what is pharmacoeconomics? joseph a. paladino, pharmd, fccp clinical professor state university of...
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What is Pharmacoeconomics?What is Pharmacoeconomics?
Joseph A. Paladino, PharmD, FCCPClinical Professor
State University of New York at BuffaloSchool of Pharmacy and Pharmaceutical Sciences
Director, Clinical Outcomes and PharmacoeconomicsCPL Associates LLC
Amherst [email protected]
Cost-Containment: PharmacyCost-Containment: Pharmacy
• Generic substitution
• Therapeutic substitution
• Restrictive formulary
• Restricted usage (appropriate use guidelines)
• Antibiotic order sheets
• Prior authorization
• Automatic stop-orders
• Selective reporting of susceptibilities
• Dose minimization
What’s So Bad About What’s So Bad About Cost-Containment?Cost-Containment?
Doesn’t workDoes not measure clinical benefitsDoes not allow for a valuation of
technology, personnel, or servicesDoesn’t work
What Can Cost-Containment What Can Cost-Containment Accomplish?Accomplish?
• Reduce medication expenditures
What Can Cost-Containment What Can Cost-Containment Accomplish?Accomplish?
• Reduce medication expenditures
• Under Capitation or DRG reimbursement, every single medication dispensed erodes institutional “profit”.
• So, the best you can do is –
What Can Cost-Containment What Can Cost-Containment Accomplish?Accomplish?
• Reduce medication expenditures
• Under Capitation or DRG reimbursement, every single medication dispensed erodes institutional “profit”.
• So, the best you can do is –
Become less of a loser
Do Formulary Restrictions Do Formulary Restrictions Reduce Drug Costs?Reduce Drug Costs?
• Problem: Using “too much” ceftriaxone
– Solution: Restrict ceftriaxone
– Result: Decreased use of ceftriaxone
SUCCESS!!!
But…
Do Formulary Restrictions Do Formulary Restrictions Reduce Drug Costs?Reduce Drug Costs?
• Problem: Using “too much” ceftriaxone
– Solution: Restrict ceftriaxone
– Result: Decreased use of ceftriaxone
SUCCESS!!!
Can you expect the use of another antibiotic to increase?
Benchmarking to Analyze Antibiotic Benchmarking to Analyze Antibiotic Control StrategiesControl Strategies
Rifenburg et al. Rifenburg et al. AJHP AJHP 1996;53:2054-2062 1996;53:2054-2062
88 hospitals in US and Canada
Serial 1993 & 1994 data• Formulary restrictions of advanced generation -lactams• Accompanied by increased expenditures on other antibiotics• Overall, $300/OB/yr increase
Cost-shifting
EFFECT OF MEDICAID 3-DRUG PRESCRIPTION LIMITEFFECT OF MEDICAID 3-DRUG PRESCRIPTION LIMITSoumerai et al. Soumerai et al. NEJMNEJM 1991;325:1072-1077 1991;325:1072-1077
5 months baseline, 11 months cap, 10 months after cap rescinded
Core Rx/pt NJ (no cap) NH (cap) Baseline 2.3 2.8CAP 2.3 1.9 (35%)
Nursing Home AdmissionsPre-Cap % 2.1 2.3CAP (% period) 6.6 10.6 (p=0.006)Post-Cap ret. to baseline
Intended and Unintended Consequences Intended and Unintended Consequences of of
HMO Cost-Containment Strategies: HMO Cost-Containment Strategies: Results from the Managed Care Outcomes Results from the Managed Care Outcomes
ProjectProject Horn SD et al. Horn SD et al. Am J Man CareAm J Man Care 1996;2:253-64 1996;2:253-64
Six HMOs: 3 with strict formulary control
Five diseases: OM, arthritis, epigastric ulcers, HTN, asthma
1 year: 12,997 patients
Co-pay: Prescriptions, Hospitalizations Formulary Restriction: healthcare utilization
(Rx, office visits, ER, hospitalizations)
Does Controlling Purchase PricesDoes Controlling Purchase PricesReduce Drug Expenditures?Reduce Drug Expenditures?
Price controls have been associated with a:
1. 17% reduction in costs
2. 10% reduction in costs
3. 4% increase in costs
4. 5% reduction in costs
Does Controlling Purchase PricesDoes Controlling Purchase PricesReduce Drug Expenditures?Reduce Drug Expenditures?
