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Cost-effective Prescribing Dr. Máirín Ryan Cost-effective Prescribing Dr. Máirín Ryan

Pharmacoeconomics: that branch of health economics that focuses upon the costs and benefits of Pharmacoeconomics: that branch of health economics that focuses upon the costs and benefits of drug therapy § limited resources § maximum health impact from a given budget § cost-effective prescribing

Opportunity Cost PPARS Herceptin for breast cancer Opportunity Cost PPARS Herceptin for breast cancer

National Centre for Pharmacoeconomics • Established with financial support from the Department of Health National Centre for Pharmacoeconomics • Established with financial support from the Department of Health and Children • Aims to promote expertise in Ireland for the advancement of the discipline of pharmacoeconomics through education, practice and research www. ncpe. ie

The main reasons driving such growth in pharmaceutical expenditure include: 1. Product Mix: Prescribing The main reasons driving such growth in pharmaceutical expenditure include: 1. Product Mix: Prescribing of newer more expensive medications: Omeprazole Lansoprazole Esomeprazole Pantoprazole 10% of GMS expenditure 2003 (€ 51. 3 m) Rabeprazole Pravastatin Atorvastatin Simvastatin 8. 3% of GMS expenditure 2003 (€ 42. 9 m) 2. Volume effect: Growth in the number of prescription items The number of eligible GMS patients has fallen by 9. 1% from 1. 27 million in 1993 to 1. 16 million in 2003. However, the 32. 3 million items prescribed in 2003 represent an 87% increase over the 10 year period.

Spending on Drugs is a major Target for Savings in Health Care costs because Spending on Drugs is a major Target for Savings in Health Care costs because of the. . . • Volume of Drug Expenditure • Highly visible nature of drug utilization • Perception that the drug budget is not being used to the best advantage • Perception that savings can be made without detriment to patients • Avoids having to address sensitive issues relating to other areas of the Health Care Budget

Improving cost-effectiveness of pharmaceutical expenditure • Review pricing mechanism • Generic prescribing • Cost-effective Improving cost-effectiveness of pharmaceutical expenditure • Review pricing mechanism • Generic prescribing • Cost-effective prescribing

IPHA agreement: governs price of drugs in Ireland • • Price linked to high IPHA agreement: governs price of drugs in Ireland • • Price linked to high price countries Automatic reimbursement Price freeze since 1993 Contribution of pharmaceutical industry to the economy • 2006 Renegotiation – Realignment of prices – Generic substitution – PE evaluation prior to reimbursement

Ireland links its drug price by formula to those of five other member states Ireland links its drug price by formula to those of five other member states Britain Ireland Netherlands Denmark Germany France

Interdependence of European pharmaceutical prices UK: No external reference Sweden: EU median Denmark: EU Interdependence of European pharmaceutical prices UK: No external reference Sweden: EU median Denmark: EU average Ireland: Minimum price -UK or average of DK, FR, GER, NL, UK Netherlands: Average BE, FR, GER, UK France: No external reference Spain: Average FR, IT Portugal: Minimum FR, IT, SPA Finland: Weighted EU average Italy: All EU prices Germany: No external Reference Belgium: Average DK, FIN, FR, GER, NL, NOR, SWE, UK Greece: Lowest EU price Source: Evidence-based health care reimbursement systems in Europe. ISPOR 2003

International Pharmaceutical Price Comparisons Tilson et al. The high cost of medicines in Ireland: International Pharmaceutical Price Comparisons Tilson et al. The high cost of medicines in Ireland: is it time to change the pricing mechanism? Eur J Health Econ.

