CMA and CBA
A new medication can be administered either orally or intravenously. Both routes are assumed to have the same clinical outcomes. The costs are as follows:
Which administration route is more cost-effective?
Oral administration ($170 versus $230 for IV)
What type of pharmacoeconomic evaluation is used when determining the total cost of heart disease in Ohio?
Cost of Illness
A new cancer therapy costs $10,000 and results in 4 additional months of disease-free survival compared to an existing therapy that costs $6,000 and results in 2 additional months of disease-free survival. Calculate the ICER for the new therapy in terms of cost per additional month of disease-free survival.
ICER = (Costtreatment a – Costtreatment b) / (Effecttreatment a – Effecttreatment b)
ICER = (10000 – 6000) / (4 – 2) = 4000 / 2 = $2000 per additional month of disease-free survival
What type of cost is the cost of the medication?
Direct Medical
If you have a health condition where patients transition between several states over a number of years, should you use a decision tree or a Markov model to evaluate this?
Markov model
In a large healthcare system, you need to decide between two new medications, MedX and MedY, for treating a chronic condition. Both medications have the same clinical efficacy and safety profile. Which medication is more cost-effective over a 1-year period based on the provided data?
Medication MedX:
Med Y is more cost effective ($820 versus $1980 for Med X)
What term is used to describe the concept that there is not an infinite amount of money available?
Scarcity
A new heart failure drug costs $5,000 per year and improves survival by 2 years compared to a standard treatment that costs $3,000 per year and improves survival by 1.5 years. The lambda is $2000. Should the new drug be accepted or rejected?
ICER = (Costtreatment a – Costtreatment b) / (Effecttreatment a – Effecttreatment b)
ICER = (5000 – 3000) / (2 – 1.5) = 2000 / 0.5 = $4000 per additional year survival
$4000 is greater than $2000, so the new drug should be rejected.
What type of cost is the cost of a house cleaning service for a chemo patient that is unable to clean thoroughly due to illness?
A new drug has the following probabilties of preventing migraines from one day to the next.
- Migraine day to no migraine day = 0.7
- Migraine day to migraine day = 0.3
- No migraine day to no migraine day = 0.8
- No migraine day to migraine day = 0.2
Based on this, what is the likelihood that a patient on the drug will have a migraine today and no migraine tomorrow?
0.7 or 70%
A pharmacy implements a medication therapy management program for diabetic patients at a cost of $7,000 per year. The program results in $10,000 in direct medical savings and $3,000 in productivity gains. What is the benefit/cost ratio of the program?
Total benefits = $10,000 + $3,000 = $13,000; Benefit/cost ratio = $13,000 / $7,000 = 1.86
What term describes the concept that occurs when a pharmacy has more Lantus in stock than what they can sell prior to the expiration date?
Surplus
Pharmacy researchers would like to estimate the utility of atrial fibrillation-associated stroke to determine the value of a pharmacist-conducted anticoagulation service for stroke prevention. They perform the necessary steps for a time tradeoff and then a separate standard gamble estimation. On average, patient-subjects reveal that they would be indifferent between living for 12 years in perfect health vs. the 15-year average expected life after having a stroke and suffering its consequences. Patient-subjects separately reveal that they are indifferent between living with stroke and its consequences vs. a gamble of undergoing a surgical procedure that has a 15% chance of resulting in their death and an 85% chance of keeping them in perfect stroke-free health.
What is the estimated utility based on the time tradeoff method?
Utility = 12/15 = 0.8
Which of the following costs would a hospital perspective be concerned with for a mental health intervention?
- Cost of therapy sessions
- Cost of medication for mental health
- Cost of lost productivity due to mental health issues
- Cost of a support group for patients
- Cost of therapy sessions
- Cost of medication for mental health
- Cost of a support group for patients
A health system is evaluating two new antidepressant meds for addition to its formulary: Drug A and Drug B. You are provided with the following information:
• Drug A:
• Cost: $300 per treatment
• 60% chance of clinical success
• 10% chance of side effects (treatable at an additional $150)
• Drug B:
• Cost: $500 per treatment
• 80% chance of clinical success
• 20% chance of side effects (treatable at an additional $200)
What is the total cost of Success for Drug A?