PharmacoEconomicsPharmacoEconomics 1998;14:471 1998;14:471
• Germany 1989 (1981- 1992)– Cost increase before control: 5.9% after control: 9.0%
• The Netherlands: price clusters in 1991– Drug expenditures continue to rise
• Canada: drug prices restrained, but– Drug expenditures continue to rise: 3.8%
• US Medicaid (MAC) : – Added restrictive formularies, prior authorization, rebates, generic
incentives
Reference pricing does not address the demand for drugs or the demand for quality care
What Can We Do That Works?What Can We Do That Works?
Antibiotics as Percentage of Total Healthcare CostsAntibiotics as Percentage of Total Healthcare Costs
Antibiotic cost Total cost
0 20 40 60 80 100
Burn
Diabetic foot
Intra-abdominal
HAP
CAP
Total Healthcare Costs (%)
Antibiotic Percentage of Antibiotic Percentage of Total Healthcare CostsTotal Healthcare Costs
CAP Dresser et al. Chest 2001;119:1439-1448
HAP Paladino & Fell. Ann Pharmacother 1994;28:384-389
IA Friedrich et al. Am J Hosp Pharm 1992;49:590-594
DF McKinnon et al. Clin Infect Dis 1997;24:57-63
Burn Nicolau et al. J Burn Care Rehabil 1994;15:244-250
Outcomes-Based Economic AnalysesOutcomes-Based Economic AnalysesMust Consider:Must Consider:
• All possible outcomes– Success
– Failure
– Adverse events
– Indeterminate
– Resistance
• All resources consumed– Personnel: Professional
– Personnel: Service
– Hospitalization
– ER, ambulance
– Office/clinic visit
– Radiology
– Pathology
– Medications
– etc.
Practical Uses of PharmacoeconomicsPractical Uses of Pharmacoeconomics
1. Show value of your position (i.e. YOU!)
2. Demonstrate economic viability of a service
3. Evaluate outcomes of a medication for formularies, guidelines, pathways, etc.
Pharmacist Participation on Physician Pharmacist Participation on Physician Rounds:Rounds:
Adverse Drug Events in the ICUAdverse Drug Events in the ICU Leape LL et al. Leape LL et al. JAMAJAMA 1999;282:267-270 1999;282:267-270
Clinical pharmacists preventable ADEs 66%
Save $270,000 annually
Economic Evaluations of Clinical Economic Evaluations of Clinical Pharmacy Services 1988-1995Pharmacy Services 1988-1995
Schumock et al. Schumock et al. PharmacotherapyPharmacotherapy 1996;16:1188- 1996;16:1188-12081208
Reviewed 104 publications
7 well-conducted trials
CBA 16.7:1
Economic Evaluations of Clinical Economic Evaluations of Clinical Pharmacy Services 1996 - 2000 Pharmacy Services 1996 - 2000
Schumock et al. Schumock et al. PharmacotherapyPharmacotherapy 2003;23:113-132 2003;23:113-132
Evaluated 59 publications: Hospitals 52%
Community Practice 41%
HMOs 3%
Increased rigor in study design
CBA in 16 trials: 4.7:1
Value of Clinical Pharmacy Value of Clinical Pharmacy ServicesServices
Drug-related morbidity and mortality. Johnson JA, Bootman JL. Arch Intern Med 1995;155:1949-1956.
Reduction in HF events by a clinical pharmacist with a HF management team.Gattis et al. Arch Intern Med 1999;159:1939-1945.
RCT to assess the cost impact of pharmacist-initiated interventions.
McMullin et al. Arch Intern Med 1999;159:2306-2309. Clinical pharmacy services and hospital mortality rates.
Bond et al. Pharmacotherapy. 1999;19:556-564. Clinical pharmacy services, pharmacy staffing, and the total cost of care in
US hospitals. Bond et al. Pharmacotherapy. 2000;20:609-621.
Practical Uses of PharmacoeconomicsPractical Uses of Pharmacoeconomics
Evaluate outcomes of a medication for formularies, guidelines, pathways, etc.
Benefits of Advanced Antibiotics in AECBBenefits of Advanced Antibiotics in AECB
224 exacerbations in 60 outpatients
1st line agents: Amoxicillin, Erythro, TCN, TMP/SMX
2nd line agents: Cephalosporins
3rd line agents: Amox/clav, Azithromycin, Ciprofloxacin
Failures: more 1st line than 3rd line (19% vs 7%, p<0.05)
Hospitalizations: more 1st line than 3rd line (18% vs 5.3%, p<0.02)
Destache et al. J Antimicrob Chemother. 1999;43A:107-113
Immunosuppressive Drug Costs: Immunosuppressive Drug Costs: Renal TransplantationRenal Transplantation
Canafax et al. Canafax et al. PharmacotherapyPharmacotherapy 1990;10:205-210. 1990;10:205-210.