Potential cost savings on the GMS scheme from substitution of a Danish, average European Potential cost savings on the GMS scheme from substitution of a Danish, average European and UK price 25 20. 95 20 Million € 16. 54 15 9. 38 10 5 0 Danish price Average European price UK price Tilson et al. The high cost of medicines in Ireland: is it time to change the pricing mechanism? Eur J Health Econ Vol 5 No 4 Nov 2004; 341 -344

Potential cost savings (million €) for individual drugs by substituting prices Omeprazole Danish price Potential cost savings (million €) for individual drugs by substituting prices Omeprazole Danish price 2. 16 Average UK price European price 1. 09 2. 7 Pravastatin 2. 85 0. 85 Lansoprazole 2. 74 1. 57 1. 61 Sertraline 1. 01 1. 29 1. 01

Difference in distribution costs Basis: € 5 ex-manufacturer price Source: Bohn, Schering 2002 Difference in distribution costs Basis: € 5 ex-manufacturer price Source: Bohn, Schering 2002

Conclusion Possible explanations for the differences in prices: u u The wholesale margin is Conclusion Possible explanations for the differences in prices: u u The wholesale margin is higher in Ireland than in the UK and Denmark. Exchange rate fluctuations. Generic substitution in Denmark makes market more competitive. Price freeze in Ireland since 1993 – no system in Ireland to revise prices in line with the reference countries.

Improving cost-effectiveness of pharmaceutical expenditure • Review pricing mechanism • Generic prescribing • Cost-effective Improving cost-effectiveness of pharmaceutical expenditure • Review pricing mechanism • Generic prescribing • Cost-effective prescribing

The potential impact of introducing a system of generic substitution on the Community Drug The potential impact of introducing a system of generic substitution on the Community Drug Schemes in Ireland Lesley Tilson, Kathleen Bennett, Michael Barry. Eur J Health Economics Sep 2005 Vol 6 Issue 3. 267 -273

Objectives 1. To investigate the level of generic drug utilisation on the GMS and Objectives 1. To investigate the level of generic drug utilisation on the GMS and DP schemes for all Health Board areas in 2003. 2. To carry out a cost-minimisation analysis to determine the potential savings to the drugs budget if a system of generic substitution were implemented.

The percentage of the ingredient cost spent on generic items on the GMS and The percentage of the ingredient cost spent on generic items on the GMS and DP schemes in 2003 90. 0% DPS GMS 80. 0% 70. 0% 60. 0% 50. 0% 40. 0% 30. 0% 20. 0% 10. 0% Generic Branded generic Proprietary drug with equivalent generic Proprietary drug with no equivalent generic

Potential Savings from Generic Substitution of cheapest generic equivalent Estimated savings on the GMS Potential Savings from Generic Substitution of cheapest generic equivalent Estimated savings on the GMS Estimated savings on the DPS* Substitution of average price of generic equivalent Substitution of maximum price of generic equivalent € 12. 7 million € 10. 9 million € 9. 0 million € 9. 1 million € 6. 4 million € 7. 7 million * Including savings due to the 50% pharmacy mark-up

Prescribe generically! Prescribe generically!

Improving cost-effectiveness of pharmaceutical expenditure • Review pricing mechanism • Generic prescribing • Cost-effective Improving cost-effectiveness of pharmaceutical expenditure • Review pricing mechanism • Generic prescribing • Cost-effective prescribing:

Cost-effective prescribing How well are we doing? • Do we prescribe generically? • Do Cost-effective prescribing How well are we doing? • Do we prescribe generically? • Do we adhere to evidence based guidance on treatment and prevention? • Do we prescribe the safest therapies? • Do we select the most cost-effective options?

Statin prescribing in Ireland • Under prescribing…target 25% – 8% in 2002 • IHD Statin prescribing in Ireland • Under prescribing…target 25% – 8% in 2002 • IHD 52%, Diabetes 40% • Doses lower than in the pivotal trials – E. g. pravastatin 20 mg

Regional variation in prescribing for diabetes and use of secondary preventative therapies in Ireland. Regional variation in prescribing for diabetes and use of secondary preventative therapies in Ireland. C Usher at al Pharmacoepidemiology & Drug Safety 2005

Diabetes in Ireland • Diabetes: growing epidemic – Ageing population, diet, sedentary lifestyle • Diabetes in Ireland • Diabetes: growing epidemic – Ageing population, diet, sedentary lifestyle • Cardiovascular disease accounts for 70% of deaths • Irish Cardiovascular Strategy: – Secondary preventative therapies e. g. statins, aspirin, BP control • National Health Strategy – Equity of access?

