Pharmacoeconomics

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190 Pharmacoeconomics

Pharmacoeconomics is a branch of health economics that analyzes the economic impact and cost-effectiveness of pharmaceuticals.1 This definition has been broadened to include not only the economic costs but also the quality-of-life or humanistic consequences of drug therapy. Evaluation of therapeutic protocols and guidelines also is included in pharmacoeconomic studies.2 It has been suggested that health economics can help answer two fundamental questions: (1) Is a given therapy (or program) worth using when compared with alternatives? (2) Should a portion of available healthcare resources be allocated to a given therapy or program?3

Since the term was first used in 1986, pharmacoeconomics has evolved in complexity and applicability.2 Although still not required by the U.S. Food and Drug Administration (FDA), clinicians, administrators, and healthcare systems are mandating that economic information be added to the clinical effectiveness information for new therapies before a drug is added to a formulary. The Academy of Managed Care Pharmacy (AMCP) published the Format for Formulary Submissions, Version 3.0 as a template pharmaceutical manufacturers can use when submitting drugs for health system review.4 The goal of these guidelines is to ensure that all new products bring added clinical as well as economic value to the insured population. As such, pharmacoeconomic data can lead to more informed decisions being made about selecting a particular drug for a patient or healthcare system. A recent survey of 540 pharmacy directors revealed that 37% had their staffing budgets reduced in the past 6 months5; 56% had to reduce their drug expenditures by 2% to 5%, and 25% reported reductions of 6% to 10%. This can translate into several million dollars cut from drug budgets. Hospital administrators are increasingly focusing on pharmacy costs. Whereas CEOs of hospitals did not rank drug expenditures in their top 20 concerns for 1996, the repeat survey in 2000 yielded drug expenditures as the seventh most important concern.6 In fact, drug and technology costs were second only to decreased reimbursement, whereas drugs offered the single greatest opportunity for cost savings.

image Economics of Health Care in the Intensive Care Unit

One of the catalysts driving the growth of pharmacoeconomics is the staggering cost of health care. In 2009, healthcare spending in the United States increased to a total of $2.6 trillion, and it is projected to be 4.7 trillion in 2019, which would represent 19.3% of the U.S. Gross Domestic Product (GDP).7 Hospital sector spending in the United States increased 86% in 2009 to $761 billion.

U.S. prescription drug expenditures were $300 billion in 2009, representing a 5% increase from 2008.8 Data in nonfederal hospitals for 2008 reveal that drug expenditures increased by 2.1% to $27 billion, and injectable drugs accounted for 71% of these expenditures.8 In 2008, the top 10 therapeutic classes accounted for 73% of hospital drug expenditures, with antineoplastic agents being the highest expenditure at $3.3 billion. The top two individual drugs in 2008 were enoxaparin at $1.1 billion and immune globulin at $868 million.

The cost of drug therapy is complex and comprises multiple components. Table 190-1 summarizes the cost of the drug product versus the cost of complications.9 It is easy to obtain data on acquisition costs of drugs and materials to prepare and administer drugs. Determining the cost of drug failures or adverse drug events is far more challenging, however, and often is not considered. The estimated annual costs of drug-related problems in the United States increased from $77.6 billion in 1995 to $155 billion in 2000.10

TABLE 190-1 Cost of a Drug Versus Cost of a Complication

Cost of a Drug Cost of a Complication
Acquisition cost Increased morbidity cost
Associated material preparation and delivery cost Increased mortality cost
Number of doses per day cost Increased total cost
Route of administration cost Increased length of stay
Labor preparation and administration cost Increased intensity of care
  Decreased patient satisfaction

