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  1. Michigan Student Chapter Pharmacoeconomics and Outcomes Research: Some Comments Dean Smith

  2. The International Society for Pharmacoeconomics and Outcomes Research is an international organization promoting the science of pharmacoeconomics and health outcomes research. The International Society is organized to act as a scientific leader relevant to research in pharmacoeconomics, health outcomes assessment, and related issues of public policy. The International Society represents health care researchers and practitioners including pharmacists, physicians, economists, and other health care professionals involved in pharmacoeconomic analysis and health outcomes assessment. The mission of the International Society for Pharmacoeconomics and Outcomes Research is to translate pharmacoeconomics and outcomes research into practice to ensure that society allocates scarce health care resources wisely, fairly, and efficiently.

  3. Further Reading …

  4. Designed specifically to meet the clinical informational needs of managed care's Pharmacy and Therapeutics Committee Members, The American Journal of Managed Care identifies the challenges and shortcomings of and opportunities for the current healthcare system by disseminating original research that examines the impact of clinical, management, and policy interventions and programs on healthcare and economic outcomes. Editors: Michael E. Chernew, Ph.D. A. Mark Fendrick, MD

  5. Disclosure • Professor, Health Management & Policy

  6. Disclosure • Co-Director, UM-Pfizer Pharmacoeconomics & Outcomes Research Fellowship Program

  7. Disclosure • Member, Board of Directors

  8. Disclosure • Consultant, various projects

  9. Conflict of Interest • "No doubt there are other important things in life besides conflict, but there are not many other things so inevitably interesting." -Robert Lynd, The Blue Lion

  10. Outline • Pharmacoeconomics & Outcomes Research • The FDA View • A Study Example

  11. Prescription Drug Expenditures • Is this is a good thing?

  12. Perspectives Patient -Clinical Cure -Quality of life -Out-of-pocket Cost -Satisfaction with treatment process 3rd-Party Payer -Clinical Cure -Cost -Customer perception of value P E R S P E C T I V E Employer / Society -Clinical Cure -Cost -Productivity Hospital / Physician -Clinical Cure -Profit from treatment

  13. J&J Pulls Guide on Web SiteWall Street Journal, April 12, 2002 • In an embarrassing retraction, Johnson & Johnson has withdrawn a how-to-guide from a company web site that helped doctors calculate how much money they might make by administering an expensive arthritis drug in their offices. • World-wide sales of Remicade climbed 95% to 721 million last year. • J&J fell 74 cents to $62.70

  14. Definitions • Pharmacoeconomics is the application of economic analysis to the use of pharmaceutical products, services and programs, which frequently focuses on the costs (inputs) and consequences (outcomes) of that use. • Outcomes research refers to broader consideration of the measurement of the efficacy or effectiveness of treatment.

  15. Outcomes Research The assessment of technology (drugs, devices, etc) • Economic • Cost Analysis • Cost-of-Illness • Cost-Minimization • Cost-Benefit • Cost-Effectiveness • Cost-Utility • Clinical • Efficacy • Safety • Impact of therapy • on “natural history” • of the disease • Humanistic • Health Related • Quality of Life • Patient Satisfaction • Caregiver Impact • Patient Preferences • Functional Status Health Services Research • Policy Research • Access • Structure of Care

  16. Application of Pharmacoeconomics Pharmacoeconomic Studies Communication to Physicians and Patients Research and Development Strategy Pricing and Reimbursement Strategy Phase II Phase III Regulatory Phase Marketing Phase

  17. Why Pharmacoeconomics - Internal Investigational New Drug - IND New Drug Approval - NDA Time (months) 42.6 15.5 24.3 36.0 = 119.4 Direct Cost ($mil.) 65.5 9.3 18.6 20.2 = 113.6 Capitalized Cost 155.6 17.8 30.3 27.1 = 230.8 Basic Research Phase I Phase II Phase III

  18. Why Pharmacoeconomics - External Market Evidence Efficacy Safety Efficiency Quality Registration Price/Reimbursement

  19. Pricing Tool 3 2 1 Drug D Drug C Drug B Drug A Effectiveness 1. Break-even Price 2. Efficiency Price 3. Premium Price Total Cost of Treatment