Standardised Hospital Discharge Rates for persons with diabetes / health board region Region IDDM Standardised Hospital Discharge Rates for persons with diabetes / health board region Region IDDM NIDDM EHB 110. 3 104. 1 WHB 98. 6 95. 1 MHB 112. 8 130 MWHB 114. 7 111. 4 SEHB 97. 3 116. 1 NWHB 77. 6 87. 1 SHB 104. 3 96. 4 NEHB 98. 8 109. 2

Adjusted ORs for prescribing of ASPIRIN to NIDDM patients by gender M H B Adjusted ORs for prescribing of ASPIRIN to NIDDM patients by gender M H B B SH B H SE B H W N N EH B B W H M B H W EH B 1. 8 1. 6 1. 4 1. 2 1 0. 8 0. 6 0. 4 0. 2 0

Adjusted ORs for prescribing of STATINS to NIDDM patients by gender 2 1. 8 Adjusted ORs for prescribing of STATINS to NIDDM patients by gender 2 1. 8 1. 6 1. 4 1. 2 1 0. 8 0. 6 0. 4 0. 2 0 EHB WHBMWHBNEHBNWHB SEHB SHB MHB

Adjusted ORs for prescribing of ACEi to NIDDM patients by gender 1. 4 1. Adjusted ORs for prescribing of ACEi to NIDDM patients by gender 1. 4 1. 2 1 0. 8 0. 6 0. 4 0. 2 B H M B SH B H SE B H W N N EH B B M W H B H W EH B 0

Cost-effective prescribing How well are we doing? • Do we prescribe generically? • Do Cost-effective prescribing How well are we doing? • Do we prescribe generically? • Do we adhere to evidence based guidance on treatment and prevention? • Do we prescribe the safest therapies? • Do we select the most cost-effective options?

Usage of paracetamol containing combination analgesics remains high in primary care C Usher et Usage of paracetamol containing combination analgesics remains high in primary care C Usher et al. BJCP 2005

Background • Distalgesic: compound opiate analgesic (dextroprooxyphene 32. 5 mg and paracetamol 325 mg). Background • Distalgesic: compound opiate analgesic (dextroprooxyphene 32. 5 mg and paracetamol 325 mg). • Indication: mild to moderate pain. • Controversial? Repeated use may result in tolerance, cases of abuse also reported (Mc. Bride, 1995). • Use in elderly regarded as inappropriate (Fick, 2003). Aim Compare prescribing of DISTALGESIC with PARACETAMOL alone and PARACETAMOL COMBINATION products.

Total number of prescriptions on the GMS in 2003 for paracetamol-containing analgesic preparations. Drug Total number of prescriptions on the GMS in 2003 for paracetamol-containing analgesic preparations. Drug Total no. prescriptions % of total no. prescriptions Co-proxamol* 366, 212 42% Paracetamol 500 mg 271, 636 31% (29% tabs. , 2% supp. ) Paracetamol 500 mg Codeine 8 mg Caffeine 30 mg 122, 004 14% Paracetamol 500 mg Codeine 30 mg 61, 544 7% Paracetamol 500 mg Dihydrocodeine 10 mg 50, 889 6% Paracetamol 500 mg Metoclopramide hydrochloride 5 mg 8, 404 1% *Dextropropoxyphene hydrochloride 32. 5 mg, paracetamol 325 mg. Usher et al. , 2005

