One of your students wants to publish a cost-benefit analysis of his recent drug class review and subsequent formulary decision. He wants to present the clinical literature review and the cost-benefit of the decision.

Is this the "right" analysis for this decision? Why or why not? If not, what IS the correct analysis?
 

SELECT  here for discussion

** THANKS to LTC (Dr.) Dave Bennett from the DOD Pharmacoeconomic Center
(PEC) for his help with this pearl.**

Although a cost-benefit analysis could be used it is probably not appropriate for this review.

There are four types of pharmacoeconomic analyses. These are summarized in a chart I stolen from Dr Gene Reeder at the University of SC at Columbia. He describes this chart as "pharmacoeconomics on one slide".

Analysis    Outcome measure    Cost Measure   
Cost Benefit    Dollars    Dollars   
Cost Effectiveness    Clinical measure/improvement    Dollars   
Cost Minimization    Equal    Dollars   
Cost Utility    QALY, QOL, etc.    Dollars   

EVERY pharmacoeconomic analysis helps answer the question, "Is the incremental benefit worth the incremental cost?" HOW that benefit is measured helps determine which analysis you should perform.

Cost benefit - this analysis is done to show by spending "x" dollars on one program, you or the organization or society will save "y" dollars over an alternative program. Basically, you're spending money to save money. Although conceptually a 'dollar' comparison between programs is easy tounderstand - accurately convertin g clinical outcome measures between
programs to monetary units can be difficult - therefore it is not often used for clinical studies.   A good example of this was a study published in Military Medicine by Dr Jim Riddle and his associates. In this study, the group evaluated what to do subsequent to an outbreak of varicella in the cadet wing at USAFA. Should they vaccinate everyone blindly OR measure everyone's antibody titers and then vaccinate only those non-immune OR do
something else? This analysis showed (using the conditions imposed on the group) by testing everyone's antibody titers and only immunizing those non-immune they would save money overall.

Cost effectiveness - this analysis look at some improvement of a clinical outcome or measure common to the action of all comparators (i.e. LDL lowering, mm decrease in BP, delay in onset of disease, etc) versus the cost. This is often done comparing one drug to another but can also be done using another clinical intervention versus drug therapy. For example, is surgery or drug therapy more cost effective in treating severe GERD? Are nicotine patches better than bupropion for smoking cessation? Better than behavior modification? FYI - there are cost efficacy and cost effectiveness analyses. The difference between efficacy and effectiveness is efficacy uses improvement or benefit determined in clinical studies and effectiveness uses improvement or benefit determined in real world clinical practice.

Effectiveness rates are often lower than efficacy rates. The first DoD statin contract was a cost effectiveness analysis. DoD used the annual drug cost per patient for a given statin for the cost measure and the percentage of patients who are predicted to reach their LDL-C goals when treated with a given statin for the outcome measure. The cost efficacy ratio was defined as annual drug cost per patient treated to the LDL-C goal.

Cost minimization - this is usually the easiest analysis to do. In this analysis, the clinical outcomes are deemed to be equivalent (i.e. equivalent BP lowering between calcium channel blockers, equivalent smoking cessation rates between two therapies) so you can make the determination based solely on cost. Who makes the determination of clinical outcome equality? It can be the MTF P&T committee, an HMO or insurance company, or even the patient themselves.

Cost utility -  In this type of analysis the clinical differences between comparators are usually related to quality of life issues (i.e. dosing frequency, side effect profile, etc.)  and are measured using patient preferences.  For example, if two chemotherapy drugs show equal efficacy regarding prolonging of life but one causes profound neutropenia, alopecia,
and more post therapy infections compared to the other, the better tolerated drug would come out on top in this analysis.

Again, EVERY pharmacoeconomic analysis should help you answer the question, "Is the incremental benefit worth the incremental cost?" How the benefit is defined will help determine which analysis you use.

This Pearl is meant for academic and educational purposes only. This Pearl is meant to raise important points regarding the safe and cost-effective pharmacotherapy of patients. It is not meant to be the definitive reference for the treatment or prophylaxis of various diseases. Although every effort is taken to ensure this Pearl is correct and factual, errors may occur. The US Air Force, the 59th Medical Wing (MDW), and 59th MDW Pharmacy assume no liability for incorrect information or harm that may occur from the use of the information included in this Pearl.