  20. Patient Outcomes Assessment Sources and Examples Clinician - Reported Physiological Caregiver - Reported Patient - Reported Global impressions Observation & tests of function FEV1 HbA1c Tumor size Dependency Functional status Functional status Symptoms HRQL Treatment Satisfaction Productivity

  21. Value: Ratio Acceptability Conclusion II III Adopt Evaluate Effectiveness / Outcomes # : New Drug C : Control C I IV Evaluate Reject Treatment Cost

  22. Outline • Pharmacoeconomics & Outcomes Research • The FDA View • A Study Example

  23. Regulation and Acceptance of PE AUS NL CDN USA F UK FRG B I SW ESP 2000 Level of Regulation Level of Acceptance

  24. Substantial Evidence- FDA Act 505 • Adequate and well-controlled investigations... • By experts qualified to evaluate therapy effectiveness... • Can be concluded that the drug has the effect it purports... • Under the conditions of use, prescribed or recommended in the label...

  25. Labeling Claims • Labeling (approved claims) • Indications must be in the label • Other information of “clinical significance” • Relevance for prescribing decision • FDA decides (approves)

  26. Advertising Claims • Advertising (permitted claims) • Meet advertising substantiation and disclosure requirements • Must be consistent with and not contrary to Label • Company decides, FDA reviews

  27. FDA Recommendations: Development of Evidence • Consult the experts • Start with the desired claims • Integrate with the clinical program • Develop with patient input • Validate with clinical trial experience • Get FDA buy-in early

  28. Recent FDA Warning Letters • Neurontin (seizures)- 6/29/01 • Misleadingly claims improvement in QOL parameters based on the NEON study. The NEON study is not considered substantial evidence for claims of QOL improvements because its not a controlled study. • Fosamax (osteoporosis)-6/20/01 • Website link titled “ Preserving your independent Lifestyle”- overstates the potential benefit, no substantiation

  29. Prescription for Profit New York Times Magazine, 3/11/01 • “Claritin is a drug of our times: designed to relieve symptoms and improve quality of life, hardly lifesaving or even curative, expensive as hell.” • ~50% effective (46% v. 35% placebo) • $103/month

  30. Cefditoren (Spectracef)Medical Letter, January 21, 20021 • “ ... it offers no clinical advantage over cefdinir, but it costs less.” • Cefdirir $82.42* • Cefditoren $65.50* * Drug Topics Red Book, 10 Day treatment

  31. Outline • Pharmacoeconomics & Outcomes Research • The FDA View • A Study Example

  32. oral third-generation, semisynthetic, extended spectrum cephalosporin antibiotic

  33. The Trial / Goal • To obtain FDA approval of cefprozil (Omnicef®) for uniform 5-day therapy (from prior labeling of 7 to 10-day therapy ~ as is common for many antibiotics)

  34. Patient Populationsfrom Randomized to Cured TOC 63.9% v. 65.7% P = 0.35

  35. Study Drug Prices • Dose size varies cefdinir (7 mg/kg) v cefprozil (15 mg/kg) as do drug prices: Pricing (125/5 ml bottles) Drug ml AWP AWP/ml Cefdinir 50 ml $27.20 $0.544 Cefprozil 100 ml $29.72 $0.297 Source: Red Book

  36. Study Drug Costs • Mean doses were 5.03 and 10.59 - with dosing of 7 mg/kg vs 15 mg/kg. Median days on study drug were 5, 10. Cefdinir (5.03 * 2 * 5 = 50.3) $27.87 Cefprozil (10.59 * 2 * 10 = 211.8) $62.90 * $82.42 comes from 300 mg tablets.

  37. Non-Study Medications 68.0% 67.1%

  38. Non-Study Medications P = 0.69

  39. Non-Study Visits P = 0.14

  40. Total Costs P < 0.01

  41. Conclusions • Antibiotic Costs • For some clinics, selection of antibiotics may be determined by “value” • With equivalent clinical outcomes, selection may be determined by cost. • Costs should consider total cost of treatment, not just drug price.

  42. Conclusions • "Not everything that can be counted counts, and not everything that counts can be counted." - Albert Einstein (1879-1955)

  43. Questions ?