TREATMENT SELECTION AND PRESCRIBING

Pharmacoeconomics

Core concept: Pharmacoeconomics provides a framework for comparing drug treatments by examining their economic and clinical effects (Santaniello & Spooner, 2022).

Key clinical distinction: The medication with the lowest purchase price may not have the lowest total cost. Administration, monitoring, nonmedical resources, lost productivity, and patient burden can change the comparison (Woo & Robinson, 2019).

Prescribing priority: Economic findings must be considered with clinical impact. Patient coverage, out-of-pocket cost, monitoring burden, and access can determine whether a treatment is feasible (Santaniello & Spooner, 2022).

Perspective and Types of Cost

  • The analytic perspective determines which costs count. A patient, health system, payer, employer, and society may experience different costs from the same treatment.
  • Direct medical costs include medication, administration, laboratory monitoring, visits, procedures, and treatment of adverse effects.
  • Direct nonmedical costs may include transportation, parking, caregiving, lodging, or equipment.
  • Indirect costs reflect effects on productivity, work, school, or unpaid responsibilities.
  • Intangible burden includes pain, anxiety, inconvenience, and loss of function. These consequences are difficult to price but remain clinically important.

Common Economic Analyses

  • Cost-of-illness analysis: Estimates the economic burden of a disease in a defined population. It describes burden but does not determine which treatment provides the best value.
  • Cost-minimization analysis: Compares cost only after credible evidence establishes that the alternatives produce equivalent outcomes. If effectiveness or safety differs, cost-minimization is inappropriate.
  • Cost-effectiveness analysis: Compares cost with outcomes expressed in natural clinical units, such as exacerbations prevented, life-years gained, or patients reaching a treatment goal.
  • Cost-utility analysis: Compares cost with outcomes that combine length and quality of life, commonly quality-adjusted life-years.
  • Cost-benefit analysis: Converts both costs and benefits into monetary terms. This permits comparisons across different types of programs but requires difficult judgments about the monetary value of health outcomes.

Applying Evidence to the Individual Patient

  • Economic evidence from a population does not automatically identify the least costly or most effective option for one patient.
  • Formulary tier, deductible, copayment, prior authorization, pharmacy availability, dose, quantity limits, and manufacturer assistance can change the patient’s actual cost.
  • Many health plans organize covered drugs into tiers, but tier names, placement, and patient cost-sharing vary by plan. A medication’s formulary status, deductible, copayment, and coverage rules may affect what the patient pays more than its list price (Santaniello & Spooner, 2022).
  • Monitoring and administration requirements may create more burden than the medication price. A less expensive drug that requires frequent visits or laboratory testing may cost the patient more overall.
  • Treatment failure can produce urgent visits, hospitalization, disease progression, and time away from work or caregiving.
  • Discuss cost directly. Patients may ration medication, delay refills, or never start treatment without volunteering that cost is the reason.

Generic and Brand-Name Medications

  • The FDA regulates and establishes standards for bioequivalence. Bioequivalence is central to determining whether a generic product can be considered therapeutically equivalent to a reference product (Santaniello & Spooner, 2022).
  • The FDA Orange Book lists approved drug products with therapeutic-equivalence evaluations and can be searched by active ingredient or proprietary name (Santaniello & Spooner, 2022).
  • A pharmacist may substitute a less expensive therapeutically equivalent drug unless the prescription or applicable requirements prevent substitution (Santaniello & Spooner, 2022).
  • Generic drugs may or may not be less expensive for a specific patient. Pharmacy coverage, benefit tiers, copayments, and retail programs affect actual cost (Santaniello & Spooner, 2022).
  • Dispense-as-written (DAW) codes communicate the reason a brand or generic product is dispensed. DAW 0 allows substitution under applicable law, DAW 1 indicates that the prescriber requires the brand product, and DAW 2 indicates that the patient requests the brand product. Decisions about substitution should follow product-specific guidance, therapeutic-equivalence status, state requirements, and any monitoring needed after a product change. FDA-approved generics should not be presumed clinically inferior (Santaniello & Spooner, 2022).

Value, Access, and Adherence

  • A medication provides poor value when the patient cannot obtain it, cannot use it correctly, or stops it because the treatment burden is unacceptable.
  • Simplifying dose frequency, aligning refill dates, selecting a covered alternative, and reducing unnecessary medications may improve adherence while lowering cost.
  • Shared decision-making should make tradeoffs explicit. A higher-cost option may be reasonable when it offers meaningfully better outcomes, lower toxicity, easier use, or less monitoring for the patient.
  • Prescribers should avoid equating lower cost with rationing. Appropriate pharmacoeconomic reasoning seeks the best achievable outcome from available resources.

Common Interpretation Errors

  • Using cost-minimization when the alternatives have not demonstrated equivalent outcomes.
  • Reporting a cost-effectiveness ratio without stating the comparator, perspective, time horizon, and outcome.
  • Applying system-level savings to a patient whose out-of-pocket cost is higher.
  • Assuming a generic product is clinically inferior or assuming that every generic is the least expensive option under every benefit plan.
  • Ignoring medication access until the prescription reaches the pharmacy.

Related YourDNP Resources

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References

Santaniello, B. L., & Spooner, J. J. (2022). The economics of pharmacotherapeutics. In V. P. Arcangelo, A. M. Peterson, V. F. Wilbur, & T. M. Kang (Eds.), Pharmacotherapeutics for advanced practice: A practical approach (5th ed.). Wolters Kluwer.

Woo, T. M., & Robinson, M. V. (2019). Pharmacoeconomics [PowerPoint slides]. F. A. Davis.