MANAGERIAL ECONOMICS PRODUCTION & COST ANALYSIS MANAGERIAL ECONOMICS PRODUCTION & COST ANALYSIS.
Cost minimisation analysis in health economics
description
Transcript of Cost minimisation analysis in health economics
![Page 1: Cost minimisation analysis in health economics](https://reader033.fdocuments.net/reader033/viewer/2022061202/547b472eb4af9fe37a8b45d3/html5/thumbnails/1.jpg)
COST MINIMIZATION ANALYSIS(CMA)
GROUP 2:
PETER PEDO AKOL
NAOME TURYAHABWE
JOHN BOSCO NINSIIMA
ALIYU HISHAM SULEIMAN
![Page 2: Cost minimisation analysis in health economics](https://reader033.fdocuments.net/reader033/viewer/2022061202/547b472eb4af9fe37a8b45d3/html5/thumbnails/2.jpg)
COST MINIMISATION ANALYSIS
Cost minimization analysis: Refers to comparison of two interventions or
strategies which are assumed to have the same outcome or effects to find out which of the two is the least costly option. It focuses on costing each of the options being compared in order to find out which of them has the least cost. Its main aim is therefore to find the most desirable option.
The fundamental assumptions underlying this method are:
The two options being compared have exactly the same effect (identical benefits).
That important alternatives have not been left out.
![Page 3: Cost minimisation analysis in health economics](https://reader033.fdocuments.net/reader033/viewer/2022061202/547b472eb4af9fe37a8b45d3/html5/thumbnails/3.jpg)
CMA (2)
It is a tool used in pharmacoeconomics and is applied when comparing multiple drugs of equal efficacy and equal tolerability. Pharmacoeconomics which is a sub-discipline of Health economics refers to the scientific discipline that compares the value of one pharmaceutical drug or drug therapy to another.
![Page 4: Cost minimisation analysis in health economics](https://reader033.fdocuments.net/reader033/viewer/2022061202/547b472eb4af9fe37a8b45d3/html5/thumbnails/4.jpg)
CMA (3)
From a broader perspective, it is used to compare two interventions/strategies (not necessarily drugs) with equivalent effectiveness and efficacy.
Of two medicines with equal efficacy, which one is least expensive.
It is the most used cost evaluation method. Most accurate method when comparing
cost between two therapeutically equivalent medicines.
![Page 5: Cost minimisation analysis in health economics](https://reader033.fdocuments.net/reader033/viewer/2022061202/547b472eb4af9fe37a8b45d3/html5/thumbnails/5.jpg)
KEY DEFINITIONS
Pharmacoeconomics—the description and analysis of the cost of pharmaceutical therapy to health care systems
Cost—the total resources consumed in producing a good or service
Price—the amount of money required to purchase an item
![Page 6: Cost minimisation analysis in health economics](https://reader033.fdocuments.net/reader033/viewer/2022061202/547b472eb4af9fe37a8b45d3/html5/thumbnails/6.jpg)
KEY DEFINITIONS (2) Medicine effectiveness—the effects of a
medicine when used in real-life situations
Medicine efficacy—the effects of a medicine under clinical trial conditions
![Page 7: Cost minimisation analysis in health economics](https://reader033.fdocuments.net/reader033/viewer/2022061202/547b472eb4af9fe37a8b45d3/html5/thumbnails/7.jpg)
DIRECT COSTS OF A MEDICINE Acquisition cost Transportation cost Supply management cost (i.e., storage facility
cost) Cost of supplies and equipment to administer
medicines, such as syringes and needles Personnel costs to prepare and administer such
as physicians, pharmacists, and nurses Other direct costs (e.g., ADRs, hospital room
charges, laboratory fees) Nonmedical cost (e.g., patient travel expenses)
![Page 8: Cost minimisation analysis in health economics](https://reader033.fdocuments.net/reader033/viewer/2022061202/547b472eb4af9fe37a8b45d3/html5/thumbnails/8.jpg)
INDIRECT COSTS OF A MEDICINE (2) Indirect costs—examples
Cost of illness to the patient Lost time from work Time required to care for somebody
Intangible costs Costs associated with pain and suffering
usually incorporated into utilities assigned to health states which reflect quality of life
![Page 9: Cost minimisation analysis in health economics](https://reader033.fdocuments.net/reader033/viewer/2022061202/547b472eb4af9fe37a8b45d3/html5/thumbnails/9.jpg)
PROCESS OF CMA
Obtain acquisition price for each medicine and calculate the price for the course of treatment to be compared- dose per day, number of days of treatment.
