Cost-effective Prescribing
Dr. Máirín Ryan
Pharmacoeconomics
Pharmacoeconomics: that branch of health economics that focuses upon the costs and benefits of drug therapy
limited resources maximum health impact from a given budget cost-effective prescribing
Economic evaluation always involves a comparative analysis of alternative courses of action
Opportunity Cost
PPARS Herceptin for breast cancer
National Centre for Pharmacoeconomics
• Established with financial support from the Department of Health and Children
• Aims to promote expertise in Ireland for the advancement of the discipline of pharmacoeconomics through education, practice and research
D ep t o f H ea lth R esea rch E d u ca tio n
C en tre
www.ncpe.ie
Drug expenditure (€ Millions) under the Community Drugs Scheme between 1994 and 2004
0
200
400
600
800
1000
1200
1400
1600
GMSTotal
Top 10 products of highest cost to the GMS for the year ended 2004 in the order of their total ingredient cost
0 5 10 15 20 25 30
AMLODIPINE
ESOMEPRAZOLE
CLOPIDOGREL
LANSOPRAZOLE
SALMETEROL AND DRUGS FOR COPD
OLANZAPINE
OMEPRAZOLE
PRAVASTATIN
CLINICAL NUTRITIONAL PRODUCTS
ATORVASTATIN
€ million
1. Product Mix: Prescribing of newer more expensive medications:
OmeprazoleLansoprazoleEsomeprazolePantoprazoleRabeprazole
PravastatinAtorvastatinSimvastatin
2. Volume effect: Growth in the number of prescription itemsThe number of eligible GMS patients has fallen by 9.1% from 1.27 million in 1993 to 1.16 million in 2003. However, the 32.3 million items prescribed in 2003 represent an 87% increase over the 10 year period.
10% of GMS expenditure 2003 (€51.3m)
8.3% of GMS expenditure 2003 (€42.9m)
The main reasons driving such growth in pharmaceutical expenditure include:
Spending on Drugs is a major Target for Savings in Health Care costs because of the ...
• Volume of Drug Expenditure• Highly visible nature of drug utilization• Perception that the drug budget is not being used
to the best advantage• Perception that savings can be made without
detriment to patients• Avoids having to address sensitive issues relating
to other areas of the Health Care Budget
Improving cost-effectiveness of pharmaceutical expenditure
• Review pricing mechanism
• Generic prescribing
• Cost-effective prescribing
IPHA agreement: governs price of drugs in Ireland
• Price linked to high price countries• Automatic reimbursement• Price freeze since 1993• Contribution of pharmaceutical industry to the
economy
• 2006 Renegotiation– Realignment of prices– Generic substitution– PE evaluation prior to reimbursement
Netherlands
Denmark
Germany
France
Ireland
Britain
Ireland links its drug price by formula to those of five other member states
Interdependence of European pharmaceutical prices
Finland:Weighted EU average
Sweden: EU median
Denmark:EU average
Germany:No external Reference
France: No external reference
Spain:Average FR, IT
Portugal:Minimum FR, IT, SPA
Italy: All EU prices
Greece: Lowest EU price
Belgium: Average DK, FIN, FR, GER, NL, NOR, SWE, UK
Netherlands:Average BE, FR, GER, UK
Ireland: Minimum price-UK or average of DK, FR, GER, NL, UK
UK: No external reference
Source: Evidence-based health care reimbursement systems in Europe. ISPOR 2003
International Pharmaceutical Price Comparisons
Tilson et al. The high cost of medicines in Ireland: is it time to change the pricing mechanism? Eur J
Health Econ.
