Pharmacoeconomics Principles, Methods and

Vol-2/Issue-5/Sept-Oct 2013

PhTechMed

ISSN: 2278-1099

Pharmacoeconomics: Principles, Methods and Economic Evaluation of Drug Therapies Sumit Kumar, Ashish Baldi* *Department of Quality Assurance, I.S.F. College of Pharmacy, Moga, (Punjab), India

Abstract Pharmacoeconomics identifies, measures, and compares the costs and consequences of drug therapy to healthcare systems and society. Due to the high pricing of drug, it is very essential in pharmaceutical industry, government, and in the private sector for comparing various cost consequences. This branch of health care economics offers important guidance for the management of limited health care resources and medical practice. As a consequence of limited financial resources, health economics, and particularly pharmacoeconomic analyses, are becoming a frequently used criterion for decision making in modern health care policy. The purpose of this article is to provide an introduction of pharmacoeconomics, its various methods of evaluations such as cost minimization analysis, cost benefit analysis, cost utility analysis, cost effectiveness analysis and guidelines to deliver quality care cost effectively and also discuss challenges, limitations and applications of pharmacoeconomics. Key Words: Cost minimization analysis, Cost benefit analysis, Cost utility analysis, Cost effectiveness analysis, Health care economics, Pharmacoeconomics Introduction Pharmacoeconomics can be defined as the branch of economics that uses cost-benefit, cost-effectiveness, costminimization, cost-of-illness and cost-utility analyses to compare pharmaceutical products and treatment strategies (Brinsmead 2003). Pharmacoeconomics and health outcomes research are playing an increasingly important role in informing clinical development and market access decisions of new innovative medicines. It mainly works on the health economics which particularly focuses upon the costs and benefits of drug therapy. It is the part of health economics that focuses on the economic evaluation of pharmaceuticals. Health outcomes research, and patient-reported outcomes (PRO) in particular, aim at understanding patient value in terms of impact of disease and its treatment on physical functioning and psychosocial wellbeing, known also as “health-related quality of life” (HRQL). Components of pharmacoeconomics are given as Fig.1. It is the description and analysis of the costs of drug therapy to healthcare systems and society. The importance of pharmacoeconomic information to healthcare decision makers will depend upon the viewpoint from which the analysis is conducted. Pharmacoeconomic research in the managed care system is growing. It is currently being used to make formulary decisions (complementing clinical data), design disease management programs and measuring the costeffectiveness of interventions and programs in managed care (Lopert 2003). The demand for and the cost of health care are increasing in all countries as the improvement in and sophistication of health technologies. The increase in health care spending is mainly because of increased life expectance, increased technology, increased standard of living and increased demand in health care quality and services. Medicines form a small but significant proportion of total health care cost. The writing of a prescription is the most common therapeutic intervention in medicine. Cost of medicines are growing constantly as new medicines are marketed and are under patent law, preference of drug therapy over invasive therapy, discovering various off label uses of existing drugs and the irrational drug prescription. Pharmaceutical companies have to spend a lot of money and Address for Correspondence Email ID: [email protected] Tel No.: +91-896842384 Received: 10/08/2013 Accepted: 18/10/2013 www.pharmtechmedica.com

time to market any new chemical entity as a drug to fulfill various research requirements (Newdy 2003). Since 1961, pharmaceuticals are fallen under price regulation in India. A total of 343 drugs accounting for, 85% of the drug market was under price control in 1979. With successive polices, the number diminished and now a mere 15 - 20% of the drug market is under price control. Therefore drug prices are quickly spinning out of reach of the common man. Pharmacoeconomics adopts and applies the principles and methodology of health economics to the field of pharmaceutical policy (Basskin 1998). Pharmacoeconomic evaluation therefore makes use of the broad range of techniques used in health economics evaluation to the specific context of medicines management.

