Pharmacoeconomics and
Management in Pharmacy IV
2013 [UNIT PH 3340] 1
[John Vella B.Pharm.(Hons.) M.Sc.(Pharmacoeconomics)]
2013 [UNIT PH 3340] 2
News review
[John Vella B.Pharm.(Hons.) M.Sc.(Pharmacoeconomics)]
J. Vella [PH 3340]
Massive margins?!
• Generic clopidogrel 75mg tabs x 28 retails for € 29
• Tender for state supplies was won at € 2.13!
• Fluticasone 250mcg retails @ € 30.57 – Tender price € 6!
• A great differential between the private market and that for
publicly purchased medicinals
3
J. Vella [PH 3340]
Fair play?
• Is such a pricing strategy morally correct?
• Should the first priority of a pharmaceutical company be the
maximisation of profits or the provision of equitable healthcare with
the concomitant effect of a fair financial reward as a collateral effect?
• Do such price differentials have a punitive effect on the state system?
4
J. Vella [PH 3340]
Discussion
• Are patients forced to depend on the state system for
pharmaceuticals because of the high pricing strategy for
generics?
• Should generic drugs be granted MAs only if pricing is
substantially below that of the current market price?
• If so what discount would be deemed acceptable?
5
J. Vella [PH 3340]
A historical note
J. Vella [PH 3340]
The advantages of modern
medicine
• It was only in the 1830‘s that medical care broke
even with the probability of patient survival, as
opposed to no intervention at all!
• Antimony treatments and bleedings were
commonplace prior to the 1800‘s
• Very few members of the public appreciate how far
medicine has come, and how uncertain it still is
J. Vella [PH 3340]
Points of interest (i)
J. Vella [PH 3340]
Points of interest (ii)
J. Vella [PH 3340]
Points of interest (iii)
J. Vella [PH 3340]
Points of interest (iv)
J. Vella [PH 3340]
Points of interest (v)
J. Vella [PH 3340]
Points of interest (vi)
J. Vella [PH 3340]
Points of interest (vii)
J. Vella [PH 3340]
Technology’s effect on survival
rates and health care spending (i)
• A working paper 1 divided HTI into three types:
• (i) home administered, e.g. pharmaceuticals
• (ii) Interventions with varying degrees of value e.g.
an angioplasty
• (iii) Interventions with no proven value e.g. knee
arthroscopy at a cost of $ 5,000 per op
• 1Chandra & Skinner, 2011
J. Vella [PH 3340]
Technology’s effect on survival
rates and health care spending (ii)
• Applying the rationale to cardiac interventions, the
investigators discovered that :
• 44% of the reduction in mortality from 1980 to
2000 was due improved health behaviour
• 22% was due to Cat(i) such as aspirin and beta-
blockers, 12% Cat(ii) like angioplasty, and 10%
due to Cat(iii) interventions
J. Vella [PH 3340]
Technology’s effect on survival
rates and health care spending (iii)
• The cost of Cat(i) and Cat(ii) increased modestly over the
period under review
• Cat(iii) contributed greatly to the increase in healthcare
expenditures
• This seems to indicate that current healthcare
administrators are narrowly focused on a paradoxical
pairing of cost-cutting and an affinity for new and
attractive technologies rather then concentrating on
patient outcomes as the crux of treatment protocols
J. Vella [PH 3340]
Is the recession increasing access
to health-care? (i)
J. Vella [PH 3340]
Is the recession increasing access
to health-care? (ii)
• It appears that patients are accessing less healthcare
services as they are being more cost conscious
• The physical constraints on the system are being relieved by
a drop in demand
• There is a reported drop in unmet needs and delay in
access to care
• Could unnecessary interventions now be avoided?
• Are patients evaluating the actual medical and quality of life
improvements prior to care?
J. Vella [PH 3340]
Is the recession increasing access
to health-care? (iii)
• Could we apply a similar principle to the local healthcare
scenario?
• Introducing a form of co-pay or prescription fee might reduce
wastage and unnecessary usage of free state medical and
pharmaceutical services
• Prescribing limits for physicians could also enable a
quantification of trends within the system framework
• An element of cost-consciousness must be inserted, otherwise
excesses will persist
J. Vella [PH 3340]
The cost of ageing (i)
J. Vella [PH 3340]
The cost of ageing (ii)
J. Vella [PH 3340]
Bad news!
J. Vella [PH 3340]
Financial implications
• No decrease in CVS admissions means that there is
no improvement in quality of life and resources
employed
• More effort to enforce prohibition and increased
health promotion required
• A recent commentator argued for the outright
banning of tobacco and its classification as an illegal
drug
J. Vella [PH 3340]
More bad news!
J. Vella [PH 3340]
More bad news!
• Malta in figures 2012 published by the NSO
J. Vella [PH 3340]
Mortality 2011
J. Vella [PH 3340]
Eurostat Figures (i)
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Eurostat Figures (ii)
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Eurostat Figures (iii)
J. Vella [PH 3340]
Vioxx in the news again! (i)
J. Vella [PH 3340]
Vioxx in the news again! (ii)
Vioxx Maker Settles False Advertising Suit
Published: Sep 13, 2013
By Peggy Peck, Editor-in-Chief, MedPage Today
save |
NEW ORLEANS -- Almost a decade after the maker of rofecoxib (Vioxx) pulled the onceblockbuster pain killer from the market, the company settled a class action suit charging
it with overselling the benefits of the Cox-2 inhibitor.
It was Merck that pulled Vioxx from drugstore shelves on Sept. 30, 2004, but it was Merck
Sharp & Dohme that settled this latest suit in the U.S. District Court for the Eastern District of Louisiana for $23 million, which will come to about $50 for each patient included in
the class.
