Pharmacoeconomics Analysis

Pharmacoeconomics is a sub-specialty within the broader field of health economics that focuses specifically on the costs and benefits of medical procedures and pharmaceuticals. Pharmacoeconomic analysis concerns itself not only with the efficacy of new drugs and medical treatments, but with the costs of these therapies weighed against their benefits. Like the overall field of economics, which studies the ways in which societies allocate scarce resources to meet societal needs, pharmacoeconomics examines allocation of finite medical resources to best meet the infinite needs and wants of patients.

• Prescription medicines

Significance

• Pharmaceutical developments are often at the forefront of changes in health care technologies and systems. Rising prices for pharmaceuticals and medical procedures, combined with pressure on national health care systems and managed care organizations to better control medical costs, have raised the prominence of pharmacoeconomic analysis. Pharmacoeconomic studies supplement clinical trials of new drugs and treatments by taking costs into consideration.

Function

• Pharmacoeconomic analysis strives to guide health care decision makers in allocating limited medical resources in an optimal manner. Consistent with other specialties in the field of economics, pharmacoeconomics examines how best to allocate the limited resources to meet, in this case, the needs of patients. Health care providers and administrators must balance the needs of individual patients with larger societal needs, recognizing that limited resources cannot meet all needs and wishes. By assessing costs and benefits, pharmacoeconomic analysis helps gauge the efficiency of medical advances.

Types

• Types of pharmacoeconomic studies include cost-effectiveness analysis and budget impact analysis. These studies supplement the randomized trials needed for approval of new drugs and treatments by providing guidance for health care policymakers and administrators in the financing and provision of pharmaceuticals.

Cost-Effectiveness Analysis

• The International Society of Pharmacoeconomics and Outcomes Research (ISPOR), a leading organization dedicated to quality pharmacoeconomic analysis, advocates cost-effectiveness studies alongside clinical research studies of new drugs and medical therapies. Cost-effectiveness analysis considers not only the health benefits of new procedures and drugs, but assesses their economic value, as well. ISPOR views clinical trials and cost-effectiveness studies as complementary, noting that clinical trials alone do not fully address issues of value, while cost-effectiveness studies by themselves do not meet regulatory standards for approval of new therapies. Increasingly, private and public administrators of health care financing systems want estimates of cost-effectiveness.

Budget Impact Analysis

• Because of rising health care costs, managed care providers in the United States and government authorities that administer single-payer health care systems in Canada and many other countries want estimates of the extent to which new pharmaceutical drugs and medical procedures will impact their budgets. Budget Impact Analysis (BIA) strives to measure these effects. Estimates of budget effects provide additional data for health care system administrators and practitioners to better ensure efficient allocation of scarce medical resources.