Figure 1: Components of pharmacoeconomics Pharmacoeconomics: Needs and Challenges Multi-factorial Variability of Drug Pricing Enumerable factors affect the prices of drug; some of them are as follows: i. The sector in which medicines are purchased: The price is often higher in the private sector due to distilentor’s costs and profiteering. ii. The types of procurement agent: e.g. different prices may be paid for the same product by a public sector purchaser, such as Ministry of Health (Garber 2004). iii. The distribution route. A patient who purchases a medicine at a hospital pharmacy may have to pay more if the hospital pharmacy purchased the product from a local wholesaler than if it has been purchased by tender and supplied through public health sector distribution system10. Many times hospital pharmacy may have limited stock of the generic drugs which one is cheaper than the branded drugs prescribed to the patient on routine basis and patient has to purchase the branded drugs in the emergency condition.

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Vol-2/Issue-5/Sept-Oct 2013 iv. The patient status: The price of patented medicine is often higher than that of their generic equivalent at least while the patient is in force (Moayyedi et al 2004). Many other factors influence the total cost of drugs is as follows: • Prices of patented, non-patented and generic drugs; • Retail and wholesale mark-ups, • Pharmacists' professional fees, • Changes in the composition of total population, e.g. proportion of older persons, • Changes in prescribing habits of physicians, • Changes in the utilization of drugs, i.e. number of drugs used per patient, • Trends towards using newer drug therapy instead of other treatments, Need of Pharmacoeconomics Pharmacoeconomics identifies measures and compares the cost and consequences of pharmaceutical products and services and describe the economic relationship involving drug research, drug production distribution, storage, pricing and used by the people (Rawlins et al 2004). It runs through the thread of our socioeconomic system, which regulates and influences all the sectors involved in pharmaceuticals. The demand for and the cost of health care are increasing in all countries as the improvement of health technologies. All over the world, patients are affected by high price of medicines. In a developing country like India, 85% of total health expenditure is financed by house-hold out of pocket expenditure. Many poor people frequently face a choice between buying medicines or buying food or other necessities due to limited resources and high pricing of drug (Russell 1996). So medicine prices do matter. Pharmacoeconomics has become more important over the past 20 years, due to an increases emphasis on efficient drug therapies for disease, which increase health cost etc. Pharmacoeconomics is a subdivision of health economics and results from that discipline coming of age through consolidation to diversification (Siegel 1996). Health economics, as a branch of economics is itself relatively young. Basically the pharmacoeconomics is needful in following manner: • In Industry- Deciding among specific research and development alternatives. • In Government- Determining program benefits and prices paid. • In Private Sector- Designing insurance benefit coverage. Pharmacoeconomic Challenges This is a challenging time for the pharmaceutical industry, with blockbuster drugs going off-patent, generics competition and a pressing need for innovative medicines, associated with rising drug development costs (Vermeulen et al 2000). The role for pharmacoeconomics could not be timelier. Pharmacoeconomic evaluations will be able to assist in the development of performance based pricing and reimbursement agreements. The main challenges for pharmacoeconomics continue to be: 1. Establishing guidelines or standards of practice. 2. Creating a cadre of trained producers and consumers of pharmacoeconomic work. 3. Continuing education on the relevant features of this discipline for practitioners, government officials, private sector executives. 4. Stable funding to support applied pharmacoeconomic research. Pharmacoeconomic Evaluations www.pharmtechmedica.com

Baldi et al., Components Pharmacoeconomic analysis will play a central role in future assessments of new technologies and the guidance of pediatric care (Weinstein 1996). The components of pharmacoeconomic analysis are given in Figure 2.

Figure 2: Components of pharmacoeconomics analysis It is implicitly understood that reducing costs and rationing resources is not compatible with the achievement of optimal health outcomes. Decisions on resource allocation must be based on comparisons of cost and benefits as much as possible (Sackett et al 2000). In an era when resources for health and health care are scarce, the costs of clinical decisions must be recognized and accommodated. Pharmacoeconomic analysis is a powerful tool for such adaptation. In this, the movement toward outcomes research has been fueled by a number of factors, including increasing prevalence of chronic disease among children, the desire of patients (and their parents) to participate in decision making, the limited generalizability or external validity of clinical trial data (particularly for a pediatric population), evidence of wide variation in clinical practice norms that cannot be accounted for on the basis of evidence, growing interest in cost containment and acceptance of the need for accountability on the part of clinical decision makers (Abarca 2005) and the perceived threat of cost containment to the overall quality of patient care. The target sector and assessment methodology adopted for pharmacoeconomic evaluation is given as Figure 3 and Figure 4.

