1. Pharmacoeconomics and Outcomes Research: Some Comments Dean Smith Michigan Student Chapter

2. The International Society for Pharmacoeconomics and Outcomes Research is an international organization promoting the science of pharmacoeconomics and health outcomes research. The International Society is organized to act as a scientific leader relevant to research in pharmacoeconomics, health outcomes assessment, and related issues of public policy. The International Society represents health care researchers and practitioners including pharmacists, physicians, economists, and other health care professionals involved in pharmacoeconomic analysis and health outcomes assessment. The mission of the International Society for Pharmacoeconomics and Outcomes Research is to translate pharmacoeconomics and outcomes research into practice to ensure that society allocates scarce health care resources wisely, fairly, and efficiently.

4. Further Reading …

5. Designed specifically to meet the clinical informational needs of managed care's Pharmacy and Therapeutics Committee Members, The American Journal of Managed Care identifies the challenges and shortcomings of and opportunities for the current healthcare system by disseminating original research that examines the impact of clinical, management, and policy interventions and programs on healthcare and economic outcomes. Editors: Michael E. Chernew, Ph.D. A. Mark Fendrick, MD

7. DisclosureDisclosure  Professor, Health Management & Policy

8. DisclosureDisclosure  Co-Director, UM-Pfizer Pharmacoeconomics & Outcomes Research Fellowship Program

9. DisclosureDisclosure  Member, Board of Directors

10. DisclosureDisclosure  Consultant, various projects

11. Conflict of Interest  "No doubt there are other important things in life besides conflict, but there are not many other things so inevitably interesting." -Robert Lynd, The Blue Lion

12. OutlineOutline  Pharmacoeconomics & Outcomes Research  The FDA View  A Study Example

13. Prescription Drug Expenditures  Is this is a good thing?

14. Patient -Clinical Cure -Quality of life -Out-of-pocket Cost -Satisfaction with treatment process treatment process Hospital / Physician -Clinical Cure -Profit from treatment 3rd-Party Payer -Clinical Cure -Cost-Customer perception of value perception of value Employer / Society -Clinical Cure -Cost-Productivity P E R S P E C T I V E PerspectivesPerspectives

15. J&J Pulls Guide on Web Site Wall Street Journal, April 12, 2002  In an embarrassing retraction, Johnson & Johnson has withdrawn a how-to-guide from a company web site that helped doctors calculate how much money they might make by administering an expensive arthritis drug in their offices.  World-wide sales of Remicade climbed 95% to 721 million last year.  J&J fell 74 cents to $62.70

16. DefinitionsDefinitions  Pharmacoeconomics is the application of economic analysis to the use of pharmaceutical products, services and programs, which frequently focuses on the costs (inputs) and consequences (outcomes) of that use.  Outcomes research refers to broader consideration of the measurement of the efficacy or effectiveness of treatment.

17. Clinical Efficacy Safety Impact of therapy on “natural history” of the disease Economic Cost Analysis Cost-of-Illness Cost-Minimization Cost-Benefit Cost-Effectiveness Cost-Utility Humanistic Health Related Quality of Life Patient Satisfaction Caregiver Impact Patient Preferences Functional Status Health Services Research Policy ResearchAccessStructure of Care The assessment of technology (drugs, devices, etc) Outcomes Research

18. Application of Pharmacoeconomics Phase IIPhase IIIMarketing Phase Regulatory Phase Pharmacoeconomic Studies Research and Development Strategy Pricing and Reimbursement Strategy Communication to Physicians and Patients

19. Why Pharmacoeconomics - Internal Phase IIPhase III New Drug Approval - NDA Investigational New Drug - IND Basic ResearchPhase I Time (months) 42.6 15.5 24.3 36.0 = 119.4 Direct Cost ($mil.) 65.5 9.3 18.6 20.2 = 113.6 Capitalized Cost155.617.8 30.3 27.1 = 230.8

20. Why Pharmacoeconomics - External Evidence Registration Price/Reimbursement Efficiency Safety Efficacy Quality Market

21. Pricing Tool Total Cost of Treatment Effectiveness Drug B Drug A Drug C Drug D 1. Break-even Price 2. Efficiency Price 3. Premium Price 1. Break-even Price 2. Efficiency Price 3. Premium Price 1 2 3

