Editorial

JosephineA Mauskopf, PhD,

ExecutiveDirector,
RTI Health Solutions,
3040 CornwallisRoad,
Research TrianglePark,
North Carolina,
USA 27709
Tel.: +1 919 541 6996
Fax: +1 919 541 7222
jmauskopf@rti.org
www.rtihs.org
FutureDrugsLtd. All rightsreserved. ISSN 1473-7167 1
Why study pharmacoeconomics?
Pharmacoeconomics research is a flourishing industry
with many practitioners, a large research and
applications agenda, several journals and flourishing
professional societies.
Why study pharmacoeconomics?Well the first
reason is so that you will know how to spell it!!!
You will not get any help from your spell-
checker software as I realized when I sat down
to write this editorial!
Before I try to give a more serious answer, I
need to start with a little history when wasthe
term pharmacoeconomics first coined and why
did it catch on? and an attempt at adefinition
of theterm what ispharmacoeconomics?
Probably one of the first times that the term
pharmacoeconomics was used in a public
forum was in 1986, at a meeting of Pharma-
cists in Toronto, Canada, when Ray
Townsend, from the Upjohn Company, used
the term in a presentation. Ray and a few oth-
ers had been performing studies using the term
pharmacoeconomics within the pharmaceuti-
cal industry since
the early eighties.
Today, pharmac-
oeconomics
research is a flour-
ishing industry
with many practi-
tioners, a large
research and applications agenda, several jour-
nals and flourishing professional societies
including the International Society for Phar-
macoeconomics and Outcomes Research.
What had happened just prior to 1986 that
prompted Ray to coin the term?Why did the
term catch on?Let me give you a little more
history, personal this time, that might suggest
the answers to these questions. Around this
same time, my career in pharmacoeconomics
started with a study of the cost-effectiveness of
AZT for treatment of persons with AIDS.
This was a modeling study based on data from
a clinical trial, ACTG 002. The cost for AZT
when it was first introduced was $10,000 for
1 year of treatment. The clinical data showed
that the drug would increase life expectancy
for persons with AIDS by approximately
1 year. My model therefore showed that the
incremental cost-effectiveness ratio for AZT
was $10,000, which was then and is now con-
sidered to be good value for money.
However, the idea of having to pay
$10,000 each year for a drug was shocking to
persons with AI DS and to the public. This
was especially so in the US where at that
time many people did not have any insur-
ance coverage for outpatient drugs. This
resulted in a lot of negative publicity for Bur-
roughs Wellcome Co. and for the whole
pharmaceutical industry.
The industry knew that AZT was just the
beginning. Drug development costs had risen
because of
increased regula-
tory requirements
to protect the pub-
lic from ineffec-
tive or unsafe
drugs following
the thalidomide
tragedy. New techniques for drug design and
new types of drugs engineered using the tech-
niquesof biotechnology, meant that the cost of
manufacturing drugswasalso likely to rise. Both
of these increasesin costsmeant that drug com-
panieswould likely be charging more for drugs
that successfully made it to market, in order to
obtain an acceptable return on their higher
investment. I think that these changes may be
some of the reasons that the new disipline of
pharmacoeconomicsflourished.
Rays initial definition of pharmacoeconom-
ics was the description and analysis of the
costs of drug therapy to healthcare systems
and society. Later this definition was
Measurement and presentation
of a comprehensive set of
outcomes that describe the
consequences of the use of a
new drug.
M a uskop f
2 Expert Rev. PharmacoeconomicsOutcomesRes. 1(1), (2001)
amended by Ray and some of his colleagues to include both
the costs and quality of life consequences associated with the
use of a new drug therapy. My own definition of pharmac-
oeconomics is the measurement and presentation of a compre-
hensive set of outcomes that describe the consequences of the
use of a new drug. These outcomes include the impact of the
new drug on healthcare costs and individual quality of life but
also include the impact of the new drug on individual func-
tional status and productivity, as well as the drugs impact on
caregivers and families and society.
Since 1986, many methodological advances have been
made that provide the tools that we need to measure this
comprehensive set of outcomes. These advances include
strategies for collecting phar-
macoeconomic data during
clinical trials. Profile meas-
ures for measuring changes
in general and disease-spe-
cific health status have been
developed and validated
using psychometric techniques. Economic techniques for
eliciting preferences have been applied to the measurement
of drug value. Statistical techniques have been developed,
using both frequentist and Bayesian approaches, for design-
ing trials and analyzing both trial and observational data for
use in pharmacoeconomic evaluations. The reference case for
cost-effectiveness ratios has been developed and methods for
estimating confidence limits around these ratios proposed.
The concept of budget and population impact estimates has
been introduced. All of these advances have given us tools
that we need to measure the comprehensive set of outcomes
associated with a new drug. They now form the body of
knowledge that is pharmacoeconomics.