Figure 3: Target health care sector for pharmacoeconomic evaluation Aims and Objectives of Pharmacoeconomic Evaluation Implementation of pharmacoeconomic evaluation will help to reduce monetary burden on the consumers (by insuring global pricing strategy) for the effective management of health care system as the principle of pharmacoeconomic evaluation is to make more efficient use of limited resources for maximization of health care benefit at lower cost (Sculpher et al 2005). In this way, it can be applied in practice to take decisions about drug therapies. 363

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Figure 4: Nature of pharmacoeconomic assessments The Fundamentals Types of Cost Costs involved in pharmacoeconomic evaluation can be mainly divided into financial cost (mandatory cost) and economic cost (resource for which no mandatory payment is made) opportunity cost is the benefit foregone when selecting one therapy alternative over the next best alternative (Doubilet et al 1986). Several costs can be measured when weighing up the cost of any invention. The first step in any cost analysis is identification of the various costs. These can be direct, indirect and intangible. Direct i.e. costs from the perspective of the healthcare funder: including staff costs, capital costs, drug acquisition costs. It includes physicians’ fees, cost of administering the medication, costs of treating an adverse drug reaction, etc. Indirect i.e. costs from the perspective of society as a whole: for example, these might include loss of earnings, loss of productivity, loss of leisure time, due to the illness, and cost of travel to hospital etc (Drummond et al 1997). This would include not just the patient themselves but also their family and society as a whole. Intangible i.e. the pain, worry or other distress; which a patient or their family might suffer. These may be impossible to measure in monetary terms, but are sometimes captured in measures of quality of life. The cost can be measured in following ways: • Cost / unit • Cost / treatment • Cost / person • Cost / person / year • Cost / case prevented • Cost / life saved • Cost / DALY (disability-adjusted life year) Outcomes The second fundamental component of a pharmacoeconomic study is outcomes or benefits. A cost-benefit analysis compares the costs and outcomes of alternative therapies and the outcome is then expressed in monetary terms (Brien et al 1997). Cost-benefit analysis allows researchers to make comparisons across a wide variety of alternatives. It compares the costs involved in implementing a programme with the value of the outcome. Since the endpoints are measured in monetary terms, different endpoints can be studied, such as a surgical procedure compared with a pharmaceutical intervention The expected benefits from an intervention might be measured in: A. “Natural” units e.g. years of life saved, strokes prevented, peptic ulcers healed etc. www.pharmtechmedica.com

Baldi et al., B. “Utility” units - Utility is an economist’s word for satisfaction, or sense of well being, and is an attempt to evaluate the quality of a state of health, and not just its quantity (Sanchez 1999). Utility estimates can be obtained through direct measurement (using techniques such as time trade off or standard gambles, or by imputing them from the literature or expert opinion. They are often informed by measures of quality of life in different disease states. The Approach A pharmacoeconomic evaluation may be conducted as an economic assessment incorporated into clinical trials (Sanchez 1999). It is difficult to justify a pharmacoeconomic trial as a separate, independent trial primarily due to the increase in costs (Weinstein et al 2003). The evaluation may be done at any time during phase I or II of the clinical trials. The reasons for conducting a pharmacoeconomic trial include: 1. Pricing of a new drug; 2. Repricing of an old drug; 3. Convincing a drug formulatory; 4. Generation of data for promotional material; and 5. Mandatory legislative requirement for drug licensing and medical reimbursement (in some countries). An ideal approach of economic evaluation in health café sector is given in Figure 5.