Odds Ratios and 95% Confidence Intervals for patients receiving follow-up prescriptions for the paracetamol-containing Odds Ratios and 95% Confidence Intervals for patients receiving follow-up prescriptions for the paracetamol-containing analgesic preparations 12 months post initiation of therapy OR (95% CI) Female vs. male# Over 65 s vs. Under 65 s# Co-proxamol 1. 18 (1. 07 -1. 28)*** 1. 71 (1. 57 -1. 86)*** Paracetamol only 1. 28 (1. 16 -1. 39)*** 2. 67 (2. 44 -2. 93)*** Paracetamol combinations 1. 33 (1. 20 -1. 47)*** 1. 69 (1. 53 -1. 87)*** # Reference category. *p<0. 05; **p<0. 01; ***p<0. 001. Usher et al. , 2005

Cost-effective prescribing How well are we doing? • Do we prescribe generically? • Do Cost-effective prescribing How well are we doing? • Do we prescribe generically? • Do we adhere to evidence based guidance on treatment and prevention? • Do we prescribe the safest therapies? • Do we select the most cost-effective options?

Cost-effective prescribing of Proton Pump Inhibitors • 10. 1% of the GMS drugs budget Cost-effective prescribing of Proton Pump Inhibitors • 10. 1% of the GMS drugs budget for 2002 was attributable to the Proton Pump Inhibitors. • Four of the five PPI’s licensed in Ireland with the exception of Rabeprazole are among the top thirty products of highest cost to the GMS. • A review by the UK’s National Institute of Clinical Excellance (NICE) concluded that the efficacy of individual PPI’s did not differ significantly, and the choice of agent should be based on licensed indication and cost (July 2000). Source: Mc. Gowan et al. Cost-effective prescribing of proton pump inhibitors in the GMS scheme. IMJ (2004).

Total GMS Expenditure (€) on PPIs in the ERHA between Jan 2001 and Dec Total GMS Expenditure (€) on PPIs in the ERHA between Jan 2001 and Dec 2002 700, 000 Omeprazole Pantoprazole Lansoprazole Rabeprazole Esomeprazole 600, 000 500, 000 400, 000 € 300, 000 200, 000 100, 000 Ja n' 0 Fe 1 b' 0 M 1 ar '0 1 Ap r'0 M 1 ay '0 1 Ju n' 01 Ju l'0 Au 1 g' 0 Se 1 p' 0 O 1 ct '0 N 1 ov '0 D 1 ec '0 Ja 1 n' 0 Fe 2 b' 0 M 2 ar '0 2 Ju n' 02 Ju l'0 Au 2 g' 0 Se 2 pt '0 O 2 ct '0 N 2 ov '0 D 2 ec '0 2 0

Estimated annual savings following substitution of Losec mups with alternative PPIs during maintenance therapy Estimated annual savings following substitution of Losec mups with alternative PPIs during maintenance therapy according to prescribing practices in the GMS scheme (2002) Drug (Trade Name) Strength mg Percentage of prescriptions dispensed at given strength Estimated savings when substituted for omeprazole (Losec Mups) corrected for % prescriptions at higher and lower doses Generic Omeprazole (Losamel) 20 mg 100% € 3, 135, 971 Esomeprazole (Nexium) 20 mg 40 mg 52% 48% € 3, 355, 926 Lansoprazole (Zoton) 15 mg 30 mg 28% 72% € 4, 233, 020 Pantoprazole (Protium) 20 mg 40 mg 34% 66% € 5, 728, 656 Generic Omeprazole (Ulcid) 20 mg 100% € 6, 419, 600 Rabeprazole (Pariet) 10 mg 20 mg 19% 81% € 6, 829, 631 Generic Omeprazole (Lopraz) 20 mg 100% € 6, 843, 294