Who should study pharmacoeconomics? Anyone who is
involved with healthcare decision-making, including suppli-
ers of healthcare products, such as pharmaceutical compa-
nies or medical device companies, the consumers of such
products and the healthcare providers. All should know
enough about the different elements of a pharmacoeco-
nomic analysis to be able to understand the results of the
analysis. Those who plan to perform the pharmacoeconomic
analyses should have a more extensive training.
How can you become a practising pharmacoeconomist?
What sort of professional training is needed?You need training
in Pharmacy, Medicine, Psychometrics, Economics, Statistics,
Epidemiology, Decision Analysis, Survey Techniques, Opera-
tions Research and a whole host of other disciplines. Clearly, it
is not practical to obtain formal training in all of these disci-
plines, so most practitioners get training in one or two of the
key disciplines and then learn something about the other disci-
plines on-the-job. In practice, most pharmacoeconomic
projects are completed by a team of people who have training
in the different disciplines so that the results of a pharmac-
oeconomic study are not dependent on one person being an
expert in all the relevant disciplines.
How can you learn to be a consumer of pharmacoeconomic
studies?For those who only need to understand the results of
pharmacoeconomic studies, the simplest way to learn this skill
would be by taking a single pharmacoeconomics course over a
1 year time period during university training in the primary
discipline or asa postgraduate course. This course would cover
the main topics in each of the disciplines. Many such courses
have been developed.
Why should these people all study pharmacoeconomics?
The main reason for studying pharmacoeconomics is to be
able to estimate and understand the full impact of a new ther-
apy. This impact will be on the individuals health and safety
but also on their use of healthcare services and the cost of
healthcare, on their quality of
life and functional status, on
their families and friends and
on society as a whole. Phar-
macoeconomics extends the
measurement of the impact
of a new drug beyond safety
and efficacy to all these additional outcomes. If we truly want
to understand the value of a new drug, we need to understand
its impacts on this broad range of outcomes. The price of the
drug will then determine whether the drug is good value for
money, depending on its impact on this broad range of out-
comes and on the value that the decision-maker places on
these changes in outcomes.
Why do we care about the impact of a new drug?Primarily
we care because the healthcare decision-makers (governments,
doctors, payers, patients) all care. They are vitally interested in
better treatments for our diseases as well as better preventive
strategies. However, they have realized that, as we have become
more successful in preventing and treating disease, we have
had to devote more and more of our scarce resources to health-
care. Thus, we now need to question more closely than ever
whether each new drug is good value for money compared
with current treatment.
Moreover, as countries try to control the rising costs of
healthcare in their aging populations, they have introduced
requirements for economic evaluations of new drugs. They
are all asking the question, is the new drug good value for
money and what is society willing to pay for it?
Guidelines for how to perform these economic analyses and
how to present the information were developed first in Aus-
tralia and Canada and then in many European countries and,
most recently, by managed care organizations in the US. All of
these guidelines require that a pharmaceutical company esti-
mate a comprehensive set of changes in outcomes associated
with the new drug.
The careful study of the body of knowledge that ispharmac-
oeconomicsand further development of that knowledge are par-
ticularly important because of the many controversies still
remaining in the use of pharmacoeconomic analysesfor the allo-
cation of funding to the use of new treatments. For example,
there isno agreement on what should be the benchmark value for
The main reason for studying
pharmacoeconomics is to be able to
estimate and understand the full
impact of a new therapy.
Why study p ha rma c oe c onomic s?
www.future-drugs.com 3
a cost-effectivenessratio and how to restrict delivery of healthcare
that hasa cost-effectivenessratio above the threshold value. There
is still no agreement on how to incorporate uncertainty of the
resultsinto decision-making and how to makedecisionswhen only
poor quality data are available. The choiceof comparator, popula-
tion subgroups, time horizon
and perspective all make a big
difference to the results and
require many more data than are
generally available. It isalso hard
to find a way to present the data
from a pharmacoeconomic anal-
ysisto decision-makersthat addressesthese issueswithout making
it completely incomprehensible to them. Finally, there are contro-
versiesabout who should fund the studiesand whether publication
biasresultsin inefficient use of healthcare resources.
For all of these reasons, it is critical that all healthcare
decision-makers have as much education in pharmacoeco-
nomics as possible. This will ensure that the methodological
and policy uncertainties still present in the pharmacoeco-
nomic analyses are properly accounted for when the results
of such analyses are used to help make healthcare decisions.
Formal training in pharmacoeconomics will ensure that the
methodologi cal and policy uncertainties still present i n the
pharmacoeconomic analyses
are properly accounted for
when the results of such anal-
yses are used to help make
healthcare decisions.
Finally, to illustrate the
fields complexity, how many
pharmacoeconomists does it take to change a light bulb?
The answer is four! One to estimate the cost of the new light
bulb, one to estimate the life expectancy of this new light
bulb, one to estimate the quality of life associated with the
light from the new light bulb and one to package the infor-
mation so that it convi nces the healthcare decision-maker to
take out the old light bulb and put in the new one!
It is critical that all healthcare
decision-makers have as much
education in pharmacoeconomics
as possible...