Figure 5: An ideal approach of pharmacoeconomic evaluation Methods of Pharmacoeconomic Evaluation Pharmacoeconomic evaluations include any study designed to assess the costs (resources consumed) and consequences (clinical, humanistic) of alternative therapies The evaluation mechanisms delineated were often helpful in demonstrating the cost impact of innovative treatments, therefore granting them greater acceptance by healthcare providers, administrators, and the public. There are basically four types of pharmacoeconomic studies. • Cost-minimization analysis (CMA) • Cost-effectiveness analysis (CEA) • Cost-utility analysis (CUA) • Cost-benefit analysis (CBA) Cost-Minimization Analysis (CMA) Cost-minimization is a tool used in pharmacoeconomics and is applied when comparing multiple drugs of equal efficacy and equal tolerability. This is done when the outcomes are the same for the two interventions. In this, only the input, i.e. the cost, is considered. The option that has the least cost is selected, e.g. if a hospital decides to introduce compulsory prescribing of generic names of drugs instead of their brand names, then the pharmacoeconomic evaluation of this would 364

Vol-2/Issue-5/Sept-Oct 2013 be done by CMA (Rawlins 1999). The objective of this method is to select the least costly among multiple equivalent interventions. It cannot be used to evaluate programmes or therapies that lead to different outcomes. CMA is a relatively straightforward and simple method for comparing competing programs or treatment alternatives as long as the therapeutic equivalence of the alternatives being compared has been established. If no evidence exists to support this, then a more comprehensive method such as costeffectiveness analysis should be employed. However, CMA shows only a “cost savings” of one program or treatment over another. Employing CMA is appropriate when comparing two or more therapeutically equivalent agents or alternate dosing regimens of the same agent (Tan et al 2006). Cost Effective Analysis (CEA) CEA is a technique designed to assist a decision-maker in identifying a preferred choice among possible alternatives. Generally, cost-effectiveness is defined as a series of analytical and mathematical procedure that aid in the selection of a course of action from various alternative approaches. CEA evaluates multiple drug treatments for the same condition. The cost of the drug treatments are weighed against the effectiveness of the drug (Thwaits et al 1998). The costs of drug treatments include acquisition costs, physician involvement, and nursing costs for administration of the drug. The effectiveness of drug treatment is measured in tangible measures such as length of hospital stay, duration of treatment required, and mortality rate. The results of a CEA are expressed as cost/outcome for both therapies. Pharmacoeconomic analysis should be incorporated in the clinical trial itself. However, for the majority of drugs, CEA is done on the basis of pre-existing data available in the medical literature. CEA is the most commonly applied form of economic analysis in the literature, and especially in drug therapy (Lee et al 1991). It does not allow comparisons to be made between two totally different areas of medicine with different outcomes. The key measure of these evaluations is the incremental cost effectiveness ratio (ICER), which can be determined as follows: Cost of drug A Cost of drug B Incremental cost effectiveness ratio= Benefits of drug A Benefits of drug B Cost Utility Analysis (CUA) CUA is a type of evaluation in which drugs/interventions with different outcomes can be compared. CUA is the most appropriate method to use when comparing programs and treatment alternatives that are life extending with serious side effects (e.g., cancer chemotherapy), those which produce reductions in morbidity rather than mortality (e.g., medical treatment of arthritis), and when HRQOL is the most important health outcome being examined (Bootman 1995). CUA is employed less frequently than other economic evaluation methods because of a lack of agreement on measuring utilities, difficulty comparing QALYs (quality adjusted life years) across patients and populations, and difficulty quantifying patient preferences. Pharmacoeconomists sometimes want to include a measure of patient preference or quality of life when comparing competing treatment alternatives. CUA is a method for comparing treatment alternatives that integrates patient preferences and HRQOL. CUA can compare cost, quality, and the quantity of patient-years. Cost is measured in dollars, and therapeutic outcome is measured in patient-weighted utilities rather than in physical units (Hepler et al 1990).Often the www.pharmtechmedica.com

Baldi et al., utility measurement used is a quality-adjusted life year (QALY) gained. QALY is a common measure of health status used in CUA, combining morbidity and mortality data. Results of CUA are also expressed in a ratio, a cost-utility ratio (C:U ratio). Most often this ratio is translated as the cost per QALY gained or some other health-state utility measurement. The preferred treatment alternative is that with the lowest cost per QALY (or other health-status utility). QALYs represent the number of full years at full health that are valued equivalently to the number of years as experienced. For example, a full year of health in a disease free patient would equal 1.0 QALY, whereas a year spent with a specific disease might be valued significantly lower, perhaps as 0.5 QALY, depending on the disease (Eisenberg 1989). An example of QALY measurement for two different treatment approaches is given in Figure 6 .

