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Relevance of undertaking expenditure reviews and cost studies to pharmaceutical decision-making CAROL BEAVER Senior Research Fellow Centre for Chronic Disease University of Qld, Australia Consultant Health Economist MVP/WHO/WPRO
Relevance of undertaking expenditure reviews and cost studies to pharmaceutical decision-making
Case Studies: Diabetes Expenditure Review and development of National Health Accounts
Problem Statement:Supply and access to essential medicines is dependent on a number of interrelated factors as demonstrated by the Pharmaceutical Sustainability Equation. One such factor is financial sustainability. Financial sustainability requires more than concern regarding access to funds – it must also address the three EEEs of provision (Effectiveness, Efficiency and Equity). This requires key decision-makers have a good understanding of the relationship between; 1. what is needed, 2. what is currently available at what cost to those in need, 3. what should be available and at what cost, 4. what the gaps are and 5. how these gaps can be addressed and at what cost.
Objective: To present case studies from the Western Pacific Region – expenditure reviews and cost analysis and their relevance to decision-making at the policy and purchasing levels.
Design: A review of diabetes related expenditure in Pacific island countries was undertaken Pharmaceutical expenditure reviews have been undertaken in a number of countries within the broader framework of National Health Account (NHA) development.
Conclusions: Chronic diseases such as diabetes and hypertension are becoming high-cost issues, and as costs increase, governments are facing shortfalls in funding, which in turn compromise early intervention and clinical care. Expenditure and reference cost data must play a major role in informing policy and purchasing decisions if appropriate and equitable access to essential medicines is to be had. It is suggested that expenditure reviews, undertaken to inform priority setting methodologies such as PBMA, can provide a structured common sense approach to informing decision making in the context of pharmaceutical supply.
There is increasing recognition that expenditure and cost studies play an important role in informing decision-making in the healthcare sector.
To develop an understanding of what is spent where, many countries in the Western Pacific Region are implementing National Health Accounts (NHAs) and undertaking expenditure reviews and cost studies.
For instance, many countries are struggling to contain the rising tide of Type 2 diabetes. With severely limited resource in many Pacific island countries, it is an imperative that those resources that are available, are used as efficiently and effectively as possible.
An expenditure review was commissioned as a first step in explore what is, and what could be, provided for what cost. Pharmaceutical expenditure was included in the study as access to appropriate pharmaceutical treatment regimes is essential to the management of diabetes and the prevention and management of complications. Relevant expenditure data, in some instances, was obtained from National Health Accounts (NHAs)
Diabetes expenditure review
National Health Accounts
HRG 4 represents expenditure of treatment of uncomplicated diabetes – A (blue) represents costs excluding out-of-pocket payments for diabetes medication and B (red) represent expenditure on diabetes medication including out-of-pocket payments
For the purposes of this study the % share of anti-hypertensives expenditure for persons with a diagnosis of diabetes was assumed to be 30% - 30% of persons attending the diabetes clinic have dual diagnoses of diabetes & hypertension
N B based on wholesale drug cost
Source National Health Accounts Samoa 1998/99 Viet Nam 2000
Discussion: expenditure and cost data presented here can be used to inform decision-making
Expenditure/cost data can inform priority setting using Program Budgeting and Marginal Analysis (PBMA)
The six basic steps of PBMA are: