What is pharmacoeconomics and why it's important for a drug manufacturer?
The healthcare as a whole plays a very important role in our lives. We live in a society where each resource is scarce and requires allocation of needed assets by priority. The healthcare economics deals with such a wide range of healthcare services, starting from the clinical care, outcomes, measures and financial values of it all. The main goal of health economics is efficiency balance between consumption by the consumers – also known as patients and providers. The main central character of health economics plays government and private sector. The government acts as regulator in deciding the legislature for the right choice of healthcare services for both providers and consumers. In order to understand the entire spectrum of health economics, we need to understand how the spending is distributed, what is the role of patients, what is the role of providers, risk and benefits of insurance and last but not least is the reform and government legislature of the healthcare. [1]
The health economics varies widely between countries and how they are perceived, for example the big majority of lobbyist in the U.S are health insurance as they predominantly provide coverage for more than 26.1 million people [2] ; in Europe on the other hand the government majority is the central attention point for deciding what would be better for people as the healthcare is considered to be universal there. At the end of the day, it’s not about which system works better but how efficient it is in distributing a quality healthcare to the population at efficient cost and labor demands. The actual scope of health economics could be divided in several points:
1. The influential aspect of healthcare (mix of providers and patients)
2. The value provided by the healthcare alone
3. The demand and supply of both parties mentioned above
4. Micro and macro impact of medical care (national vs local).
5. Planning and budgeting.
Pharmacoeconomics:
The Pharmacoeconomics deals with analysis and cost of drug treatment in the medical field. As a field it provides measures of costs and consequences on pharmaceutical industry. If you look at the Pharmacoeconomics as a whole, it could be described as a decision-making machine that evaluates the price fairness and access to the right medicine for the right patient. It’s interesting to note that Pharmacoeconomics predominantly evaluates the costs and effects of pharmaceutical products and therapies for the consumers. In the United States, Pharmacoeconomics is judged by the FDA (The United States Food and Drug Administration) and this organization intervenes on behalf of US citizens on price comparison and utilization.[3]
During the course of decision making about certain pharmaceutical drugs, it’s all about tradeoffs and choices between what is urgently needed or wanted by the affected population. Yes, it’s absolutely impossible to please everyone under the sun, however a rational thinking should be employed. For example, in the United Stated the annual cost of medical treatment for Amyotrophic Lateral Sclerosis or ALS for short is $150,000 [3]. In most cases the cost of medication will be covered only partially, not including the labor/specialist cost for administering this medication. These tradeoffs are very harsh in some cases and in others are beneficial for those with premium health insurance. The main goal of Pharmacoeconomics in this scenario is to define a fine line which will contribute a mass benefit and optimal cost for the pharma. In order for Pharmacoeconomists to evaluate the right choice several evaluations must be in place, these evaluations are cost-minimization, cost-transparency, cost-benefit, cost of illness and cost of consequence. Not only Pharmacoeconomics touches the clinical and production part of financial regulations but also post-illness monetary expenses patient will experience due to the financial costs.
In academia, Pharmacoeconomics deals with published data, data interpretation, policy making suggestions and application in local jurisdictions and geographical continents. The application of one policy of pharmacoecnomics in Asia for example may not work in North America as regulatory and financial preferences are different (p.e GDP allocation to the healthcare by country).
Another part of pharmacoeconomics is health insurance. The health insurance plays a vital role in pharmacoeconomics, because it allows patients to get the needed drug therapy for the price that is negotiated by health insurance providers (in the case of the Unites States of America). By looking at the data, decision makers at pharmaceutical industries can make a sound decision whether the product will be affordable by general public or exclusively given to those who can afford it. Not only this decision will affect the health outcomes, but also can create a wealth gap in society in general. Therefore, transparency in pricing and affordability is a vital part during manufacturing, business & marketing and distribution of the final drug to the public. [5]
References:
1. Stobierski, Tim. “What Is Health Care Economics? | HBS Online.” Business Insights - Blog, 23 Mar. 2021, online.hbs.edu/blog/post/what-is-healthcare-economics.
2. Keisler-Starkey, Katherine, and Lisa Bunch. “Health Insurance Coverage in the United States: 2019.” The United States Census Bureau, 15 Sept. 2020, www.census.gov/library/publications/2020/demo/p60-271.html.
3. Santaniello, Briana. “ALS Managed Care Considerations.” AJMC, 23 Aug. 2018, www.ajmc.com/view/als-managed-care-considerations. Accessed 29 Jan. 2021.
4. U.S. Food and Drug Administration. “U S Food and Drug Administration Home Page.” Fda.gov, 2019, www.fda.gov/.
5. Anderson, Gerard F., et al. “It’s the Prices, Stupid: Why the United States Is so Different from Other Countries.” Health Affairs, vol. 22, no. 3, May 2003, pp. 89–105, 10.1377/hlthaff.22.3.89. Accessed 11 Feb. 2020.