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Formulary decision methodology in the context of health system costs and insurance trends Fadia T Shaya†, PhD, MPH Navendu Samant †Author for correspondence Center on Drugs and Public Policy, University of Maryland School of Pharmacy, 515 West Lombard Street, Baltimore, MD 21201, USA Tel.: +1 410 706 5392 Fax: +1 410 706 5394
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10.1586/14737167.4.6.595
‘...as different plans, with different populations and demographics, evaluate the cost and benefit of therapies, it is important that they also be consistent in their approach to valuation of life.’ Expert Rev. Pharmacoeconomics Outcomes Res. 4(6), 595–597 (2004)
With the increasing share of pharmaceuticals treatment guidelines, demographics and as a percentage of total healthcare expendi- when available, plan specific figures and tures, formulary decisions are becoming sociodemographics. Ultimately, it is at the increasingly critical. Decisions made by Phar- interface of clinical information, epidemiomacy and Therapeutics committees guide logic measures and economic principles [4], treatment options available to managed care that the relevance to formulary decision populations, and affect both the short- and making is defined. However, the challenge is long-term costs of managing diseases. Accord- in bridging the gaps among these three ingly, there is an increasing interest in mode- areas, which have traditionally grown in ling disease events and the corresponding eco- different silos. nomic implications in both the presence and Clinical information absence of therapy. As reflected in the Academy of Managed Randomized clinical trials (RCTs) lie at the Care Pharmacy formulary submissions guide- heart of all clinical information and form the lines, it is important that there is a standardized basis of a product clinical evaluation for forframework to present ‘With the increasing share of mulary decision makpopulation-specific data ing. Typically designed pharmaceuticals as a as double-blind, RCTs [1]. For instance, the data need to be struc- percentage of total healthcare are designed to identify the etiology or risk tured to reflect product expenditures, formulary factors of diseases, information, place of decisions are becoming evaluate therapeutic product in therapy increasingly critical.’ and preventive aspects (pharmacokinetics/pharmacodynamics) as well as supporting of medical practice or evaluate new clinical and economic information such as clin- approaches to healthcare delivery. The RCT measures efficacy such that it ical study results, disease management intervention strategies and clinical success. A result- reflects the extent to which a drug has the ing impact model report outlines indications, intended effect in a controlled environment. contraindications, adverse events, incidence However, it establishes efficacy only in the and prevalence assessments, optimizing patient experimental/select population. Thus, efficacy, as determined by clinical trial results, care and product availability [2,3]. It is therefore very important that decision must be translated into effectiveness, which is makers get timely and relevant information, more relevant to formulary decision making. reflecting new advances in therapies, new This leap from efficacy to effectiveness must © 2004 Future Drugs Ltd
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be qualified, as typically the conditions prevailing in the RCT include information on the disease clinical course and outare not sustained in a natural setting, where the treatment comes, the primary treatment options and process, as well as period exceeds that of the RCT. On the other hand, the out- the proportion and characteristics of patients, the products comes in the RCT are intermediate or even surrogate by and resources and their costs. Increasing standardization in pharmacoeconomics calls for design and necessity. Moreover, differences are expected in compliance, dosing and comorbid conditions. In that respect, systematic use of epidemiologic measures [6]. Well-conit is important to account for the anticipated compliance pat- structed pharmacoeconomic models can combine estimates terns from populations similar to that of the managed care of the treatment effectiveness and the resources consumed plan. The challenge remains to establish effectiveness in the by each treatment process [7]. There is an increased need for more general population. economic impact information, including direct treatment The RCT is based on a study design aimed at fulfilling the costs, indirect medical costs, indirect nonmedical costs and assumptions of internal validity. However, issues arise regarding mortality costs. In deriving these costs, however, we need to the external validity or generalizability. There are problems of consider the choice of epidemiologic inputs such as drop-outs, in instances of nonadherence to the experimental incidence or prevalence rates [8]. regimen, and drop-ins, for cases of nonadherence to the control Prevalence represents the load in a time period, or the burden regimen [5]. of disease. In the formulary context, it is used for measuring Traditionally, RCTs have used placebo controls. However, drug use. Being a static measure, it has the potential bias of in cases where it is unethical to withhold treatment due to including chronic cases. On the other hand it carries the bias of the nature of the conditions, RCTs are conducted with an measuring the disease and the attribute together (temporal relation). It is best used to model active drug in the control arm, as opposed to placebo. Trials are ‘Although randomized clinical trials chronic diseases. The other approach, which is conducted to prove superiority, remain the gold standard for equivalence or noninferiority. In assessing the efficacy of a therapy, it incidence-based, represents a direct estimate of the probability superiority trials, the hypothesis is is important that their result is of developing the disease in a time that the test drug is superior to the active control; in equivalence tri- interpreted with caution when used period. The incidence of drug use relates to measuring new expoals, it is hypothesized to be equivin formulary decision making.’ sure. As opposed to the prevaalent to the control. Increasingly, noninferiority trials are conducted to evaluate whether the lence-based approach, the incidence-based approach examtest drug is effective (better than placebo), or noninferior to ines the present value of future direct costs and indirect costs of morbidity [9]. Incidence represents the risk and as such is the active control. Noninferiority trials apply in cases where there is a better a dynamic measure. It is best used to model acute condi(prespecified) toxicity profile for the experimental treatment tions. The choice of either approach needs to be made in than the standard treatment, or the test drug is believed to consideration to the type of disease and other factors, but reduce toxicities of the standard therapy, or the test drug may should always be transparent to those using the information present with better ease of administration (e.g., the experimen- and making decisions. tal treatment may be an oral drug in a setting where there are no approved oral drugs). These softer outcome measures have Cost-of-illness & risk measures been the subject of increasing interest, in light of the relative Various studies have developed measures to assess the ecodecrease of new drugs in the pipeline. nomic burden of disease and illness on society. Cost-of-illNaturally, the fundamental assumption in an active control ness studies are often built on the premise of valuation of trial is that the control is effective. When this assumption does life as measured by the human capital or willingness-to-pay not hold, a harmful (i.e., worse than placebo) drug may be approach [10,11]. approved, based on a noninferiority test. Although RCTs In the human capital approach, a person is valued in as far remain the gold standard for assessing the efficacy of a therapy, as market earnings and the value of life is the discounted it is important that their result is interpreted with caution when future earnings stream. Proponents of the method believe it used in formulary decision making. provides a measure of the cost of disease. As a drawback, it places a low value on women, children, minorities and the Epidemiologic measures elderly because they have lower than average earnings. The By translating efficacy into effectiveness, the conceptual human capital approach also overlooks psychosocial costs framework is shifted from a clinical trial-specific model to a such as pain and suffering. In the willingness-to-pay approach, the value of what people disease-based model, which is more relevant to formulary management. A comprehensive disease-based model should are willing to pay for a change that reduces the probability of illaddress the system-wide impact of formulary changes on both ness or death is considered. This method is helpful in indicating clinical outcomes and resource utilization and costs, and how individuals value life and health, deriving social preferences
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regarding public policy, and assessing the burden of pain and suffering. While this approach draws less criticism than the human capital approach, it is more difficult to implement. In any formulary consideration, evidence is needed to describe the disease and the agent’s role in therapy, the clinical efficacy, safety and effectiveness, economic evaluations, References 1
Academy of Managed Care Pharmacy. Format for formulary submissions (2000).
2
Sullivan SD, Lyles A, Luce B, Grigar J. AMCP guidance for submission of clinical and economic evaluation data to support formulary listing in US health plans and pharmacy benefits management organizations. JMCP 7(4), 272–282 (2001).
3
Gross R, Strom BL. Toward improved adverse event/suspected adverse drug reaction reporting. Pharmacoepidemiol. Drug Safety 12(2), 89–91 (2003).
4
Mather DB, Sullivan SD, Augenstein D, Fullerton DSP, Atherly D. Incorporating clinical outcomes and economic consequences into drug formulary decisions; a practical approach. AJMC 5(3), 277–285 (1999).
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modeling techniques and overall clinical value. These approaches are as critical as information on the effectiveness of treatment to decision making. Finally, as different plans, with different populations and demographics, evaluate the cost and benefit of therapies, it is important that they also be consistent in their approach to valuation of life.
5
Lilienfeld D, Stolley P. Foundations of Epidemiology. Third Edition. Oxford University Press, NY, USA (1994).
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10
Mullins CD, Ogilvie S. Emerging standardization in pharmacoeconomics. Clin. Ther. 2(6), 1194–1202 (1998).
Hodgson TA, Meiner MR. Cost-of-illness methodology: a guide to current practices and procedures. Millbank Mem. Fund Q. Health Soc. 60(3), 429–462 (1982).
11
Mauskopf J. Why study pharmacoeconomics? Expert Rev. Pharmacoeconomics Outcomes Res. 1(1), 1–3 (2001).
Rice DP, Cooper BS. The economic value of human life. Am. J. Pub. Health 57, 1954–1966 (1967).
Affiliations
8
Shaya FT, Mullins CD, Wong W. Incidence or prevalence: implications for formulary decision-making. Proceedings of the Seventh Annual Meeting, International Society for Pharmacoeconomics and Outcomes Research. VA, USA (2002).
9
Shaya FT, Mullins CD, Wong W. Incidence versus prevalence modeling in pharmacoeconomics. Expert Rev. Pharmacoeconomics Outcomes Res. 2(5), 89–96 (2002).
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Fadia T Shaya, PhD, MPH Assistant Professor, Associate Director, Center on Drugs and Public Policy, University of Maryland School of Pharmacy, 515 West Lombard Street, Baltimore, MD 21201, USA Tel.: +1 410 706 5392 Fax: +1 410 706 5394
[email protected] Navendu Samant, PhD candidate University of Maryland School of Pharmacy, 515 West Lombard Street, Baltimore, MD 21201, USA
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