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PHARMACOECONOMICS - Coggle Diagram

- - - - Maximum level of output from a given level of inputs
      - Minimum level of resources used to obtain a level of outputs
    - - technical efficiency
        
        the way we produce goods and services
        
        getting the most out of the resources you have when delivering healthcare programs
        
        how to improve
        
        reduce inputs' cost but maintaining the level of quantity and quality
      - allocative efficiency
        
        how you allocated goods and services to address diseases
        
        making sure we're spending money on healthcare services or pharmaceutical services and treatmetns that provide most value and benefit to the society as whole
  - - - costs
        
        intangible
        
        indirect
        
        direct
      - outcomes
        
        clinical
        
        economic
        
        humanistic
      - cost is justified by its outcome
  - - - determines subjects merit or worth and significance using criteria governed by set of standards
    - - process of breaking a complex topic into smaller parts to gain better understanding
  - - - determines the analysis and the data required (healthcare, societal perspective, patient perspective)
    - - both efficacy and effectiveness must be included and they must be compared and the outcome must be shared
    - - check out the efficacy rates, incidence of adverse drug reactions, hospital records and literature
    - - if there's a discount cost and outcome
      - the values selected must be consistent across the alternatives (it must be representative of the research setting), which should be stated clearly in the documentation
    - - determines the impact of assumptions on the study test and results
      - tests for the robustness of the data
    - - you have to describe the assumptions, the methods, the data sources, then state the limitations
      - state the conclusions and recommendations
  - - - branching structure wherein various node represents different kinds of events and the node branches represent the outcomes or alternatives associted with tthe event
      - allows a systemic approch to decision making under conditions of uncertainty
      - identifies available options when faced with a decision and is able to predict the outcomes of each option
        
        selcts the decision that will yield the best payoff
      - results into definite values which can make the decision more simple
      - elements
        
        decision node
        
        a point where a choice of alternatives can be made
        
        events branch
        
        states the alternative paths and events that may occur
        
        chance node
        
        a point where potential events can occur`
        
        accompanied by probability
        
        terminal node
        
        a point where the end results (payoffs) of a particular pathway are calculated
        
        in pharmacoeconomics, the end is cost of treatment
      - incremental cost effectiveness and not the average cost effectiveness because there is always an alternative to the new drug or whatever therapy is in question
    - - state transition model used in the study of probabilities
        
        in healthcare, it consists of different states under the disease progression
      - appropriate for repetitive or recursive events such as infections
      - used to model more complex diseases that occur over a number of cycles or intervals
        
        consists of helath state transitional probabilites and cycle lenth
      - components
        
        each arrow represents the probability of moving from one state to another known as transitional probability
        
        recursive model: allows movement back and forth
        
        transitional probability: an input, output matrix governing how and when the patients enter and exit the various health state
        
        determines the time spent by each patient in each ehalth state
        
        future statees depend only on the present state and are independent of past states
        
        no memory of earlier cycles
      - consist of 3 health states
        
        transient state
        
        has a probability of going anywhere
        
        temporary states
        
        absorbing states
        
        state is terminal: no chance for it to transition to another state
      - all state transitions are probabilistic
      - addresses whether the event can recur as well as when that event will occur
    - - most appropriate model for infectious and epidemiologic diseases
      - also known as your transmission dynamic models
      - named according to the core health and disease states (SIR, SIS, etc)
        
        involves the relationship between susceptible, exposed, infected and recovered
      - models
        
        SIS
        
        assume that no natural immunity occurs so individuals who recoverd from infectiouns are susceptible to further infections
        
        no recovery
        
        SIR
        
        assumes that the host can only be infected once in an individuals lifetime or the time horizin model
        
        appropriate for measle
        
        one wat ticket, you can be suscpetible to the disease, then you get infected then recovered
        
        SIRS
        
        host is protected from reinfection for some time after recovering but the natural immunity wanes over time
        
        appropriate for influenza
        
        SEIR
        
        includes the latent period during an individual is infected but not transmit the infection
        
        introduces a delay that reduces the speed at which an epidemic spreads
        
        represent a phase when the host is infectious but without symptoms
        
        important for individuals to change their contact pattern after the onset of symptoms
        
        exposure can be incorporated to other models (SEIS, SEIRS)
  - - - resources are scarce and choices must be made
      - healthcare is not usually provided under 'prdinary' market conditions, because of well recognized 'failures'
      - many countries adopt risk pooling mechanisms, so costs are share and there is an emphasis on accessing care based on"need" rather than "ability to pay" (i.e., social insurance, taxation)
      - opportunity cost of health decision making
        
        if the DOH spends more on one thing, it must do less of something else
        
        efficient allocation of scarce resources among competing wants is imperative
  - - - example: set up a clinical pharmacy program or service (bar coding) in the hospital
        