Potential cost savings on the GMS scheme from substitution of a Danish, average European and UK price
20.95
16.54
9.38
0
5
10
15
20
25
Danish price Average Europeanprice
UK price
Mill
ion
€
Tilson et al. The high cost of medicines in Ireland: is it time to change the pricing mechanism? Eur J Health Econ Vol 5 No 4 Nov 2004; 341-344
Potential cost savings (million €) for individual drugs by substituting prices
Danish price
Average European price
UK price
Omeprazole 2.16 1.09 2.7
Pravastatin 2.85 2.85 0.85
Lansoprazole 2.74 1.57 1.61
Sertraline 1.01 1.01 1.29
4
5
6
7
8
9
10
11
12
13
14
AUS BEL FIN FR GER IRL ITA NL POR DNK GB N
Ex-Mnf-Price Wholesaler Margin Pharmacy Margin VAT
Difference in distribution costsDifference in distribution costsBasis: €5 ex-manufacturer priceBasis: €5 ex-manufacturer price
Source: Bohn, Schering 2002
Conclusion
Possible explanations for the differences in prices:Possible explanations for the differences in prices:
The wholesale margin is higher in Ireland than in The wholesale margin is higher in Ireland than in the UK and Denmark.the UK and Denmark.
Exchange rate fluctuations.Exchange rate fluctuations.
Generic substitution in Denmark makes market Generic substitution in Denmark makes market more competitive.more competitive.
Price freeze in Ireland since 1993 – no system in Price freeze in Ireland since 1993 – no system in Ireland to revise prices in line with the reference Ireland to revise prices in line with the reference countries.countries.
Improving cost-effectiveness of pharmaceutical expenditure
• Review pricing mechanism
• Generic prescribing
• Cost-effective prescribing
The potential impact of introducing a
system of generic substitution on the
Community Drug Schemes in Ireland
Lesley Tilson, Kathleen Bennett, Michael Barry.Eur J Health Economics Sep 2005 Vol 6 Issue 3. 267-273
Objectives
1.1. To investigate the level of generic drug To investigate the level of generic drug utilisation on the GMS and DP schemes for all utilisation on the GMS and DP schemes for all Health Board areas in 2003.Health Board areas in 2003.
2.2. To carry out a cost-minimisation analysis to To carry out a cost-minimisation analysis to determine the potential savings to the drugs determine the potential savings to the drugs budget if a system of generic substitution were budget if a system of generic substitution were implemented.implemented.
The percentage of the ingredient cost spent on generic items on the GMS and DP schemes in 2003
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
Generic Branded generic Proprietary drug with equivalentgeneric
Proprietary drug with noequivalent generic
DPS GMS
Potential Savings from Generic Substitution
Substitution of cheapest generic equivalent
Substitution of average price of generic equivalent
Substitution of maximum price of generic equivalent
Estimated savings on the GMS
€12.7 million €10.9 million €9.0 million
Estimated savings on the DPS*
€9.1 million €7.7 million €6.4 million
* Including savings due to the 50% pharmacy mark-up
Prescribe generically!
Improving cost-effectiveness of pharmaceutical expenditure
• Review pricing mechanism
• Generic prescribing
• Cost-effective prescribing:
Cost-effective prescribing
How well are we doing?• Do we prescribe generically?• Do we adhere to evidence based guidance
on treatment and prevention?• Do we prescribe the safest therapies?• Do we select the most cost-effective
options?
National Centre for Pharmacoeconomics, January 2006Total Ingredient cost € of all statin medications (ATC class C10AA) to the GMS
between Jan'00 and Sep'05
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
ingr
edie
nt c
ost
C10AA01 Simvastatin branded C10AA01 Simvastatin genericC10AA03 Pravastatin branded C10AA03 Pravastatin genericC10AA04 Fluvastatin C10AA05 AtorvastatinC10AA06 Cerivastatin C10AA07 Rosuvastatin
Statin prescribing in Ireland
• Under prescribing…target 25%– 8% in 2002
• IHD 52%, Diabetes 40%
• Doses lower than in the pivotal trials– E.g. pravastatin 20mg
Regional variation in prescribing for diabetes and use of secondary
preventative therapies in Ireland.
C Usher at alPharmacoepidemiology & Drug Safety 2005
Diabetes in Ireland
• Diabetes: growing epidemic – Ageing population, diet, sedentary lifestyle
• Cardiovascular disease accounts for 70% of deaths• Irish Cardiovascular Strategy:
– Secondary preventative therapies e.g. statins, aspirin, BP control
• National Health Strategy– Equity of access?
Standardised Hospital Discharge Rates for persons with diabetes / health board region
Region IDDM NIDDM
EHB 110.3 104.1
WHB 98.6 95.1
MHB 112.8 130
MWHB 114.7 111.4
SEHB 97.3 116.1
NWHB 77.6 87.1
SHB 104.3 96.4
NEHB 98.8 109.2
Adjusted ORs for prescribing of ASPIRIN to NIDDM patients by gender
00.20.40.60.8
11.21.41.61.8
EHBW
HB
MWHB
NEHB
NWHB
SEHBSHB
MHB
Adjusted ORs for prescribing of STATINS to NIDDM patients by gender
00.20.40.60.8
11.21.41.61.8
2
EHB WHBMWHBNEHBNWHB SEHB SHB MHB
Adjusted ORs for prescribing of ACEi to NIDDM patients by gender
0
0.2
0.4
0.60.8
1
1.2
1.4
EHBW
HB
MWHB
NEHB
NWHB
SEHBSHB
MHB
Cost-effective prescribing
How well are we doing?• Do we prescribe generically?• Do we adhere to evidence based guidance
on treatment and prevention?• Do we prescribe the safest therapies?• Do we select the most cost-effective
options?
Usage of paracetamol containing combination analgesics remains high
in primary care
C Usher et al. BJCP 2005
Background• Distalgesic: compound opiate analgesic (dextroprooxyphene 32.5mg and paracetamol 325mg).• Indication: mild to moderate pain.• Controversial? Repeated use may result in tolerance, cases of abuse also reported (McBride, 1995).• Use in elderly regarded as inappropriate (Fick, 2003).
Aim
Compare prescribing of DISTALGESIC with PARACETAMOL alone and PARACETAMOL COMBINATION
products.
Drug Total no. prescriptions % of total no. prescriptions
Co-proxamol* 366,212 42%
Paracetamol 500mg 271,636 31% (29% tabs., 2% supp.)
Paracetamol 500mgCodeine 8mgCaffeine 30mg
122,004 14%
Paracetamol 500mgCodeine 30mg
61,544 7%
Paracetamol 500mgDihydrocodeine 10mg
50,889 6%
Paracetamol 500mgMetoclopramide hydrochloride 5mg
8,404 1%
Total number of prescriptions on the GMS in 2003 for paracetamol-containing analgesic preparations.
*Dextropropoxyphene hydrochloride 32.5mg, paracetamol 325mg. Usher et al., 2005
Odds Ratios and 95% Confidence Intervals for patients receiving follow-up prescriptions for the paracetamol-containing analgesic preparations 12 months
post initiation of therapy
Usher et al., 2005
OR (95% CI) Female vs. male#
OR (95% CI) Over 65s vs. Under 65s#
Co-proxamol 1.18 (1.07-1.28)*** 1.71 (1.57-1.86)*** Paracetamol only 1.28 (1.16-1.39)*** 2.67 (2.44-2.93)*** Paracetamol combinations 1.33 (1.20-1.47)*** 1.69 (1.53-1.87)*** # Reference category. *p<0.05; **p<0.01; ***p<0.001.
Cost-effective prescribing
How well are we doing?• Do we prescribe generically?• Do we adhere to evidence based guidance
on treatment and prevention?• Do we prescribe the safest therapies?• Do we select the most cost-effective
options?
Cost-effective prescribing of Proton Pump Inhibitors
• 10.1% of the GMS drugs budget for 2002 was attributable to the Proton Pump Inhibitors.
• Four of the five PPI’s licensed in Ireland with the exception of Rabeprazole are among the top thirty products of highest cost to the GMS.
• A review by the UK’s National Institute of Clinical Excellance (NICE) concluded that the efficacy of individual PPI’s did not differ significantly, and the choice of agent should be based on licensed indication and cost (July 2000).