Intensive care units (ICUs) consume significant hospital resources. Quantifying costs attributable to ICU care is complex, since both patients and their costs are constantly being shifted to and from the ICU, and different hospitals use different cost accounting systems. However, the large economic burden of the ICU is out of proportion to the number of ICU beds in the institution. In 2005, 95,000 ICU beds accounted for only 7% of all inpatient beds in the United States yet consumed about 13% of inpatient costs, or $82 billion annually.11 Furthermore, this figure represents 4% of national health expenditures. The cost of an ICU day is estimated to be three to four times the cost of a ward day and has increased 30% from 2000 to 2005.12 One study reported that daily ICU costs averaged $3518 during 2000-2005,12 but a large database of more than 50,000 patients from 252 ICUs revealed a mean ICU cost of $19,725.13 Daily ICU costs were greatest on day 1 (average $7728), decreased on day 2 (average $3872), and stabilized on day 3 and beyond at approximately $4200 in 2009 dollars. Mechanically ventilated patients had the highest ICU costs; use of a ventilator increased average daily cost by $1800 compared to ICU patients who were not receiving mechanical ventilation. Therapeutic interventions that can reduce ICU length of stay by even 1 day can have a significant impact on total hospital costs, particularly in patients requiring mechanical ventilation. Cost saving initiatives are particularly relevant in this setting, since only 83% of hospital costs are covered for Medicare patients with an ICU admission.14 This discrepancy can result in a $5.8 billion loss to hospitals when ICU care is required.

Drug costs in the ICU are difficult to quantify because most hospitals are not sufficiently computerized to track these data. In one academic medical center, 15 drugs accounted for more than 50% of drug costs in the ICU.15 Drug costs in the ICU averaged 38% of the hospital’s total drug costs and increased at a higher rate than non-ICU drug costs over the 4-year period studied (12.4% versus 5.9%). Fiscal year 2002 data revealed an ICU drug cost of $312 per day compared with $112 per day outside of the ICU.

image Economic Evaluations in Critical Care Medicine

Although any economic analysis could be performed in a critical care environment, some of the more appropriate are cost-effectiveness analysis, cost-benefit analysis, cost minimization analysis, cost utility analysis, and cost of illness.16 Cost-effectiveness evaluation is discussed in greater depth because it is the most commonly performed and the approach recommended by expert bodies.17

Cost-effectiveness analysis is a full economic evaluation because both costs and outcomes are considered. A drug is evaluated on the basis of cost and outcome in reference to a comparator, which is usually the current standard of care. In a cost-effectiveness evaluation, the most preferred therapy has increased effectiveness at decreased cost.

In 1996, the Panel on Cost-Effectiveness in Health and Medicine (PCEHM) published seminal work consisting of guidelines for the conduct and reporting of economic analyses.18 This work resulted in some key points to consider when employing a cost-effectiveness evaluation, including use of a reference case for comparison, the importance of transparent methods and logic, and consideration of the perspective being evaluated. The PCEHM recommends that the societal perspective is the most comprehensive and considers workforce and familial aspects of illness. The PCEHM recommends using the following steps when designing a cost-effectiveness analysis:

The American Thoracic Society convened a workshop to address the application of the PCEHM guidelines to a critical care environment.19 A group of experts compiled key considerations for a cost-effectiveness evaluation in the ICU, and details can be reviewed in their report.

Cost utility analysis is a form of cost-effectiveness evaluation that examines the utility or value of an outcome.16 Patient, family member, provider, or societal preferences can value health outcomes. Cost per quality-adjusted life-year can be measured for alternative therapies by assessing the length of time a patient is in a state of health rated on a scale of 0 to 1, where 0 equals death, and 1 equals perfect health.

Cost minimization assumes equal effectiveness for each alternative and evaluates the impact on an identical outcome. For example, if two ICU sedatives produce the same quality of sedation, but one requires a more labor-intensive administration protocol, a decision maker could apply a cost minimization analysis to determine the preferred, less costly therapy.

Cost-benefit analysis compares the costs and benefits of alternatives. This approach is rarely used in medicine.

Cost-of-illness studies describe the economic burden of a specific condition or disease state and are frequently part of epidemiology studies. This type of analysis may take into consideration the workforce and societal impact of illness, in addition to the financial implications for payers and providers.

