Applied Pharmacoeconomics: Putting Theory into Practice

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Applied Pharmacoeconomics Putting Theory into
Practice

• Lisa A. Sanchez, Pharm.D.
• President
• PE Applications

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Learning Objectives

• Describe basic PE principles and methods commonly
  used in hospital pharmacy practice
• Define applied pharmacoeconomics and its role
  in pharmacy today
• Discuss the application of PE to inform pharmacy
  decision-making
• Compare and contrast common strategies for
  applying PE to daily pharmacy practice
• Review an example of how PE can be applied to
  solve a real-world problem

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PE Applications Mission and Summary of Services

• Mission - To provide pharmacoeconomics and
  outcomes research, education, and consulting
  services to assess the value of pharmaceutical
  products and services in todays healthcare
  systems.
• Summary of Services
• Research services
• customized PE and OR studies
• site or population-specific economic models
• partnerships with HC organizations
• Educational services
• PE lectures and workshops
• PE educational materials
• Consulting services
• protocol design and strategic PE plans

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BASICS of Pharmacoeconomics
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Basic PE Definitions

• Pharmacoeconomics
• The description and analysis of the costs and
  consequences of pharmaceutical products and
  services and their impact on individuals, health
  care systems and society. (Bootman JL, 1995)
• Pharmaceutical care
• The responsible provision of drug therapy for the
  purposes of achieving definite outcomes. (Hepler
  and Strand, 1990)
• Outcomes research
• Broadly defined as studies that attempt to
  identify, measure and evaluate the end result of
  health care services in general. (Bootman
  JL, 1995)

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OUTCOMES RELATIONSHIP
CLINICAL
OUTCOMES RESEARCH
ECONOMIC
HUMANISTIC
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Relationship between Outcomes, Pharmacoeconomics
and Pharmaceutical Care
outcomes research
pharmaco- economics
pharmaceutical care
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Evolution of Pharmacoeconomics

• PK helps pharmacy evolve from distributive to
  clinical discipline
• Drug decisions based on safety, efficacy

1960s 1970s 1980s 1990s 2000

• CBA and CEA introduced into pharmacy literature
  (Bootman et al.1978)
• 1979 first PE research article published (Bootman
  JL et al.)

• Cost containment strategies emerge
• Inclusion of economic outcomes into drug
  decisions
• Misuse of PE terminology (Lee Sanchez, 1991)
• AHCPR created in 1989 to conduct outcomes
  research (PORTS)

• ECHO model (Kozma CM et al., 1993)
• PE components commonly included in Phase III
  RCTs
• Guidelines for conduct and reporting of PE
  studies widespread
• Improved quality/rigor of published PE studies
• Applied pharmacoeconomics emerges

• PE has widespread application by clinicians and
  administrators
• Pharmaceutical manufacturers collaborate with
  MCOs to provide provider-specific outcomes
  data

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PHARMACOECONOMIC METHODS
Economic
Humanistic
Cost consequence Cost benefit Cost
effectiveness Cost minimization Cost utility
Quality of life Patient preferences Patient
satisfaction
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Applied Pharmacoeconomics
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Applied Pharmacoeconomics The Missing Piece
theory
definitions
applications
principles
methods
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Applied Pharmacoeconomics

• Defined as
• Putting pharmacoeconomic principles, methods and
  theories into practice, to quantify the value
  of pharmacy products and pharmaceutical care
  services utilized in real-world
  environments Sanchez LA, 1997

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WHERE Pharmacoeconomics is Applied in the Real
World
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Primary PE Applications
Drug Therapy Evaluations
Justify Pharmaceutical Care Services
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Components of Clinical Decision-Making
clinical
humanistic
economic
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Specific Decisions for PE Applications
MICRO
Clinical Decisions
Formulary Management
Drug Use Guidelines
Disease Management
Justification of Pharmacy Services
Resource Allocation
MACRO
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Potential Hurdles for Application of PE to Drug
Decision-Making

• Lack of PE sophistication by target audience
  (e.g. hospital administrators, MC pharmacy
  directors)
• Lack of PE sophistication by pharmacy
  practitioners who are generating and/or
  interpreting PE data
• Lack of organizational resources (time and )
• Component vs. system management approach
• Budget responsibilities
• Silo mentality

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HOW Pharmacoeconomics is Applied in the Real
World
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Strategies for Putting Theory into Practice

• Strategy 1
• Interpret, critique, and use results from studies
  published in the literature
• Strategy 2
• Utilize economic modeling
• Strategy 3
• Conduct a local observational PE evaluation

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Factors to Consider When Selecting an
Application Strategy

• What is the PE question being asked?
• What is the timeframe for the decision?
• What are the resources and data sources
  available?
• What is the impact of the decision on
  organizational costs and quality of care?