Source: McGowan et al. Cost-effective prescribing of proton pump inhibitors in the GMS scheme. IMJ (2004).
Total GMS Expenditure (€) on PPIs in the ERHA between Jan 2001and Dec 2002
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
Jan'0
1
Feb'01
Mar'01
Apr'01
May'01
Jun'0
1Ju
l'01
Aug'01
Sep'01
Oct'01
Nov'01
Dec'01
Jan'0
2
Feb'02
Mar'02
Jun'0
2Ju
l'02
Aug'02
Sept'0
2
Oct'02
Nov'02
Dec'02
€
Omeprazole Pantoprazole Lansoprazole Rabeprazole Esomeprazole
Estimated annual savings following substitution of Losec mups with alternative PPIs during maintenance therapy according to prescribing
practices in the GMS scheme (2002)
Drug (Trade Name) Strength mg Percentage of prescriptions dispensed at given strength
Estimated savings when substituted for omeprazole (Losec Mups) corrected for % prescriptions at higher and lower doses
Generic Omeprazole (Losamel)
20mg 100% € 3,135,971
Esomeprazole (Nexium) 20mg40mg
52%48%
€ 3,355,926
Lansoprazole (Zoton) 15mg30mg
28%72%
€ 4,233,020
Pantoprazole (Protium) 20mg40mg
34%66%
€ 5,728,656
Generic Omeprazole (Ulcid)
20mg 100% € 6,419,600
Rabeprazole (Pariet) 10mg20mg
19%81%
€ 6,829,631
Generic Omeprazole (Lopraz)
20mg 100% € 6,843,294
Pharmacoeconomic Evaluation in Europe in 2004Norway: Pharmacoeconomic data required for reimbursement; official guidelines in operation.
Finland:Pharmacoeconomic evidence mandatory for evaluating newtherapies for reimbursement and may also be requested for existing therapies.
Sweden:Cost-effectiveness data required for reimbursement.
Denmark:Cost-effectiveness data may be requested for reimbursement decisions.
Britain:National Institute of Clinical Excellence (NICE) evaluatesthe cost effectiveness of medicines. Guidelines updated April 2004.
Germany:Guidelines prepared. No formal requirement for reimbursement but likely to play a growing role in the future.
France:Not aformal requirement but increasingly used in reimbursement decisions; Guidelines prepared.
Spain:Not a formal requirement. Guidelines prepared.
Portugal:Cost benefit analysis incorporated into reimbursement decisions.
Italy:Proof of cost-effectiveness required For pricing and reimbursement decisions.
Greece: Guidelines for pharmacoeconomic studies prepared; cost-effectiveness data may be requested.
Belgium: Not a formal requirement but a standard report format for economic evaluations has been published.
Netherlands:Pharmacoeconomic evidence explicitly required for reimbursement of new products.
Ireland: Guidelines for pharmacoeconomic studies prepared; cost-effectiveness data may be requested.
Value for money: costs vs benefits
Costs
Drug costs+
Outpatient visits+
Inpatient costs
Benefits:
- More symptom free days- Less hospital admissions- Increased quality of life- Increased survival
CONSIDER A NEW INTERVENTION,
IFMore effective and/or Less adverse events and/or More convenient
THENLess Other Drugs?Less Tests and Imaging?Less Physicians Consults?Less Interventions?Less or Shorter Hospital stay?
Typical Example: Cost Analysis of Drug B Vs. ASuppose B works better and is moreconvenient
Average other treatment costs
•Physicians
•Hospital
•Surgery
•Oth. Drugs
•Tests
•…….
Total cost
Average acquisition cost
CAB
B A +
SAB
B A
=
Snet = net saving
B A
Cost Analysis of Drug B Vs. A (2)Idem but differences areLess pronounced
Average other treatment costs
•Physicians
•Hospital
•Surgery
•Oth. Drugs
•Tests
•…….