        conduct of a cost-benefit analysis
        
        no clinical pharmacy programs
        
        with clinical pharmacy
        
        measuring costs and outcomes
        
        costs
        
        personnel time and benefits
        
        training of personnel
        
        set-up costs
        
        drug informatoin sources
        
        disease management software
        
        drug costs
        
        outcomes
        
        reduced emergency and outpatient visits
        
        redced lenght of stay and readmission
        
        drug cost reducntion
        
        prevention of drug therapy problems (e.g., ADEs) and errors
        
        other health care costs
    - - provide information to help identify areas for future study or support of clinical programs to encourage rational prescribing and use
  - - - costs: expressed in monetary units
      - outcomes: assumed to be similar for all treatmetn options
      - result: determines the least costly alternative when the outcomes for all treatmetn options are virtually identical
    - - costs: expressed in monetary units
      - outcomes: expressed in monetary units
        
        challenge is how you convert the clinical outcomes into monetary units
        
        they out a value on the outcome (e.g., adverse event: how much will you save avoiding the adverse event)
      - result: cost-benefit ratio or incremental net benefit
        
        performed at national level
      - note: comparisons can be done among programs across differetn sectors (ie. allows for comparison of programs between the health care secotr and other sectors with differnt outcomes)
        
        the outcomes are expressed in monetary unit
    - - most utilized
      - costs: expressed in monetary units
      - outcomes: expressed in non-monetary units - in natural health outcomes or clinical values
      - result: cost per unit of consequence
      - note: comparing interventions is done within the healht sector provided that the intervnetions have similar outcome, and are usuallt conducted within the same program
        
        while the outcome is similar, the amount of outcome is not similar
    - - costs: expressed in monetary units
      - specialized form cost effectiveness analysis
        
        performed at an agency level
      - outcomes: expressed in units of utility or preference
      - result: cost per unit of QALY gained or DALY averted
        
        cost per standardized morbidity or mortality measures
        
        QALY
        
        single measure of quality of life and survival
        
        DALY
        
        years life lost due to premature deaht plus years of life lost due to time spent disabled by disease
        
        1 DALY = 1 healthy life lost
      - note: allows the comparison of health gains and costs across different diseases and interventions, and therefore, allows decision makers to make efficient allocation of resources while maximizing health gains
    - - not considered as full type of evaluation
      - disaggregated costs and a range of outcomes are presented to allow readers to form their own opinion on relevance and relative importance to their decsion making context
        
        applied to interventions with multiple outcomes and public health interventions with an array of health and non-health benefits
      - more easily understood by decision makers because the info is only the cost and the differnt consequences and outcoms
      - you are able to present a broader range of non-health cost and benefits
      - there's no specific guidance in cost effectiveness threshold
      - limited generalizability and decsions based on thiis are not transparent and can run the risk of cherry picking positive results
- - - - can the drug work?
        
        measures efficacy: extent to which an intervention does more good than harm under ideal circumstances
        Performed under a controlled environment to ensure that the effect received by the variable is due to the intervention given
        Involves randomized controlled trials
      - does the drug work in practice?
        
        Research measuring the drug’s effectiveness: checks effect of the intervention under usual circumstances
        Involves post marketing surveillance
        
        used in real world and not controlled by the developer
      - How does the drug affect the health of the population?
        
        Research concerned with the effectiveness of public health interventions and services
        
        the attention may be focused on the affected individual (e.g., QALY)
        
        measures cost-effectiveness
      - Is the drug worth it?
      - What are the financial consequences to the health care system?
        
        Measures efficiency
        
        Measures the effect of the intervention in relation to the resources it consumes
        
        Can be answered by economic evaluations
  - - - the decisions we make on how we use these scarce resources
    - - focuses on where do we use these resources
  - - - focuses on the outcomes after you implement the HTs
  - - - impact: outcomes
        
        benefit
        
        effectiveness
        
        utility
  - - - provision of drug therapy
        
        how do we decide which and for whom the drug therapy is; we can use outcome research, health economics, pharmacoeconomics to help to decide
        
        responsible also for the choice, what is the best drug therapy
- - - - the total amount of a product (good or service) that producers (sellers) are willing and able to sell at a specified price
      - law of supply
        
        the higher the price, the higher the quantity supplied
        
        as the price goes up, the supplier will attempt to maximize the profits by increasing the number of quantity supplied
    - - the toral amount of good or service that consumers are willing and able to purchase at a given price
      - law of demand
        
        the higher the price, the lower the quantity demanded
        
        as the price goes, so does the opportunity cost
        
        the amount of goods purchase at a higher price is less since the price of a good goes up so does the opportunity cost of buying that good
        
        opportunity cost
        
        The amount of a good that buyers purchase at a higher price is less since as the price of a good goes up, so does the opportunity cost of buying that good.
        