Mean valuesALG-AZA-P CSA-AZA-P
Treatment period 3/83-10/84 9/84-12/86Number of Patients 30 301 year survival 93% 100%Drug Costs ($) $2,017 $6,004
ALG-AZA-P: antilymphoblast globulin - azathioprine - prednisoneCSA-AZA-P: cyclosporin - azathioprine - prednisone
Immunosuppressive Drug Costs: Immunosuppressive Drug Costs: Renal TransplantationRenal Transplantation
Canafax et al. Canafax et al. PharmacotherapyPharmacotherapy 1990;10:205-210. 1990;10:205-210.
Mean valuesALG-AZA-P CSA-AZA-P
Drug Costs ($) $2,017 $6,004
Hospitalization ($) $18,146 $13,459
LOS (days) 12 + 8 7 + 4
Rehospitalization ($) $6,364 $1,508
LOS (days) 7 + 6 5 + 4 ALG-AZA-P: antilymphoblast globulin - azathioprine - prednisoneCSA-AZA-P: cyclosporin - azathioprine - prednisone
Azithromycin IV/PO versus Azithromycin IV/PO versus Cefuroxime Cefuroxime ± ± Erythromycin IV/POErythromycin IV/PO
266 Hospitalized Patients with CAP266 Hospitalized Patients with CAP
Cost Cure Cost-Effectiveness RatioAzithromycin $4104 78% $5265:expected success
Cefuroxime ± Erythromycin $4578 75% $6145: expected success
P value 0.059 NS 0.05
Paladino et al. Chest. 2002;122: 1271-1279
CAP
$6332 5 days
$8865 7 days
$5106 4 days
$2533 2 days
IV (0.02)
IV/PO (0.98)
Gati n = 98
$15,823 14 days
IV (0.03)
$5827 4 days
$19,355 11 days
$5598 4 days
$8590 8 days
Ceftn = 105
Ceft alone n = 70
Ceft + Eryn = 35
IV/PO (0.97)
IV/PO (1.0)
S (0.5)
F (0.01)
S (0.99)
F (0.5)
F (1.0)
S (0.96)
F (0.04)
S (0.89)
F (0.11)
28
Pharmacoeconomics 101Pharmacoeconomics 101
Sick patients cost more than healthy ones….
Effects of Cost and Compensation on Effects of Cost and Compensation on Adoption of a Cost-Effective Drug Adoption of a Cost-Effective Drug
Kolassa et al.Kolassa et al. Pharmacoeconomics Pharmacoeconomics 1998;13:223-2301998;13:223-230 • 1 of 3 versions of a questionnaire sent to 1,300
pharmacy directors in the US
• 353 (27%) usable responses
• Pharmacy budget will increase by either
$250, $1,750, or $3,250 per case
• Differing salary compensation conditions
• Each case will save the hospital $2,500 (14%)
Cost vs. Economics: ResultsCost vs. Economics: ResultsKolassa et al.Kolassa et al. Pharmacoeconomics Pharmacoeconomics 1998;13:223-2301998;13:223-230
EACH SCENARIO WAS COST-EFFECTIVE!
• More will restrict use at $3,250 than at lower costs (p<0.001)
• More will restrict use, regardless of cost, if their personal salary is contingent on drug budget control (p=0.001)
• Department-based budgeting is a disincentive to cost-effective decisions
RealityReality
$$$$$$$$
Endpoints in Studies of Infections: Endpoints in Studies of Infections: Traditional Traditional andand NewNew
Niederman M. 2001Niederman M. 2001
• Clinical: cure, failure– Time to clinical response– Time to return to work– Time until next infection (AECB)
• Bacteriologic: eradication, superinfection, reinfection– Prevention of resistance
• Economic: money spent on drugs, hospitalization– Money saved by being well, Cost of lost productivity
Although Drug Prices Are ImportantAlthough Drug Prices Are Important::
• Overall costs are dependent on overall outcome (economics)
• Sick patients cost more than healthy ones
• It is cost-effective to quickly cure the patient
The most expensive medication is one that does not work.