The American Recovery and Reinvestment Act of 2009 provided considerable funding for comparative effectiveness research and mandated that the Institute of Medicine (IOM) of the National Academy of Sciences recommend initial national priorities for this research.20 Its purpose is to compare the ratio of cost to effectiveness of two interventions used for the same condition.16 These comparisons should be evaluated in the real-world setting and could provide data about which interventions are most effective for patients under specific circumstances.8 It has been estimated that these data could reduce spending by Medicare and Medicaid by $0.1 billion from 2008 to 2012 and $1.3 billion between 2008 and 2017.

image Determining Costs in the Intensive Care Unit

Three approaches frequently are used to assess the economic burden of a disease state: prospective study design, retrospective analysis, and decision modeling.17 A prospective study gives the investigator an opportunity to measure important variables completely and accurately. Retrospective database analysis reviews data that already have been assembled and has the advantage of being much less costly and time consuming than prospective studies with the ability to review many patients easily.

In retrospective studies, the subjects already are assembled and have been de-identified, baseline measurements have been made, and the follow-up period has occurred. The total direct and indirect costs of a condition can be readily assessed. Total direct costs include the value of all goods, services, and other resources consumed in the provision of an intervention or in dealing with the side effects of the intervention or other current or future consequences linked to the intervention.21 Indirect costs are the costs that result from a certain therapy or illness, such as lost wages, workforce replacement, or child care that may be necessary.

Patient billing information and summary estimates of department-level expenditures can be used to estimate costs when hospital administrative data are used. At one extreme, hospital charges can be used as a proxy of costs. This approach may be reasonable in a comparative analysis of interventions, assuming that charges per admission are roughly proportional to economic costs per admission. Another approach is to use the department’s cost-to-charge ratio, which has been shown to perform accurately when evaluating average costs per diagnosis-related group.22

image Cost of Intensive Care Unit–Related Conditions

Evaluation of the economic impact of medical conditions is one of several areas of focus since the 1990s in ongoing efforts to decrease overall healthcare spending and identify high-cost diseases to target therapies. More recently, hospital-acquired conditions have received increased attention. Several of these are so-called never events that are not reimbursed by government payers.23 Representative conditions of the 10 identified areas for 2009 and 2010 include deep venous thrombosis (DVT) or pulmonary embolism (PE) developing after total knee or hip replacements, extreme manifestations of poor glycemic control, and surgical site infections. Recently, a study analyzed the performance of several hundred hospitals for hospital-acquired conditions and their associated additional costs.24 Top conditions and their associated annual costs were decubitus ulcers ($536,900), DVT and PE ($564,000), and infections ($252,600). Preventing these conditions from developing could result, for example, in a 200-bed hospital saving $2 million per year.

In this section, we will summarize the data on selected acute care conditions for which information on costs is known. Although the data presented may not be directly from patients in the ICU, the results represent the best data available.

Acute Congestive Heart Failure

Among the nearly 5 million Americans with congestive heart failure, the number of hospital discharges has increased by 165% in the past 20 years.25 Acute congestive heart failure is the reason for at least 20% of hospital admissions in patients older than 65 years of age and the most expensive admission diagnosis, with an estimated $39.2 billion spent in the United States during 2010.26 In 1998, the cost per admission of a congestive heart failure patient was $5471, and in 2001, hospitals lost on average $1288 per Medicare patient.27 In fact, one large database study conducted in 2005 revealed 50% of heart failure admissions had costs that exceeded the DRG (diagnosis-related group) payment.28 More recent data reveal that the mean hospital cost per admission was $21,800 in 2009 dollars, and that 75% of admissions with acute heart failure developed this condition as a secondary diagnosis.29 As such, the global burden of acute heart failure may be underestimated from these data, since statistics are generated from patients with a primary diagnosis of heart failure.26

Acute Kidney Injury

Despite considerable information on the clinical effects of acute kidney injury (AKI), there have been only seven studies describing costs associated with this condition.30 There are substantial differences in methods, such as different definitions of the condition and different definitions of costs. As such, comparisons are difficult. The median hospital costs adjusted to 2008 dollars range from $3300 in patients with uncomplicated AKI to $56,095 from the start of renal replacement therapy to hospital discharge.30 One study reported that the median postoperative costs of AKI following coronary artery bypass surgery was $44,800 compared to $21,900 in controls in 2009 dollars.31 Even patients with small increases in serum creatinine postoperatively, namely 1.5 times baseline, had higher postoperative costs ($35,400), whereas patients with the most severe AKI had costs of $62,700 (median value).