        efined as the value of what you lose when choosing between two or more options; or the potential forgone profit from a missed opportunity.
  - - - elastic goods
        
        change in price -> change in demand also
        
        elasticity <-1
      - inelastic goods
        
        change in price -> no change in demand
        
        ex. gas and food
        
        elasticity bet -1 and 0
      - unit elastic
        
        elasticiy = -1
    - - Demand for healthcare (as an expenditure) and price: -0.17 -> inelastic
        
        1% increase in price of healthcare -> 0.17% reduction in healthcare expenditure
        
        price induced changes in demand: attributed to accessing to healthcare rather than no of visits once care has been accessed
        
        low demand elasticity: lower less bills of cost sharing
      - Demand for healthcare (as an expenditure) and income: 0.00 – 0.20 -> income inelastic
        
        The positive sign of the elasticity measure indicates that as income increases, the demand for health care services also increases.
        The magnitude of the elasticity, however, suggests that the demand response is relatively small.
      - supplies is inelastic for healthcare
        
        even there is a change in prices, still the quantity supplied does not change
      - demand for healthcare
        
        the quanity of supply is influenced by cost to produce, profession income and personal taste
        
        two factors inelasticity of supply
        
        professionalism
        
        monopoly
- - - - We cannot predict when we are going to be ill.
      - In many circumstances, we cannot postpone buying healthcare because it could lead to a serious threat to our lives.
      - The cost of making a wrong decision may mean death.
    - - competion exist because
        
        Exists when there are multiple buyers and sellers, products are same/identical, and no single entity controls the price of goods or services
        
        There are no barriers in the entry into or exit from the market
        
        Consumers will benefit through lower prices, more product choices, and better-quality goods and services
        
        concept of perfect competition
        
        many sellers and buyers so much that each one individually is too small to affect price levels
        
        the products are same and identical
        
        sellers can exit and enter the market freely w/o restriction from regulations
        
        perfect knowledge about the prices and technologies so that the consumers can access the information in no cost
        
        no externalities
        
        all of the sellers are price takers
      - the structure of healthcare is not competitive
        
        there are barriers in entry and exit (licensing, cost to build hospitals)
        
        there are barriers that might protect inefficient producers to prevent them from being weeded out so that efficient resource allocation does not occur automatically
        
        monopoly of hospitals, price setting of companies
        
        the product and services are not identical
        
        there is a price discrimination (consumers have to pay different prices for the same service)
        
        there are firms that have market power and are able to move and set prices
        
        healthcare does not have to be efficient in production because they cannot be driven out by more efficient producers
        
        patent of pharma company -> price setters and monopolist
        
        does not punish inefficiency
      - issues
        
        healthcare products are usually not identical (i.e., private versus public sector of providing healthcare); it is considered a unique product with its own degree of monopoly power
    - - public goods
        
        product of which anyone can consume as much as desired without reducing the amount available for other
        
        health is a human right, hence, it may not be possible to exclude an individual from enjoying it
      - issue
        
        free rider
        
        individuals may deliberately or incidentally choose to receive the benefits of a public good without contributing to the payment of costs of producing those benefits
    - - refer to spill over effects of consumption or production
        
        positve
        
        occur when the actions of one individual result in a spill over that improves the well being of another individual
        
        not often included in decision making because they are not visible to producer and consumer
        
        confers an under production of goods
        
        negative
        
        impose a cost on another individual (smoking -> second hand smoke effects)
        
        confers over production of goods (smoking cessation or nicotine replacement therapies)
      - issues
        
        May not be able to capture all long-term outcomes (benefits or risks) for health care products and services → health care decisions may not be optimal → inefficiency
        
        need alamin kung sino nagbenefit aside from the consumers
    - - Exists if one party has information that the other lacks (i.e., the physician knows more about the patient’s condition and its management)
      - issues
        
        inherent conflict of interest with doctors (as supplier and determinant of demand for health care) → “supplier-induced demand”, especially if doctor is profit-driven/motivated → inefficiently high level of utilization
        
        private sector solutions are more effective than public one
  - - - market under ideal conditions, the production of goods and services is efficient- -> doen it the lowest possible per unit cost
        
        consumption is also efficient -> max utiltiy given limited income
    - - is not realized in reality
  - - - unexepected and irregular (e.g., COVID pandemic)
      - the demand is hinge on the fact the consumers are in the diseased state
        
        illness by itself is a costly risk
    - - trust/perverse incentives?
        
        diff physician will charge you differently
    - - will I recover?
        
        information assymetries
    - - barriers to entry
        
        licenses, training
    - - who will regulate?
        
        physician: no regulation in fees
        
        drugs: FDA regulates but innovator drug can be manipulated
- - - - choices need to be made
        
        the choices in health are complex, which are not like other markets
        
        health economists help inform these choices
      - priorities need to be set
        
        priority setting
    - - focuses on how do we choose drugs to be included in the formulary for the government to be reimbursed