22. Patient Outcomes Assessment Sources and Examples Clinician - Reported Physiological Caregiver - Reported Patient - Reported Global impressions Observation & tests of function FEV 1 HbA1c Tumor size Dependency Functional status Functional status Symptoms HRQL Treatment Satisfaction Productivity

23. Effectiveness / Outcomes IV Treatment Cost C # : New Drug C : Control # : New Drug C : Control I IIIII Conclusion Adopt RejectEvaluate Value: Ratio Acceptability

24. OutlineOutline  Pharmacoeconomics & Outcomes Research  The FDA View  A Study Example

25. Regulation and Acceptance of PE 2000 CDN AUS NL ESP F SW FRG I UK USA Level of Regulation Level of Acceptance B

26. Substantial Evidence- FDA Act 505  Adequate and well-controlled investigations...  By experts qualified to evaluate therapy effectiveness...  Can be concluded that the drug has the effect it purports...  Under the conditions of use, prescribed or recommended in the label...

27. Labeling Claims  Labeling (approved claims)  Indications must be in the label  Other information of “clinical significance”  Relevance for prescribing decision  FDA decides (approves)

28. Advertising Claims  Advertising (permitted claims)  Meet advertising substantiation and disclosure requirements  Must be consistent with and not contrary to Label  Company decides, FDA reviews

29. FDA Recommendations: Development of Evidence  Consult the experts  Start with the desired claims  Integrate with the clinical program  Develop with patient input  Validate with clinical trial experience  Get FDA buy-in early

30. Recent FDA Warning Letters  Neurontin (seizures)- 6/29/01  Misleadingly claims improvement in QOL parameters based on the NEON study. The NEON study is not considered substantial evidence for claims of QOL improvements because its not a controlled study.  Fosamax (osteoporosis)-6/20/01  Website link titled “ Preserving your independent Lifestyle”- overstates the potential benefit, no substantiation

32. Prescription for Profit New York Times Magazine, 3/11/01  “Claritin is a drug of our times: designed to relieve symptoms and improve quality of life, hardly lifesaving or even curative, expensive as hell.”  ~50% effective (46% v. 35% placebo)  $103/month

33.  “... it offers no clinical advantage over cefdinir, but it costs less.”  Cefdirir$82.42*  Cefditoren$65.50* * Drug Topics Red Book, 10 Day treatment Cefditoren (Spectracef) Medical Letter, January 21, 20021

34. OutlineOutline  Pharmacoeconomics & Outcomes Research  The FDA View  A Study Example

35. oral third-generation, semisynthetic, extended spectrum cephalosporin antibiotic

36.  To obtain FDA approval of cefprozil (Omnicef®) for uniform 5-day therapy (from prior labeling of 7 to 10-day therapy ~ as is common for many antibiotics) The Trial / Goal

37. Patient Populations from Randomized to Cured TOC 63.9% v. 65.7% P = 0.35

38. Study Drug Prices Dose size varies cefdinir (7 mg/kg) v cefprozil (15 mg/kg) as do drug prices: Pricing (125/5 ml bottles) Drug ml AWP AWP/ml Cefdinir50 ml $27.20 $0.544 Cefprozil100 ml $29.72 $0.297 Source: Red Book

39. Study Drug Costs Mean doses were 5.03 and 10.59 - with dosing of 7 mg/kg vs 15 mg/kg. Median days on study drug were 5, 10. Cefdinir(5.03 * 2 * 5 = 50.3) $27.87 Cefprozil(10.59 * 2 * 10 = 211.8)$62.90 * $82.42 comes from 300 mg tablets.

40. Non-Study Medications 68.0%67.1%

41. Non-Study Medications P = 0.69

42. Non-Study Visits P = 0.14

43. Total Costs P < 0.01

44. ConclusionsConclusions  Antibiotic Costs  For some clinics, selection of antibiotics may be determined by “value”  With equivalent clinical outcomes, selection may be determined by cost.  Costs should consider total cost of treatment, not just drug price.

45. ConclusionsConclusions  "Not everything that can be counted counts, and not everything that counts can be counted." - Albert Einstein (1879-1955)

46. QuestionsQuestions ?