Figure 6: Calculating QALYs - A simple example Cost Benefit Analysis (CBA) CBA is the most comprehensive and the most difficult of all economic evaluation techniques. In this technique, the benefits are also assigned a monetary value so that costs and benefits can be easily compared. Thus, totally different interventions can be compared, making it a useful tool (like CUA) for resource allocation by policy-makers. It is a basic tool that allows for the identification, measurement, and comparison of the benefits and costs of a program or treatment alternative. CBA should be employed when comparing treatment alternatives in which the costs and benefits do not occur simultaneously. CBA also can be used when comparing programs with different objectives because all benefits are converted into dollars and to evaluate a single program or compare multiple programs. The benefits realized from a program or treatment alternative are compared with the costs of providing it. Both the costs and the benefits are measured and converted into equivalent dollars in the year in which they will occur. Future costs and benefits are discounted or reduced to their current value. These costs and benefits are expressed as a ratio (a benefit-to-cost ratio), a net benefit, or a net cost (Bootman et al 2005). The most difficult and challenging part of CBA lies in calculating the benefits in economic terms. Some benefits are easy to convert, others need subjective judgment. CBA may ignore intangible benefits (pain, anxiety, stress) that are difficult to express in monetary terms (Freund et al 1992). Analysis of Results in Pharmacoeconomic Evaluation Health economics, and particularly its branch precision health economics, help us choose between two alternatives, which we compare with regard to their clinical benefit on one hand and their cost on the other. The users of pharmacoeconomic evaluations are not interested in the results themselves but in where and how these results can help them for a better care of their patients (Barner et al 2003). 365

Vol-2/Issue-5/Sept-Oct 2013 Health benefits and costs can be accessed from a different viewpoint called "perspective". There are three common types of perspectives in economic studies: a producer's perspective, a payer's perspective and a social perspective. The perspective of an economic assessment is important. In general, the social perspective is the broadest and most appropriate for making financial decision because it leads to optimal decisions but other perspectives are also valid (Blumenschein et al 1999). Consider the four possible results arising in a CEA given in Fig.7. First, if costs are lower and health benefits higher for one drug relative to another, the former is said to dominate and would be the preferred treatment. Second, the opposite applies, i.e. the new drug is more expensive and less effective, and thus is considered inferior and not recommended. The third and most common case is where the new drug is both more effective and more expensive than the standard; on the basis of ICERs, a judgment must be made regarding whether the additional benefits are worth the extra costs of the new drug and, therefore, whether it is ‘cost-effective’. This might be defined by a previously agreed ICER threshold value (Thar 1992). The fourth case is similar to the third, with the roles of the new therapy and the standard reversed; the question now is whether the extra benefits provided by the standard justify the additional costs of retaining it as the preferred treatment when the option of a new, cheaper but less effective drug exists.

Figure 7: Difference in costs Applications of Pharmacoeconomics I. One of the primary applications of pharmacoeconomics in clinical practice today is to aid clinical and policy decision making. Through the appropriate application of pharmacoeconomics, practitioners and administrators can make better, more informed decisions regarding the products and services they provide (Detsky et al 1990). Complete pharmacotherapy decisions should contain assessments of three basic outcome areas whenever appropriate: economic, clinical, and humanistic outcomes (ECHO). Traditionally, most drug therapy decisions were based solely on the clinical outcomes (e.g., safety and efficacy) associated with a treatment alternative (Kozma et al 1993). II. Pharmacoeconomic data can be a powerful tool to support various clinical decisions, ranging from the level of the patient to the level of an entire healthcare system. Fig. 8 shows various decisions that can be supported using pharmacoeconomics, including effective formulary management, individual patient treatment, medication policy, and resource allocation (Bungay et al 2003). For discussion purposes, the application of pharmacoeconomics to decision making is divided into two basic areas: drug therapy evaluation and clinical pharmacy service evaluation. III. While the proper output of pharmacoeconomics is information needed for making decisions on selection of www.pharmtechmedica.com

