Basics of Pharmacoeconomics and Outcomes Research: Application to Patient Care

1. Basics of Pharmacoeconomics and Outcomes Research:Application to Patient Care Sara Shull PharmD, MBA

2. Preview • Economic concepts • Data types & sources • Types of pharmacoeconomic analyses • Perspective • Cost-effectiveness and incremental analysis • Sensitivity analysis • Steps to pharmacoeconomic literature evaluation • Case studies for clinical practice and policy building

3. Opportunity Cost • Time and money as resources can only be spent once – choice is unavoidable. • O.C. is defined as the amount that a resource could earn in its highest valued alternative use. • How do you invest your time? • Why take valuable time to learn about pharmacoeconomics and outcomes research?

4. How Can PE and Outcomes Enhance My Practice? • PE is an aid to decision making with strong potential to: • Mitigate the influence of marketing • Puts practitioner in the driver’s seat • Help set practice priorities • Enhances position of practitioner from payer’s perspective • Medicare plans to decrease pay-out to stem tide of budget deficit • Private payers actively are developing quality “report cards”

5. How Can PE and Outcomes Enhance My Practice? • Statistically more likely to be responsible for better success in clinical care by eliminating poor/ unnecessary care • Ethical framework • Fidelity to individual patients & stewardship to the public good

6. Economics is: • The study of how individuals & society end up choosing, with or without the use of money, to employ scarce resources that could have alternative uses, to produce various commodities & distribute them for consumption now, now or in the future, among various people and groups in society. Paul Samuelson

7. Pharmacoeconomics and Outcomes Research • Using data to distinguish your practice Data about efficacy clinical and humanistic Data about cost resources consumed to achieve efficacy endpoints (investment)

8. Efficacy Data • Management of efficacy endpoints based on evidence enables clinicians to maximize prescribing skills • Evidence-based healthcare is a determination of the mix of those services, drug products, and procedures that maximise benefits and reduce risks.

9. Cost Data • Management of resource consumption enables patients to maximize purchasing power- • Individual level- managing insurance co-payments • Group level- managing insurance premiums across groups and maximizing the number of insured patients • Govt level- sustaining public programs

10. Value Is the Goal of Practice • Minimizing the ratio of cost to efficacy creates value- best return on investment • Enhances your ability to deliver a superior product

11. Basic Value of Medical Care • Evidenced by general trends: • Increased use of medical care and prescription drugs • Mortality rates of certain diseases have significantly declined • Mean length of hospital stay has also declined • Despite this general evidence, few specific data regarding the actual costs and benefits attributed to drugs and medical therapies exist

12. Objectives • Objectives of pharmacoeconomics and outcomes research must originate within three dimensions when considering results and value of healthcare • Acceptable clinical outcomes • Acceptable humanistic outcomes • Acceptable economic outcomes

13. Types of Pharmacoeconomic Analysis

14. Common Misconceptions When Applying Pharmacoeconomic Principles • Cost-effective care is initially the cheapest alternative in a manner similar to other investments, least cost option may lead to greater costs downstream • Cost-effective care is outcome that generates “biggest” effect in a manner to similar investments, smaller increments of outcome may be achieved at a lower overall cost

15. Perspective • The “point of view” considered in economic analyses influences the outcomes and costs considered to be most relevant: • Provider • Patient • Payer • Society

16. Comprehensive Definition of Cost-effectiveness • A therapy is deemed to be a cost-effective strategy when the outcome is worth the cost relative to competing alternatives. In other words, scarce resources are utilized to acquire the best value on the market.

17. Average Cost-effectiveness • Specifies the cost of an agent required to achieve each unit of effect. No comparison is made to alternative agents. Average cost-effectiveness Cost of drug Resulting effect = Cost per unit of effect achieved

18. Average Cost-effectiveness • Average cost-effectiveness of Agent A $50.00 50 units of effect = $1.00 per unit • Average cost-effectiveness of Agent B $150.00 90 units of effect = $1.60 per unit

19. Incremental Cost-effectiveness Analysis • Makes comparisons to other therapeutic options, standard of care, or “doing nothing” (placebo) • Fundamental ratio Cost optionB – Cost optionA Effect optionB – Effect optionA = Cost to achieve one unit of effect

20. Incremental Cost Analysis

21. Incremental Effect Analysis

22. Comprehensive Incremental Cost-effectiveness • $150 - $50 $100 90 – 50 units = 40 units = $2.50 per unit of effect achieved Therefore, because Agent A is an available alternative with a lower average cost per unit of effect achieved, the cost-effectiveness of using Agent B is diminished. The cost of Agent B is not in line with the product it delivers- a poor value.

