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“Rational Pharmacology” and
Health Economics
By
Alan Maynard
Outline
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What is “rational pharmacology”?
What is health economics?
Is it time for marriage between these
two disciplines?! Developing the “fourth
hurdle”
Conclusions
Introductory comments
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“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!
What is “rational
pharmacology” 1?
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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
Rational Pharmacology 2
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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?
Rational pharmacology 3
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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?
Health economics 1
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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.
Health economics 2
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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!)
Health economics 3
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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
Health economics 4
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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.
Health economics 5
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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
Health economics 6:outline
criteria for good study
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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.
Health economics 7
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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
Conclusions 1
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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
Conclusions 2
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“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.