Calculate pharmacy, nursing and physician cost associated with the use of each medicine.
![Page 10: Cost minimisation analysis in health economics](https://reader033.fdocuments.net/reader033/viewer/2022061202/547b472eb4af9fe37a8b45d3/html5/thumbnails/10.jpg)
Process 2
Calculate equipment cost associated with each medicine.
Calculate laboratory costs associated with each medicine.
Calculate cost of any other significant factor
Calculate and compare total medicine costs for each medicine.
![Page 11: Cost minimisation analysis in health economics](https://reader033.fdocuments.net/reader033/viewer/2022061202/547b472eb4af9fe37a8b45d3/html5/thumbnails/11.jpg)
Example 1
Category Medicine A Medicine BAcquisition price USD 8.OO USD 15.00Pharmacist salary USD 2.50 USD I.50Nurses salary USD 2.50 USD 2.00Supplies USD 9.00 USD 2.25Lab services USD 4.00 USD 1.00
TOTAL USD 26.00 USD 21.75
![Page 12: Cost minimisation analysis in health economics](https://reader033.fdocuments.net/reader033/viewer/2022061202/547b472eb4af9fe37a8b45d3/html5/thumbnails/12.jpg)
Example 2
For example, we may wish to compare the cost of organizing communal days for periodic impregnation of mosquito nets with distributing individual kits for home use in order to find which of the two options is cheaper. The expected outcome is the treated net for both strategies. The study would now try to establish which of the two options is cheaper.
![Page 13: Cost minimisation analysis in health economics](https://reader033.fdocuments.net/reader033/viewer/2022061202/547b472eb4af9fe37a8b45d3/html5/thumbnails/13.jpg)
APPLICATION OF CMA
In situations where the benefits of alternative treatments have been proven to be identical and as such this methodology is perceived as being easy to apply.
It is used in supporting and justifying the introduction of cheaper drugs in the same therapeutic class.
It is used when finding out the activity or output with the lowest cost
![Page 14: Cost minimisation analysis in health economics](https://reader033.fdocuments.net/reader033/viewer/2022061202/547b472eb4af9fe37a8b45d3/html5/thumbnails/14.jpg)
Advantages
It facilitates selection of cheaper yet effective drugs or interventions.
It is the simplest of the four types of pharmacoeconomics analysis because the focus is on measuring the left hand side (cost) of the pharmacoeconomics equation.
It is very useful in evaluating the cost of a specific drug
Because it compares the cost of two alternatives, it helps identify the cheapest method/drug to use hence maximized profits/benefits.
It is most useful for comparing generic and therapeutic equivalents or «me too» drugs
![Page 15: Cost minimisation analysis in health economics](https://reader033.fdocuments.net/reader033/viewer/2022061202/547b472eb4af9fe37a8b45d3/html5/thumbnails/15.jpg)
Disadvantages
It can only be used to compare two products that have been shown to be equivalent in dose and therapeutic effect.
In many cases, there is no reliable equivalence between two products and if therapeutic equivalence cannot be demonstrated, then cost-minimization analysis is inappropriate (WHO, 2003)
It turns to the assessment of costs only after the benefits of the competing health care technologies have been demonstrated to be clinically equivalent.
It only compares alternatives of the same outcomes.
Its more time consuming since in-order to use it one has to find out the cost of the two different outputs for purposes of comparison
![Page 16: Cost minimisation analysis in health economics](https://reader033.fdocuments.net/reader033/viewer/2022061202/547b472eb4af9fe37a8b45d3/html5/thumbnails/16.jpg)
REFERENCES
1. Gold MR, et al, 1996: Cost effectiveness in Health and Medicine, Oxford press, New York.
2. Maynard A, et al, 1994: Something rotten in the state of clinical and economic evaluation? Intern. J of health economic.
3. Span MM, et al, 2006; None inferiority testing in cost minimization studies; practical issues concerning power analysis. Int. J int. J technol assessment healthcare.