23. Grid Representing All Possible Relationships of Cost to Effect Between Two Competing Alternatives

24. Measuring Efficacy Data Variables • What product (effect) can be consistently expected from use of drug or health service? • Usually determined from clinical trials • Seek direct relationship to morbidity and mortality • Survival/ death • Myocardial infarction avoided • May rely on surrogate probably related to final outcome to enhance feasibility of analysis • Hemoglobin changes • LDL cholesterol changes • Intimal vessel wall thickness changes • Randomized controlled clinical trial is gold standard for deriving efficacy data

25. Measuring Cost Data Variables • What resources are consumed to produce one unit of the effect? Direct costs drug product acquisition costs drug preparation & administration costs drug monitoring costs treatment costs of adverse effects Indirect costs example of institution indirect cost

26. Discounting Costs • In order to draw most valid conclusion about costs generated over time to achieve an effect in the future, it is necessary to consider that there is a time preference associated with money • Time-value of money adjustment • Money in hand is worth more than the same amount sometime in the future (we like to be paid as soon as possible, but prefer to pay at the last possible moment) • Therefore future costs must be adjusted to reflect present value. • A $1000 cost one year from now requires only $930.00 in hand today assuming a 7% return on investment.

27. Sensitivity Analysis • Conclusions drawn from an economic analysis may change, depending on the uncertainty of cost and effects considered. • S.A., by altering important variables & then recalculating results, tests the validity of conclusions: • Would Agent A still be most cost-effective if the effect of Agent B was greater than measured in clinical trial? • Would Agent A still be most cost-effective if the monitoring costs of Agent B were actually lower? • S.A. becomes increasingly important as assumptions are made to a greater degree.

28. Steps to Pharmacoeconomic Literature Evaluation • Evaluate: • The quality of the journal • Qualifications of authors • Title and abstract- unbiased? • Study methodology • Perspective, study design, outcomes and appropriate alternatives, costs and appropriate discounting, sensitivity analysis, & data sources • Sponsorship- could bias be introduced? • Incremental results • What is the conclusion and does it differ between subgroups? How much does allowance for uncertainty change conclusion? Vogengerg, FR editor. Introduction to Applied Pharmacoeconomics, 2001

29. Cases for Development • Formulary decision making (policy) • Appropriate place for eplerenone (Inspra®) and spironolactone (generic) on Inpatient formulary of tertiary care academic medical center • Clinical decision making for acute therapy (bedside) • Choosing between low molecular weight heparin or unfractionated heparin for the treatment of acute proximal deep vein thrombosis • Clinical decision making for chronic therapy (bedside) • Choosing between selective cyclooxygenase inhibitor and traditional non-steroidal anti-inflammatory agent for management of osteoarthritis pain • Other suggestions?

30. Treatment of Pain Resulting from Osteoarthritis • Pain results in significant disability and resource utilization • affects 15% of US population • results in > 100,000 hospitalizations annually • NSAIDs • effective pain relief • 24 – 30% the cost of Cox-II inhibitors • associated with a significant risk of adverse effects • Dyspeptic symptoms • More serious non-dyspeptic effects- symptomatic ulcers, ulcer hemorrhage, ulcer perforation • Cox- II inhibitors • effective pain relief • substantially more expensive than NSAIDs • associated with lower risk of GI side effects

31. How should I treat my patient? • NSAIDs are inexpensive compared to Cox-II inhibitor: • But won’t the more expensive agent pay for itself many times over by preventing an expensive GI bleed in my patient? • Dyspeptic symptoms are decreased by 15% • Clinically significant ulcer complications are reduced by 50%

32. Risk of GI bleed: How Much Can It Be Altered? • Not all osteoarthritis patients have an equal risk of developing a GI bleed • Is paying extra for GI protection justified in all patients? • How much can the risk of GI bleed be altered by using a Cox-II inhibitor instead of an NSAID? • What value is really purchased for the extra cost? • The relative risk reduction of GI complications with Cox-II inhibitor catches our eye- but actual risk reduction is small • 1-2% for overall ulcer complications • 1% for serious hemorrhage and perforation Spiegel MR et al. Annals Internal Medicine 2003; 138:10(795-806)

33. Cost-effectiveness analysis Spiegel MR et al. Annals Internal Medicine 2003;138:10(795-806)

34. Cardiovascular Effect of Cox-II Inhibitors • How do cardiovascular problems affect my choice of using Cox-II inhibitors or NSAIDs? Spiegel MR et al. Annals Internal Medicine 2003;138:10(795-806)