Baldi et al., pharmaceuticals and medical devices as viewed from the standpoint of cost-effectiveness, the techniques are applicable in a diversity of domains (Druglis et al 1989). IV. Pharmacoeconomics provides precious input in studies of product portfolios by pharmaceutical firms and manufacturers of medical devices. Because QALYs may be equated to pharmaceutical value per se, the aggregate QALYs of a firm's products may be equated to its corporate value (Drummond at al 1997). V. Healthcare practitioners, regardless of practice setting, can benefit from applying the principles and methods of pharmacoeconomics to their daily practice settings. Applied pharmacoeconomics is defined as putting pharmacoeconomic principles, methods, and theories into practice to quantify the value of pharmacy products and pharmaceutical care services used in real-world environments (Cox 2003).Today’s practitioners increasingly are required to justify the value of the products and services they provide. Applied pharmacoeconomics can provide the means or tools for this valuation. VI. Pharmacoeconomic analysis is important since payers such as third-party payers or government/private health plans utilise them when determining whether to reimburse a claim. These results in decreased adherence, lack of prescription filling, decreased physician visits and increased emergency room care (Sanchez 1994).

Figure 8: Decisions for pharmacoeconomic applications Guidelines for Pharmacoeconomics Evaluations In 1999, the Health Care Insurance Board published the ‘Dutch Guidelines for Pharmacoeconomic Research’. These Guidelines were updated in 2005 and published in the report ‘Guidelines for Pharmacoeconomic Research; Evaluation and Actualisation. The guidelines are intended for designing, conducting and reporting pharmacoeconomic research, but are applicable to economic evaluations in general within the field of health care (Schrand et al 2001). Guideline 1 - The perspective of the evaluation The pharmacoeconomic evaluation should be performed and reported from a societal perspective, in which all costs and benefits are included, irrespective of who actually bears the costs or receives the benefits (Armstrong et al 2003). Guideline 2 - Choice of comparative treatment/ indication The drug for a certain indication should be compared with the standard treatment, or if that does not exist, the usual treatment. This can either be a medicinal or a non-medicinal treatment. The standard treatment is the treatment regarded in daily practice as first-choice, for which effectiveness has been proven. Guideline 3 - Analytical technique If the improvement in quality of life forms an important effect of the drug being assessed, then it is necessary to carry out a 366

Vol-2/Issue-5/Sept-Oct 2013 CUA. If this is not the case, then CEA has to be carried out. If the manufacturer does not expect the drug to have an added therapeutic value, nor that it will be mutually replaceable with (a) different drug(s), then a CMA can be carried out. Guideline 4 - Time horizon The time horizon of a pharmacoeconomic evaluation must be such that it enables valid and reliable statements to be made regarding the effects and costs of the treatments being compared. This includes both intended and unintended effects and costs e.g. side effects (Milne 1994). Guideline 5 - Cost identification, measurement and evaluation Where possible, the Health Care Insurance Board’s ‘Manual for cost research’ should be applied for the identification, measurement and evaluation of costs. The aim of using this manual is to promote the uniformity and the standardization of cost measurement and evaluation in pharmacoeconomic evaluations. Guideline 6 - Assessing quality of life and QALYs If improvement in the quality of life is an important effect of the drug being assessed, then a CUA should be performed. When carrying out a cost-utility analysis, assessments for health states of patients need to be determined in order to calculate the number of 'quality-adjusted life-years’ (QALYs). The assessments of the health states and the survival data need to be reported separately. The combination of these two elements into a QALY should be presented clearly (Barr et al 1996). Guideline 7 – Modeling In order to be able to support decision-making, the model must be transparent: preferably based on 'peer-reviewed' publications and with a user-friendly electronic version. In order to make a model transparent, the model must be as simple as possible, and obviously it must include all the most important processes. Modelling should be supplementary, and in line with pharmacoeconomic analysis of the clinical studies (preferably ones that have already been published). Guideline 8 - Incremental analysis The cost effectiveness of the treatments to be compared is presented by reporting the incremental effects and costs between the treatments. Guideline 9 - Discounting future effects and costs If data on effects and costs are collected over a period longer than one year, then the effects and costs need to be discounted after the first year (Touchette et al 2003). In the primary analysis the costs should be discounted at a constant discount rate of 4%. Future effects should be discounted at a constant discount rate of 1.5%. Guideline 10 - Uncertainty analysis Definitive estimate of the costs, effects and a costeffectiveness ratio, a number of methodological choices have been made and a number of parameters have been estimated. In a sensitivity analysis it is preferred to first formulate an upper and a lower limit for each estimate reflecting the uncertainty margins (Bennett et al 1997). A multivariate sensitivity analysis examines the effect of simultaneous alterations in various variables thereby taking into account the correlation between these variables. When the chance distribution within these values is known, as well as the extreme values of the parameters, then simultaneous ‘random’ draws can be used to determine a new estimate of each parameter. Guideline 11 - Use of expert panel In the pharmacoeconomic evaluation, the manufacturer first needs to demonstrate that the study data are missing. The Health Care Insurance Board needs to have access to this www.pharmtechmedica.com

