcomes may make it
more challenging to conclude with certainty which of the competing therapies under
analysis is better. Selecting one of three competing treatments, for instance, that have
different treatment costs, efficacy outcomes, side-effect profiles, and compliance rates
may prove to be challenging. Similar to this, choosing the right antidiabetic medication
may involve comparing how different treatments affect amputation rates, weight
reduction, blood glucose management, and cardiovascular disease incidence.

Examples:
A comprehensive list of expenses, clinical results, side effects, and other
pertinent data is presented, without any prioritization or consolidation into a single
metric, in order to compare several treatment choices for a certain ailment. Examples of
this approach in the nursing literature are provided by two studies. Another example is
evaluated patient skin integrity, resident behavioral issues, costs, and resident and
nurse satisfaction while comparing the effects of giving bed baths against standard soap
and water baths for residents of nursing homes. as the number of patient interactions)
and compared standard treatment to either a phone consultation with a general
practitioner or a phone consultation with a nurse in order to calculate the costs and
effects of expanding primary care access.
Reference/s:

Kleinpell, R. (2021). Outcome Assessment in Advanced Practice Nursing, 5th Edition.

Springer Publishing Company.

SIAPS. (2017). Applying Principles of Pharmacoeconomics to Improve Medical Product

Selection and Use in Low- and Middle-income Countries: Trainer’s Guide.
Submitted by the Systems for Improved Access to Pharmaceuticals and Services
Program to the US Agency for International Development.

Tonin, F. S., Aznar-Lou, I., Pontinha, V. M., Pontarolo, R., & Fernandez-Llimos, F.
(2021). Principles of pharmacoeconomic analysis: the case of pharmacist-led
interventions. Pharmacy practice, 19(1), 2302.
https://doi.org/10.18549/PharmPract.2021.1.2302