Pharmacoeconomic Evaluation in Europe in 2004 Britain: National Institute of Clinical Excellence (NICE) evaluates Pharmacoeconomic Evaluation in Europe in 2004 Britain: National Institute of Clinical Excellence (NICE) evaluates the cost effectiveness of medicines. Guidelines updated April 2004. Norway: Pharmacoeconomic data required for reimbursement; official guidelines in operation. Finland: Pharmacoeconomic evidence mandatory for evaluating new therapies for reimbursement and may also be requested for existing therapies. Sweden: Cost-effectiveness data required for reimbursement. Ireland: Guidelines for pharmacoeconomic studies prepared; cost-effectiveness data may be requested. Denmark: Cost-effectiveness data may be requested for reimbursement decisions. Netherlands: Pharmacoeconomic evidence explicitly required for reimbursement of new products. France: Not a formal requirement but increasingly used in reimbursement decisions; Guidelines prepared. Belgium: Not a formal requirement but a standard report format for economic evaluations has been published. Spain: Not a formal requirement. Guidelines prepared. Portugal: Cost benefit analysis incorporated into reimbursement decisions. Italy: Proof of cost-effectiveness required For pricing and reimbursement decisions. Germany: Guidelines prepared. No formal requirement for reimbursement but likely to play a growing role in the future. Greece: Guidelines for pharmacoeconomic studies prepared; cost-effectiveness data may be requested.

Value for money: costs vs benefits Costs Drug costs + Outpatient visits + Inpatient Value for money: costs vs benefits Costs Drug costs + Outpatient visits + Inpatient costs Benefits: - More symptom free days Less hospital admissions Increased quality of life Increased survival

CONSIDER A NEW INTERVENTION, IF More effective and/or Less adverse events and/or More convenient CONSIDER A NEW INTERVENTION, IF More effective and/or Less adverse events and/or More convenient THEN Less Other Drugs? Less Tests and Imaging? Less Physicians Consults? Less Interventions? Less or Shorter Hospital stay?

Typical Example: Cost Analysis of Drug B Vs. A Suppose B works better and Typical Example: Cost Analysis of Drug B Vs. A Suppose B works better and is more convenient Average other treatment costs • Physicians Total cost • Hospital • Surgery Snet = net saving • Oth. Drugs Average acquisition cost CAB • Tests • ……. SAB + B A = B A

Cost Analysis of Drug B Vs. A (2) Idem but differences are Less pronounced Cost Analysis of Drug B Vs. A (2) Idem but differences are Less pronounced Average other treatment costs Total cost • Physicians • Hospital Cnet = net cost • Surgery • Oth. Drugs Average acquisition cost • Tests • ……. CAB SAB + B A = B A

Cost Effectiveness The cost effectiveness of a therapeutic intervention may be expressed in terms Cost Effectiveness The cost effectiveness of a therapeutic intervention may be expressed in terms of natural units such as life years gained or infection avoided i. e. COST/LYG It may be expressed in utility terms i. e. preferences that individuals or society may have for a set of health outcomes. The effects of treatment on both patient quality of life and survival are determined. i. e. COST/QALY

Incremental Cost Effectiveness Cost A – Cost B Effect A – Effect B or Incremental Cost Effectiveness Cost A – Cost B Effect A – Effect B or Cost Effect

Lower Effectiveness Lower Effectiveness

COST-EFFECTIVENESS PLANE Re gi on of M co ax st im -e um ct COST-EFFECTIVENESS PLANE Re gi on of M co ax st im -e um ct iv en es s ffe w ill i ng ne ss to pa y Difference in cost Difference in effect

Cost-Effectiveness of Statins for the Secondary Prevention of Coronary Heart Disease in Ireland M Cost-Effectiveness of Statins for the Secondary Prevention of Coronary Heart Disease in Ireland M Barry, A Heerey. IMJ May 2002; (95): 133 -135

Modelling the impact of statins for secondary prevention in Ireland • The disease is Modelling the impact of statins for secondary prevention in Ireland • The disease is divided into distinct states e. g. well, non fatal MI, Death Well (IHD) • Transition probabilities are assigned for movement between these states Nonfatal MI Death • Estimates of resource use are attached to each state and transitions within the model (attaching weights) • Running the model over a large number of cycles enables the estimation of long term costs and outcomes

Transition probabilities required Well (IHD) Clinical effectiveness: 4 S Epidemiological: Irish life tables Nonfatal Transition probabilities required Well (IHD) Clinical effectiveness: 4 S Epidemiological: Irish life tables Nonfatal MI Death

