The healthcare policy makers commonly utilize pharmacoeconomic methods or tools, which can be categorized into two main groups: economic evaluation techniques (such as Cost Consequence, Cost Benefit, Cost Effectiveness, Cost Minimization, and Cost Utility) and humanistic evaluation techniques (including Quality of Life, Patient Preferences, and Patient Satisfaction). These methodologies have been applied across various fields and are being utilised within the healthcare settings increasingly.
- Evaluation of Cost of Illness: The assessment pertaining to Cost of Illness (COI) pinpoints and computes the complete expenditures related to a specific disease within a definite population. It is frequently termed as a “burden of illness” analysis and is involved in the quantification of both the direct and indirect expenditures related to a particular disease. Estimations have been made for the expenditures of various diseases such as peptic ulcer, mental illnesses, cancer, heart ailments etc. in the western world. The purpose of COI evaluation is not meant for the comparison of various options of treatment but to assess a disease’s financial impact. This leads to the assessment of the effectiveness of prevention and strategies of treatment in relation to an illness’s cost.
- Analysis by Cost minimization: To determine the option of treatment which is effective in cost among two or more options, the Cost Minimization Analysis (CMA) method is used. This analysis supposes or confirms that the treatment alternatives pertaining to effectiveness and safety are equal (i.e., they are equivalent therapeutically). Once this equivalence is established, the costs are then identified, quantified, and compared in monetary units (such as dollars). An approach which is uncomplicated and direct is offered by (CMA) for the assessment of options of treatment or competing programs, provided confirmation of the therapeutic equivalence of the compared alternatives is there.
- Analysis by Cost Benefit: The identification, measurement, and comparison of the advantages and disadvantages of a specific program or option of treatment is done by the Cost Benefit Analysis (CBA) method. This involves converting the benefits of a program or treatment into their dollar equivalent for the year they will occur. Additionally, both future costs and benefits are adjusted or “discounted” to reflect their current value.
These costs and benefits are then presented as either a ratio (benefit to cost ratio), a net benefit, or net cost. A clinician or decision maker would typically opt for the program or treatment alternative with the highest net benefit or the most favorable benefit to cost (B/C) ratio. Specific guidelines exist to help interpret this ratio.
- If B/C ratio is > 1, the program or treatment proves valuable. This indicates that the benefits gained from the program or treatment outweigh the costs associated with it.
- If the B/C ratio is = 1, the benefits are exactly equal to the costs. This means that the program or treatment alternative’s benefits precisely match the costs of providing it.
- If B/C ratio is < 1, the program or treatment is not economically advantageous. This means that the price of offering the treatment or program outweighs the benefits it produces.
- Analysis by Cost Effectiveness: The evaluation of various treatments or programs based on profiles of safety and varying safety is done by Cost-Effectiveness Analysis (CEA) method. The measurement of costs is based on the value of the currency, while the assessment of outcomes is based on the achievement of particular therapeutic targets. The description of these outcomes can be in physical units, natural units, or non-monetary terminologies such as lives saved, cured cases, expectancy of life, or drops in blood pressure (e.g., mm Hg drop). The presentation of CEA results is in the form of ratios, either as an Average Cost-Effectiveness Ratio (ACER) or as an Incremental Cost-Effectiveness Ratio (ICER).
CEA is particularly valuable for finding the balance between cost and patient outcomes. It helps identify which treatment options offer the best health outcomes per dollar spent and is especially useful when outcomes are measured based on achieving specific therapeutic objectives. For instance, when considering different antiemetic agents for establishing a policy to prevent chemotherapy-induced nausea and vomiting, CEA can be a valuable tool.
The cost effectiveness of a therapeutic intervention may be expressed in terms of natural units such as Life Years Gained (LYG) or infection avoided i.e. COST / LYG.
Utility in health care refers to preferences for health outcomes. The COST/QALY metric, where QALY stands for Quality Adjusted Life-Years, assesses treatments based on both their influence on quality of patient’s life and survival. This generic measure allows for cost-effectiveness comparisons across different healthcare interventions. It’s particularly useful when weighing changes in quality of life against changes in survival. For instance, a new cancer drug might reduce quality of life during treatment but offer gains in additional survival.
Incremental Cost Effectiveness can be shown as-
Cost of drug A – Cost of drug B
Effect of drug A – Effect of drug B
- Cost-utility analysis and quality-adjusted life year: Cost-utility analysis (CUA) compares treatment options based on patient preferences and quality of life (QOL), using dollars for cost and patient-weighted utilities like quality-adjusted life years (QALYs) for outcomes. The C/U ratio (cost per QALY gained) is used, favoring treatments with the lowest cost per QALY. CUA is ideal for comparing life-extending treatments with serious side effects (like cancer chemotherapy) or those reducing morbidity (like arthritis treatment), when QOL is the primary health outcome of interest.
In conclusion, pharmacoeconomic studies provide essential insights into the economic aspects of healthcare, aiding in the pursuit of efficient and effective treatment strategies for better overall health outcomes.