35. Clinical Decision Making • Risk reduction for GI complications seen with Cox-II inhibitors is unlikely to offset their increased cost in the management of average risk patients with osteoarthritis pain • With no history of GI bleed, choose naproxen • With history of GI bleed, choose Cox-II inhibitor

36. Clinical Decision Making • In all patients with osteoarthritis, the decision to use Cox-II inhibitor should be made with awareness of the effect of the added risk for cardiovascular events on cost-effectiveness • Currently, there is not enough information available, but it may be prudent to avoid these drugs in patients with cardiovascular history, even in patients with history of GI bleed

37. Treatment of Acute Deep Vein Thrombosis • VTE • > 200,00 new cases reported annually in US • Mortality attributed to PE 100 – 200,000 deaths annually • Unfractionated heparin • Effective for treating VTE • Daily cost for IV therapy is low • Requires close monitoring of clotting time/ dose titration and, therefore, hospitalization • Low molecular weight heparin • Effective for treating VTE • Daily cost for SQ therapy is high • Routine clotting time monitoring not required unless obese or manifestations of renal compromise present • Early discharge or outpatient treatment for VTE is possible

38. How Should I Treat My Patient? • Unfractionated heparin is a less expensive option compared to low molecular weight heparin. • But won’t the more expensive agent pay for itself by bypassing routine coagulation monitoring? • Also, can’t I lower the risk of nosocomial infection and error by sending my patient home after establishing low molecular weight therapy?

39. Cost-effectiveness Analysis Gould MK et al. Annals Internal Medicine 1999;130(10):789-799

40. Clinical Decision Making • Decreased monitoring costs with low molecular weight heparins and the attenuated risk of future complications with these agents do result in cost-effective care. • The higher acquisition cost is justified. • Treating the patient on outpatient basis creates best value. • Better outcomes are achieved at a lower overall cost- the best possible situation. Gould MK et al. Annals Internal Medicine 1999;130(10):789-799

41. Clinical Decision Making • For patients that can receive in-home treatment and support, establish low molecular weight heparin therapy on first day of hospitalization, then send the patient home. (analysis includes cost of home health visits) • For patients that must remain hospitalized, low molecular heparin should be selected before unfractionated heparin as therapy for treatment of VTE.

42. Drug Selection for Inpatient Formulary Addition • Congestive heart failure • Afflicts > 4.6 million people in US • Disease and cost burden rapidly increasing • Primary reason for hospitalization in US • Length of stay & readmission significant cost drivers • High mortality rate

43. Inpatient Reimbursement • Most heart failure patients are insured by Medicare • Medicare reimburses on prospective case basis; monetary amount determined by diagnosis • Hospital is motivated to develop cost-effective formulary with goal of decreasing mortality rate, hospital length of stay, and preventing readmissions

44. Formulary Considerations • Two agents are effective & safe in reducing the risk of death and hospitalization of heart failure patients. • Spironolactone (available on Inpt formulary) • Daily cost is 50-90% lower than eplerenone • Gynecomastia/ breast pain occurs in 10% of males • Eplerenone (considered for formulary addition) • More specific mechanism of action • Lower incidence of gynecomastia, but greater incidence of hyperkalemia requiring hospitalization

45. Indirect Comparison of Clinical Trial Results Pitt B et al. The New England Journal Medicine 1999;341(10):709-717 Pitt B et al. The New England Journal Medicine 2003;348(14):1309-1321

46. Policy Decision Making • Eplerenone is not cost-effective across entire heart failure population • However, length of stay and readmission rates increase as severity of heart failure increases • Stratification of eplerenone efficacy indicates mortality and hospitalization rates fall more dramatically when heart function is more compromised (ejection fraction < 40%)

47. Policy Decision Making • Extra cost of eplerenone may be justified in sicker patients or in patients that cannot tolerate cheaper spironolactone due to gynecomastia/ breast pain • Add eplerenone to Inpatient formulary but limit use within these two patient populations only • Ejection fraction < 40% • Cannot tolerate or fails spironolactone • Eplerenone is not allowed for treatment of hypertension (despite FDA indication) as many effective, safe alternatives are available at significantly lower cost.

48. Conclusion • Time and money can only be spent once- choice is inevitable. Whether done unconsciously or with a consistent process, health care professionals are constantly evaluating patient care choices & acting on them. • Pharmacoeconomics and outcomes research can enhance the quality of your practice by strengthening your evaluation process and increasing the probability that you deliver better value in patient care.