Resource utilisation associated with transition states Well (IHD) Drug costs Monitoring: Dr visits & Resource utilisation associated with transition states Well (IHD) Drug costs Monitoring: Dr visits & labs Nonfatal MI Death Hospitalisation for MI

Cost-effectiveness of statins for secondary prevention atorvastatin fluvastatin pravastatin simvastatin Starting age = 40 Cost-effectiveness of statins for secondary prevention atorvastatin fluvastatin pravastatin simvastatin Starting age = 40 yrs Combined sex € 1, 172 € 2, 358 € 3, 900 € 2, 788 Males > 40 yrs Females > 40 yrs € 1, 189 € 2, 257 € 3, 646 € 2, 643 € 1, 194 € 2, 593 € 4, 412 € 3, 099 Cost per quality adjusted life year

Cost / QALY league tables Intervention Statins for hypercholesterolaemia ACE inhibitor in heart failure Cost / QALY league tables Intervention Statins for hypercholesterolaemia ACE inhibitor in heart failure Beta blocker post MI Radiation therapy in breast cancer Mild acute HZV EPO to augment autologous blood donation in elective surgery Cost/QALY € 1, 172 € 1, 337 € 7, 333 € 35, 000 € 90, 000 € 45, 000

CEA of statins summary • Cost-effectiveness analysis indicates that all statins available in Ireland CEA of statins summary • Cost-effectiveness analysis indicates that all statins available in Ireland are highly cost-effective for the secondary prevention of IHD • Adopting new drug strategies may result in increased drug expenditure but savings in other healthcare budgets. Formal economic evaluation allows comparison of increased costs with improvement in benefit

Role for economic evaluation • Individual patient level? • Policy level – Useful additional Role for economic evaluation • Individual patient level? • Policy level – Useful additional information to inform development of guidelines – Provides useful metric to combine all costs and savings associated with drug therapy and allow comparison within and between diseases If a therapy is not clinically effective, it cannot be cost-effective

MAIN LESSONS FROM THE USE OF ECONOMIC EVALUATION AT THE CENTRAL LEVEL • Demonstration MAIN LESSONS FROM THE USE OF ECONOMIC EVALUATION AT THE CENTRAL LEVEL • Demonstration of clinically-important benefits is still paramount. • Economic data are more important when there is substantial budgetary impact. • In reimbursement decisions, total refusal is rare; limitations or restrictions in use are much more common. Drummond 2005

HOW ARE REIMBURSEMENT RULES OR GUIDANCE IMPLEMENTED? • Depends on the jurisdiction and clinical HOW ARE REIMBURSEMENT RULES OR GUIDANCE IMPLEMENTED? • Depends on the jurisdiction and clinical setting. • Use of hospital-based drugs can be influenced by budgetary controls and formulary listing. • Use of drugs in primary care can be influenced by clinical guidelines (e. g. approval ‘on authority’), financial incentives and formulary restrictions. Drummond 2005

HIQA’s Three Areas of Responsibility § Information § Quality and Safety § Health Technology HIQA’s Three Areas of Responsibility § Information § Quality and Safety § Health Technology Assessment

Health Technology Assessment “a policy research approach that examines the short and long term Health Technology Assessment “a policy research approach that examines the short and long term social consequences of the application or use of technology” OTA, US: 1976 “technology assessment in health care is a multidisciplinary field of policy analysis. It studies the medical, social, ethical, and economic implications of development, diffusion and use of health technology” INAHTA: 1998

HTA functions of HIQA • To provide authoritative and robust analysis of Health Technology HTA functions of HIQA • To provide authoritative and robust analysis of Health Technology to inform decision making at all levels of the system from policy to practice. • To provide a single reference point for information on HTA and to coordinate the dissemination of HTA guidance. • To conduct horizon scanning within the area of HTA and so inform the selection of topics/interventions for appraisal in consultation with the Department of Health & Children and other interested parties. • To make recommendations for research where evidence is lacking or incomplete.