Average acquisition cost
Total cost
CAB
B A
+
SAB
B A
=
B A
Cnet = net cost
Cost EffectivenessThe cost effectiveness of a therapeutic intervention may be expressed in terms of natural units such as life years gained or infection avoided
i.e. COST/LYG
It may be expressed in utility terms i.e. preferences that individuals or society may have for a set of health outcomes. The effects of treatment on both patient quality of life and survival are determined.
i.e. COST/QALY
Incremental Cost Effectiveness
Cost A – Cost BEffect A – Effect B
or
CostEffect
The Cost-Effectiveness Plane
Higher Cost
Lower Cost
HigherEffectiveness
Q1
Ceiling Incremental Cost-Effectiveness Ratio
Q3
Q4
Q2
LowerEffectiveness
COST-EFFECTIVENESS PLANEDifference in cost
Difference in effect
Maxim
um w
illing
ness
to pa
y
Region
of co
st-eff
ectiv
enes
s
Economic Modelling: why is it necessary?
• Absence of hard data
• Need to synthesise comparisons:• e.g. head-to-head comparisons of therapies
• Need to extrapolate• Over time – e.g. beyond trial follow-up period• Between intermediate and final outcomes
Cost-Effectiveness of Statins for the Secondary Prevention of
Coronary Heart Disease in Ireland
M Barry, A Heerey. IMJ May 2002;(95):133-135
Modelling the impact of statins for secondary prevention in Ireland
• The disease is divided into distinct states e.g. well, non fatal MI, Death
• Transition probabilities are assigned for movement between these states
• Estimates of resource use are attached to each state and transitions within the model (attaching weights)
• Running the model over a large number of cycles enables the estimation of long term costs and outcomes
Death
Well (IHD)
Nonfatal MI
Transition probabilities required
Clinical effectiveness: 4S
Epidemiological: Irish life tables
Death
Well (IHD)
Nonfatal MI
Resource utilisation associated with transition states
Drug costs
Monitoring: Dr visits & labs
Hospitalisation for MI
Death
Well (IHD)
Nonfatal MI
Cost-effectiveness of statins for secondary prevention
atorvastatin fluvastatin pravastatin simvastatin
Starting age = 40 yrsCombined sex
€1,172 €2,358 €3,900 €2,788
Males > 40yrs
€1,189 €2,257 €3,646 €2,643
Females > 40yrs
€1,194 €2,593 €4,412 €3,099
Cost per quality adjusted life year
Cost / QALY league tables
Intervention Cost/QALYStatins for hypercholesterolaemia €1,172ACE inhibitor in heart failure €1,337Beta blocker post MI €7,333Radiation therapy in breast cancer €35,000Mild acute HZV €90,000EPO to augment autologous blood donation in elective surgery
€45,000,000
CEA of statins summary
• Cost-effectiveness analysis indicates that all statins available in Ireland are highly cost-effective for the secondary prevention of IHD
• Adopting new drug strategies may result in increased drug expenditure but savings in other healthcare budgets. Formal economic evaluation allows comparison of increased costs with improvement in benefit
Role for economic evaluation• Individual patient level?• Policy level
– Useful additional information to inform development of guidelines
– Provides useful metric to combine all costs and savings associated with drug therapy and allow comparison within and between diseases
If a therapy is not clinically effective, it cannot be cost-effective
MAIN LESSONS FROM THE USE OF ECONOMIC
EVALUATION AT THE CENTRAL LEVEL
• Demonstration of clinically-important benefits is still paramount.
• Economic data are more important when there is substantial budgetary impact.
• In reimbursement decisions, total refusal is rare; limitations or restrictions in use are much more common.
Drummond 2005
HOW ARE REIMBURSEMENT RULES OR GUIDANCE
IMPLEMENTED?• Depends on the jurisdiction and clinical setting.• Use of hospital-based drugs can be influenced
by budgetary controls and formulary listing.• Use of drugs in primary care can be influenced
by clinical guidelines (e.g. approval ‘on authority’), financial incentives and formulary restrictions.
Drummond 2005
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