“Rational Pharmacology” and Health Economics

1. “Rational Pharmacology” and Health Economics By Alan Maynard

2. Outline • What is “rational pharmacology”? • What is health economics? • Is it time for marriage between these two disciplines?! Developing the “fourth hurdle” • Conclusions

3. Introductory comments • “Doctors prescribe medicines of which they know little, to cure diseases of which they know less, for human beings of whom they know nothing” Voltaire • Doctors are dangerous because practitioners exhibit large ,unexplained variations in practice, deliver inappropriate care and fail to manage medical errors or measure outcomes The role of pharmacologists and economists is to offer these sinners salvation!

4. What is “rational pharmacology” 1? • The role of the pharmacologist is to identify the effects of drugs on the human body. • The measurement of safety, quality and efficacy • Problems with clinical trails : the choice of comparator and the scope for the scope for being ”economical with the truth”. The need for comparative efficacy data and the need to analyse products after marketing

5. Rational Pharmacology 2 • Identification of efficacy in trials and effectiveness of drugs in the community are only the first two steps in deciding whether to reimburse a product in a health care system • Efficacy and effectiveness are necessary but not sufficient conditions for reimbursement e.g. if drug X produces 5 years of good quality life (5 QALYs) and drug Y produces 10 QALYs, which would you choose?

6. Rational pharmacology 3 • With such data about X and Y drugs, • The pharmacologist • The physician • The patient • Would all prefer Y • But what if drug X cost $50 and drug Y cost $500? Which is the best buy now?

7. Health economics 1 • A basic assumption in economics is that resources always and everywhere are scarce, and all decisions makers whether they are individuals or health care systems have to choose how to allocate scarce resources amongst competing ends • Health care rationing is ubiquitous and practitioners deprive (or simply do not offer) patients of care which is of benefit to them and which they would like to have.

8. Health economics 2 • The policy issue is not WHETHER to ration but HOW access to care will be determined • The individual (Hippocratic) ethic versus the social (opportunity cost) ethic: doing good to the patient in your care versus recognising the need to target heath care to those patients who can benefit most per unit of expenditure • Evidence based medicine (EBM) versus economics based medicine (the new EBM!)

9. Health economics 3 • If drug X produces 5 QALYs for $50 and drug Y produces 10 QALY for $500, the cost per QALY of X is $10, and the cost per QALY of Y is $50. Y produces 5 more QALYs at an additional cost of $450 or $90 per QALY • So Y is more clinically effective whilst X is cost effective. Some products which are clinically effective may also be cost effective. It is essential to identify, measure and value the costs and effects of all pharmaceutical products to determine cost effectiveness

10. Health economics 4 • If the available budget for a therapeutic area is $100,00, product X produces 10,000 QALYs whilst product Y produces only 2000 QALYs. If the policy goal is to maximise population health gains, X must be used. • Thus the message is, depending on the cost and effectiveness data, what is clinically effective may not always be cost effective, but what is cost effective is always clinically effective.

11. Health economics 5 • Pharmacology and health economics are partners in identifying, measuring and valuing what is given up when a patient uses a drug (the cost) and what is gained for the patient (improved length and quality of life) • In addition to the 3 “hurdles” of safety, efficacy and quality which have to be met to get marketing agreement, reimbursement has to be determined by the 4th hurdle of cost effectiveness e.g England and Australia

12. Health economics 6:outline criteria for good study • Clear definition of the hypothesis, and the comparator. • Identify, measure and value relevant costs • Identify measure and value all relevant benefits • Discount costs and benefits, and carry out sensitivity analysis.

13. Health economics 7 • Many poor studies are published and used for marketing by the industry • Data basis of critiqued studies at NHS Centre for reviews and Dissemination : www.york.ac.uk/inst/crd/centre.htm • Need to reappraise cost effectiveness continually with post marketing surveillance • Challenge to improve quality of studies and avoid corruption of the evidence base in both clinical and economic work

14. Conclusions 1 • Efficient reimbursement should be informed by clinical and economic data • Issues with the Fourth Hurdle (BMJ 360,576,2002): • Where to set the “advisory cut off”: is £30,000 per QALY too high? • Prioritising the technologies for evaluation • Political interference e.g beta interferon • Guidance can be inflationary even if efficient when the science is high quality

15. Conclusions 2 • “the role of the doctor is to amuse the patient as nature takes its course” Voltaire • The determination of pharmaceutical formulae for primary and hospital care is a matter of science for clinical scientists, statisticians, pharmacologists and economists. The challenge then is to ensure that physicians follow guidelines based on the 4th hurdle.