Total Cost = $189
A wellness program costs a company $50,000 per year. The program reduces sick days by 150 days annually. If the average daily wage is $200 per employee, what is the program’s Net Benefit?
Productivity Gained = (150) x (200) = $30,000
Net Benefit = $30,000 - $50,000 = -$20,000
What term describes the concept that occurs when a pharmacy can’t obtain enough Adderall to fill all of the prescriptions that are sent due to a DEA manufacturing limits?
Shortage
Pharmacy researchers would like to estimate the utility of atrial fibrillation-associated stroke to determine the value of a pharmacist-conducted anticoagulation service for stroke prevention. They perform the necessary steps for a time tradeoff and then a separate standard gamble estimation. On average, patient-subjects reveal that they would be indifferent between living for 12 years in perfect health vs. the 15-year average expected life after having a stroke and suffering its consequences. Patient-subjects separately reveal that they are indifferent between living with stroke and its consequences vs. a gamble of undergoing a surgical procedure that has a 15% chance of resulting in their death and an 85% chance of keeping them in perfect stroke-free health.
What is the estimated utility based on the standard gamble method?
Utility = 0.85
A pharmaceutical company anticipates a benefit of $50,000 as a flat payout in 3 years from the launch of a new drug. The discount rate is 7%. Calculate the present value of this benefit assuming the drug is launched this year.
PV = FV / (1 + r)t FV = $50,000 r = 0.07 t = 3
PV = 50,000/(1+0.07)3 = 50,000/1.225043 = $40,814.89
A health system is evaluating two new antidepressant meds for addition to its formulary: Drug A and Drug B. You are provided with the following information:
• Drug A:
• Cost: $300 per treatment
• 70% chance of clinical success
• 10% chance of side effects (treatable at an additional $100)
• Drug B:
• Cost: $400 per treatment
• 85% chance of clinical success
• 20% chance of side effects (treatable at an additional $100)
What is the CER for Drug A?
Using the Human Capital Method, calculate the indirect benefit of a pharmacy intervention for asthma patients. The average daily wage is $150/day, and patients missed 15 days before the intervention and 5 days after the intervention.
Difference in days missed = 15 – 5 = 10
Indirect benefit = (10) x (150) = $1500
If a pharmacy manager notices that the smoking cessation appointments are always booked out months in advance with a waiting list, which of the following options have the potential to bring the supply and demand into equilibrium? (Select all that apply)
If a healthcare intervention costs $200,000 and produces 5 additional life years with a utility of 0.6, is it considered cost-effective if the threshold is $50,000 per QALY?
QALYs gained = 5 * 0.6 = 3
200,000 – 0 / 3 – 0 = $66,667 per additional QALY so NOT cost effective b/c more than $50,000
A hospital acquired a drug costing $25,000 in July 2021. The annual inflation rate in drug prices was 3.5% from July 2021 to July 2024. Calculate the present value of the drug acquisition cost in July 2024.
PV = Costs * (1 + r)t
$25,000 * (1.035)3 = $27,717.95
A new drug has the following probabilities of preventing migraines from one day to the next.
- Migraine day to no migraine day = 0.7
- Migraine day to migraine day = 0.3
- No migraine day to no migraine day = 0.8
- No migraine day to migraine day = 0.2
Based on this, what is the likelihood that a patient on the drug that doesn't have a migraine today will have a migraine 3 days from now?
No migraine day --> (0.2) migraine day --> (0.3) migraine day --> (0.3) migraine day = 0.018
No migraine day --> (0.2) migraine day --> (0.7) no migraine day -- > (0.2) migraine day = 0.028
No migraine day --> (0.8) no migraine day --> (0.2) migraine day --> (0.3) migraine day = 0.048
No migraine day --> (0.8) no migraine day --> (0.8) no migraine day --> (0.2) migraine day = 0.128
Total probability = 0.018 + 0.028 + 0.048 +0.128 = 0.222 or 22.2%