Baldi et al., information relating to the expert panel in order to determine the composition and independence of the expert panel. Furthermore, this information provides insight into the way in which consensus is reached within the expert panel. Finally, the data used in the pharmacoeconomic evaluation provided by the expert panel should be clearly documented in the reimbursement file (Kim et al 1997). Conclusion In the era of rising medical costs, the science focuses on ‘value for money’. For this, there is an urgent need to develop a science based on study of cost and consequences of drug therapy to healthcare system and society (Younossi et al 1990). Pharmacoeconomics is that science, although still testing its methodologies which provide the mean to qualify the value of pharmacotheraphy through balancing costs and outcomes. By understanding the principal, methods and applications of pharmacoeconomics, healthcare professionals will be prepared to make better, motre informed decisions the ultimately represent ther interest of the patient, the healthcare system, and society. Hence pharmacoeconomics is also relevant socioeconomics as it relates patients, society and economy, to drug therapy. In today’s healthcare settings, various pharmacoeconomic methods can be applied for effective formulary management, individual patient treatment, medication policy determination, and resource allocation. Economic, humanistic, and clinical outcomes should be considered and valued using pharmacoeconomic methods, to inform local decision making whenever possible. The perspective of a pharmacoeconomic evaluation is paramount because the study results will be highly dependent on the perspective selected. When evaluating published pharmacoeconomic studies, factors should to be considered are study objective, study perspective, pharmacoeconomic method, study design, choice of interventions, costs and consequences, discounting, study results, sensitivity analysis and study conclusions (Schecter 1993). Majority of pharmacoeconomic guidelines provide only general and vague recommendation in many areas may be because of no consensus among the developers and challenge of sustenance for relatively young science of pharmacoeconomics. Therefore strict guidelines having uniform global standards should be formulated by an independent body comprising of people from academia, industry and health authorities. Upon implementation it would be helpful towards prescribing a rational drug therapy and pharmacist, the bridge between patients and doctors, will dispense as well as help in purchasing drugs for hospital pharmacies. This would also help in reducing the monetary burden on institutions and public. Acknowledgements: Authors are grateful to Mr. Praveen Garg, ISFCP for provides necessary facilities and support. References 1. Armstrong EP, Grauer D, Lee J, Odom T. (2003): Sensitivity analysis. Pharmacoeconomics and Outcomes, 2nd Ed. Kansas City, MO: American College of Clinical Pharmacy, pp.231–245. 2. Abarca J (2005): Assessing Principles of Pharmacoeconomics. Int. Jour. Pharm. Tech, 23(3):76-89. 3. Akehurst R, Anderson P, Brazier J. (2000): Consensus Conference on Guidelines on Economic Modeling in Health Technology Assessment. Decision analytic modeling in economic evaluation of health technologies: A consensus statement. Pharmacoeconomics, 17: 443–444. 367

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