Pharmacoeconomics: basic concepts and terminology.

in promoting rational prescribing [4] or in clinical trials Introduction which incorporate an economic component. In some areas (e.g. Australia) economic evaluations are now formally Spending on drugs is a major target for savings in health care costs for governments around the world. Such a focus required prior to a drug being approved for reimbursement— the ‘fourth hurdle’ for a new drug after establishing safety, results from the size of the drug bill, the highly visible nature of drug utilization and the perception that the drug efficacy and tolerability [1]. Elsewhere, pharmaceutical companies are increasingly ‘tagging’ on economic evaluations budget is currently not being used to best advantage. In addition the drugs bill is an area in which it is perceived to clinical trials primarily as a marketing strategy. The lack of scientific rigour in many such studies is in danger of that savings can be made without detriment to patients [1] and without having to address sensitive issues relating to bringing the entire process of economic evaluation into disrepute in the eyes of clinicians [5]. staff redundancy. The total cost of the drug bill in 1994 was £3844 million which represented a cost of over £65 per The concepts and terminology of health economics are likely to be new to most clinical pharmacologists but are capita and an average of 8.9 prescriptions were consumed per head of population [2]. Government attempts to contain becoming increasingly relevant to their professional role. In recognition of this growing importance this is the first in a the drug bill include increased patient copayments, encouragement of formularies, and the utilization of indicative or series of three articles aimed at providing a non-technical introduction for clinical pharmacologists to pharmacoeconreal drug budgets. The use of cost limited drug budgets to constrain the overall drugs bill has experienced some success omics. This article introduces basic concepts and terminology, the second article provides a range of quality markers in the UK [3]. The impact of placing severe constraints on the drugs bill that will assist clinical pharmacologists in assessing the reliability of such evaluations while the third article analyses needs to be evaluated to ensure that it does not lead to significant increased costs elsewhere in the health care issues relating to the integration of economic evaluations into clinical trials. Excellent textbooks [6], articles [7–12] system (e.g. increased inpatient episodes or diagnostic tests) or lead to a significant reduction in the level of benefits to and courses are available for those who wish to develop their knowledge further. patients. The focus of concern to decision makers, health care professionals and the public should be the value derived from drug therapy, rather than simply the level of the drugs Basic concepts and terminology bill. This wider focus requires a comparison of benefits derived and costs incurred [1, 4]. It is not after all the Health economics is fundamentally comparative and deals with choices between options. Thus when a study asserts function of a health service to minimise costs but rather to use its available resources to achieve the greatest health that ‘drug x is cost effective’, our immediate response should be ‘compared with what?’ Currently there is debate about gain for its population. By these criteria, increased spending on drugs which leads to a reduction in the need for what the ideal comparator should be—should it be the drug and dose most widely used for a condition (which may vary hospitalisation or economises on the use of some other expensive resource can represent a cost-effective shift in from country to country), or a ‘gold standard’ comparator that is chosen on the basis of results obtained in clinical resource utilization. The important issue concerns the optimum manner of investing health care resources to trials. One method by which the results of analyses can be biased is to choose a comparator (old generation drug or generate health gain and for this reason an increase in expenditure on drugs may be a highly efficient use of scarce suboptimal dosage) that provides a patient benefit ‘yardstick’ that is relatively easy to beat. This raises further questions health care resources. Such a comparison of the ‘marginal productivity’ (additional benefits derived from the appliconcerning the most appropriate sources of medical evidence to support economic studies. Where possible, such studies cation of additional resources) from different methods of using resources is difficult but essential for a health service should be based on a balanced evaluation of the available medical evidence, but more importantly on the nature of determined to maximise patient benefit. Such assessments are essential, not to reduce costs, but rather to identify the clinical management in common medical practice rather than in a clinical trial. Frequently however little is known benefits of alternative uses of resources in order to identify the structure of health care that best meets the needs of the nature and impact of clinical management in practice and we are forced to make assumptions to fill the gaps in our of patients. Pharmacoeconomics is a branch of health economics knowledge. Such assumptions must be ‘reasonable’, and should be explicitly stated and therefore transparent so that which particularly focuses upon the costs and benefits of drug therapy. A knowledge of pharmacoeconomics is they can be challenged. Indeed any good economic study will proactively challenge the impact of such assumptions, therefore vital for clinical pharmacologists who are involved by varying them in a sensitivity analysis. A sensitivity analysis explores the extent to which the Correspondence: Professor T. Walley, Department of Pharmacology and Therapeutics, University of Liverpool, Liverpool, UK conclusion derived from a study is dependent on the