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Scale for Selecting a PE Application Strategy
(Potential Impact of Decision on Cost And Quality)
Mild
Moderate
Extreme
None
Compare acquisition costs
Conduct prospective study
Review PE literature, conduct sensitivity
analysis
Perform economic modeling
Conduct retrospective study
(Application Strategy)
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Number of Published Cost Studies, by Year
Number of Studies
Ref Bradley CA, et al. 1995
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Strategy 1 Use the Literature

• ADVANTAGES
• Data often plentiful
• Quick
• Inexpensive
• Subject to peer-review
• Variety of results can be examined
• Results from RCT

• DISADVANTAGES
• Results from RCT (costs may be protocol driven)
• External validity
• Placebo-controlled
• Misuse of PE terms
• Variations in quality of studies published

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Strategy 2 Use Economic Modeling

• ADVANTAGES
• Inexpensive
• Quick
• Yields organization-specific results
• Bridges efficacy to effectiveness
• Data collection is unobtrusive
• Increased ability to generalize results

• DISADVANTAGES
• Results dependent on assumptions
• Potential for researcher bias
• Controversial
• Reluctance of decision-makers to accept results
• May require a meta-analysis of the literature

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Strategy 3 Conduct a Local Observational Study

• ADVANTAGES
• Flexible
• Yields provider-specific data
• Reflects usual care or effectiveness
• Usually offer comparative data
• Data from multiple sources can be used
• Are less expensive than RCT

• DISADVANTAGES
• Expensive (time and )
• Difficult to control and randomize
• Potential for patient selection bias
• Small sample size
• May be difficult to generalize results to other
  patient populations and providers

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Additional PE Data Sources
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Examples Applied Pharmacoeconomics in the
Real-World
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Targets for Local PE Evaluations

• Biotechnology agents
• New expensive agents
• Newly marketed agents
• Controversial agents
• New me-too agents
• New and existing clinical pharmacy services

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Example One Drug Therapy Evaluation
(literature review)

• A literature review of t-PA vs. streptokinase for
  AMI was conducted to assess to assist in
  formulary management
• A variety of studies were critically evaluated
  and interpreted using 11 basic criteria
• These data were input into an economic model
  (using decision analysis) and customized to
  better reflect real world care at a specific
  organization
• Results lead to acceptance of organizational
  policy and formulary management decision favoring
  the use of t-PA in the organization (32,000 per
  life year saved)

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Criteria for Evaluating the Quality of a PE Study

• Study objective
• Study perspective
• Study method (type of analysis)
• Study design
• Treatment interventions (comparators)

• Costs and consequences (outcomes)
• Study results
• Discounting (adjusting for differential timing)
• Sensitivity analysis
• Study conclusions
• Sponsorship

Sanchez, LA. AJHP 1999561630-40.
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Example Two Drug Therapy Evaluation (conduct
local study)

• A local CEA of stratified doses of ondansetron
  for CIE was conducted from a providers
  perspective, using a 14-step process
• Demographic, clinical, economic and humanistic
  outcomes data were collected
• Stratified dosing regimens were cost-effective,
  yielding equivalent clinical and humanistic
  outcomes
• Results lead to acceptance of organizational
  policy and dosing guidelines, realizing an annual
  cost-savings gt300,000

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Process for Conducting a Local PE Evaluation

• Designed specifically for hospital pharmacy
  applications
• Adapted from Jolicoeur LM, et al. 1992 and
  Sanchez LA, 1995
• Incorporates steps of decision analysis
• Process can be used to guide PE evaluations to
  assess the value of pharmacy products and
  services

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Process for Conducting a Local PE Evaluation
1. Define the PE problem 2. Create a
cross-functional team 3. Determine the study
perspective(s) 4. Determine the comparators and
outcomes 5. Select the appropriate PE
method 6. Identify necessary resources and data
sources 7. Place a monetary value on the outcomes
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Process for Conducting a Local PE Evaluation
(continued)

• 8. Establish probabilities of outcomes
• 9. Use decision analysis (when appropriate)
• 10. Perform discounting and/or sensitivity
  analysis
• 11. Present the results to appropriate groups
• 12. Develop a policy or intervention
• 13. Implement and educate
• 14. Document value through follow-up

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Example ThreeJustify a Clinical Pharmacy Service

• Pharmacy wants to implement/justify an IV to PO
  program
• A CBA of a target drug program, using data from
  literature AND data collected locally, was
  conducted
• Results revealed a B/C ratio ranging from 121 -
  201
• Service was successfully implemented with an
  average compliance rate of 75
• One FTE expected to be approved to manage service
• Data expected to be used to support PUD and CAP
  disease management efforts

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Conclusions

• Applied PE has been the missing link in
  pharmacy
• PE principles and methods can be successfully
  applied in the real world to enhance
  decision-making
• PE can be applied to any therapeutic area, using
  a variety of application strategies
• Application of PE to the real world is a new
  dimension, challenge and opportunity for hospital
  pharmacy