Infectious Diseases

Healthcare-Acquired Infections

Hospital staffs recognize the importance of preventing infections in patients admitted to their institution. By implementing appropriate procedures and guidelines, hospitals can save on costs associated with these infections. Importantly, the government will not reimburse hospitals if patients develop infections such as catheter-associated urinary tract infections, vascular catheter–associated bloodstream infections, and surgical site infections. The Centers for Disease Control and Prevention (CDC) recently summarized the literature on this topic in a comprehensive published report.32 They estimate that overall annual direct medical costs of 1.7 million healthcare-associated infections ranged from $28.4 to $33.8 billion, depending on the method used for adjusting to 2007 dollars. They furthermore state that prevention can save $5.7 to $6.8 billion for preventing only 20% of infections. The attributable patient costs are separated by infection site and are shown in Table 190-2. A sample from 69 million hospital discharges between 1998 and 2006 revealed 558,000 identified cases, and costs were adjusted to 2006 dollars.33 For patients with invasive surgery, the attributable mean length of stay was 11 days with hospital costs of $32,000 for sepsis and 14 days and $46,400 for pneumonia, respectively. The corresponding values for patients without invasive surgery were 6 days and $12,700 for sepsis and 9.7 days and $22,300 for pneumonia, respectively. Another recent evaluation of costs of nosocomial infections34 reviewed 1.3 million admissions from 55 hospitals; costs were adjusted to 2007 dollars. The 58,000 cases of nosocomial infections had a mean added total hospital cost of $12,200 (95% confidence interval [CI], $4862-$19533). The highest costs were seen in cerebrospinal fluid and respiratory infections.

TABLE 190-2 Average Attributable Costs per Patient of Hospital-Associated Infections by Sites of Infection

Infection Site Low Estimate Adjusted to 2007 Dollars Using CPI-U High Estimate Adjusted to 2007 Dollars Using CPI-U
Surgical site infection $11,087 $29,443
Central line–associated bloodstream infection $6,461 $25,849
Ventilator-associated pneumonia $14,806 $27,520
Catheter-associated urinary tract infection $749 $832
Clostridium difficile–associated disease $5,682 $8,090

CPI-U, consumer price index for all urban consumers.

Ventilator-associated pneumonia (VAP) is a frequent complication of mechanical ventilation in critically ill patients and is associated with a 20% to 54% ICU mortality rate.35,36 Studies published through 2004 estimated that the cost of VAP ranges from $5365 to $10,062 per patient. One study determined the attributable cost of VAP in a nonteaching U.S. medical center.37 Compared with noninfected mechanically ventilated patients, patients with VAP had a higher incidence of bacteremia (36% versus 22%), longer ICU length of stay (26 versus 4 days), and greater mortality rate (50% versus 34%). Hospital costs for VAP patients were significantly higher ($70,568 versus $21,620), with a higher proportion of total costs being room, nursing, pharmacy, and respiratory therapy expenses. The cost differences for patients developing early-onset compared to late-onset VAP were $36,822 versus $60,562. The attributable cost of VAP when adjusted for a wide variety of factors was $11,897 (95% CI, $5265-$26,214). Approaches that provide even a small clinical effect can have a significant economic benefit.35,36

Additional recent studies have quantified costs of bloodstream infections, colitis due to Clostridium difficile infection, catheter-related infections, and severe sepsis.3841 A study of catheter-associated bloodstream infections in a medical and surgical ICU at a nonteaching hospital revealed an incidence of 4%, with an attributable total hospital cost of $14,200 in 2009 dollars.38 The catheter-related infections were associated with an attributable ICU length of stay of 2.4 days. Infections caused by C. difficile are a common cause of diarrhea in hospitalized patients, and many of these patients are in ICUs. A review of the literature reveals that the incremental costs in 2008 dollars ranged from $2800 to $4800 for primary infection and $13,600 to $18,000 for recurrent disease.39

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