A A
J. Vella [PH 3340]
Vioxx in the news again! (iii)
May 14, 2009
Merck Paid for Medical „Journal‟ Without Disclosure
By NATASHA SINGER
Pharmaceutical companies routinely offer doctors reprints of articles from medical journals that are favorable
to their products.
But news of a Merck-sponsored publication for doctors in Australia, that has come to light in a personal injury
lawsuit there over Vioxx, has raised eyebrows in international medical publishing.
From 2002 through 2005, the Australian affiliate of Merck paid the Australian office of Elsevier, an academic
publisher, to publish eight compilations of scientific articles under the title Australasian Journal of Bone and
Joint Medicine, a spokesman for Elsevier said.
The Merck marketing compilation was unusual in that it looked like an independent peer-reviewed medical
journal. It even called itself a “journal,” without indicating in any of the issues that Merck had paid for it.
“I believe that many doctors reviewing the journal would likely believe it to be a peer-reviewed medical
journal, and rely upon the contents as they would upon other journals they read,” said Robert J. Donovan,
an expert witness for the plaintiff, according to a deposition statement.
J. Vella [PH 3340]
A planned aberration
• The company knowingly promoted the drug for an
unapproved indication, and set aside funds for damage
settlements
• A case of premeditated damage limitation
• In certain cases the FDA has bowed to pressures from ‘big
pharma’ to approve NME
• The financial stakes are enormous
J. Vella [PH 3340]
Obesity again! (i) 12/3/13 Why Are The Maltese So Fat?
Why Are The Maltese So Fat?
By Palash Ghosh on Nov ember 26 2011 9:20 PM
A recent survey by Eurostat, the statistical arm of the European Union (EU), revealed that British people are the fattest in Europe.
According to the data, 23.9 percent of British women are obese -- as defined by a Body Mass Index (BMI) of at least 30 -– while 22.1
percent of British men are fat.
That‟s not surprising, given the poor diet, heavy drinking and lack of exercise that characterize modern life in what Prime Minister
David Cameron calls „broken Britain.‟
However, what surprised me about the EU report was that the people of Malta were also alarmingly overweight.
Malta is a group of islands only 60 miles south of Sicily, and 180 miles from North Africa -- hence, I would have thought they would
adhere to a healthy Mediterranean diet, blessed by warm sunshine like Italy.
But while Italians are generally slim and healthy (only 9.3 percent of women and 11.3 percent of men are obese there, among the lowest
levels in the EU).
The numbers for Malta are 21.1 percent for women (second highest in Europe) and 24.7 percent for men (the highest for the continent).
According to the Maltese ministry of health, the island has a serious obesity problem.
J. Vella [PH 3340]
Obesity again! (ii)
Pediatr Obes. 2013 Oct;8(5):e54-8. doi: 10.1111/j.2047-6310.2013.00191.x. Epub 2013 Jul 25.
Prevalence of obesity among 10-11-year-old Maltese children using four established standards.
Decelis A, Fox K, Jago R.
Institute for PE and Sport, University of Malta, Msida, Malta; Centre for Exercise, Nutrition and Health Sciences, School for Policy Studies, University of Bristol, Bristol, UK.
Abstract
OBJECTIVE: The objective of this study was to establish, through measured height and
weight, the prevalence of overweight and obesity in a representative sample of Maltese
children aged 1011 years.
METHODS: Height and weight were measured in a sample, stratified by sex, region and type
of school, of 874 year 6 children and their body mass index classified as normal weight,
overweight, and obese using International Obesity Task Force (IOTF), World Health
Organization (WHO), US Centre for Disease Control and U.K. Department of Health
standards.
RESULTS: IOTF standards indicated 20.4% overweight and 14.2% obese, while WHO
standards indicated 23.1% overweight and 20.9% obese. All four standards reported
significant sex differences, classifying more boys in the overweight and obesity categories.
J. Vella [PH 3340]
Champions, of the flab?
• Maltese men are the fattest in Europe!
• Maltese women are second to the UK
• Neighbouring Italy has half the number of obese
citizens
• More awareness of the potential dangers must be
created, from an early age
J. Vella [PH 3340]
Discussion points
• Should obese people be forced to pay a surcharge on
medicines they get free, if they are the sequelae of
their own negligence?
• Should healthy and lifestyle conscious individuals
have to pay for other‘s indiscretions?
• Could future health systems measure vital statistics
and insurance be paid accordingly?
J. Vella [PH 3340]
The irony of life! 12/3/13 Food Prices Linked to Obesity Rates - Real Time Economics - WSJ
June 28, 2013, 11:19 AM ET
Food Prices Linked to Obesity Rates
ByKhadeeja Safdar
The pricing of food options may be exacerbating the childhood obesity epidemic in the U.S., according to
new research.
In a working paper published by the National Bureau of Economic Research, economists Michael
Grossman, Erdal Tekin and Roy Wada examined the connection between the body fat compositions of
youth across U.S. counties from 1999 to 2004 and the corresponding prices of foods. They found that
bigger price tags on fruits and vegetables were associated with greater levels of youth obesity, while
lower prices of fast-food options were correlated with higher youth obesity levels.
J. Vella [PH 3340]
The irony of life!
• A recent study found that a drop in the price of
foodstuffs in high-income countries was related to an
increase in consumption and obesity-related morbidity
• A case of too much or too little, as exhibited in the
previous examples
• It is expected that rates of obesity will rise further as
basic food prices keep dropping
J. Vella [PH 3340]
A novel Russian idea! (i)
• The Russian Federation has the same issues with obesity as
the Maltese Islands
• With the upcoming Sochi Winter Olympics this is a topical
subject
• The ROC has devised a plan based on a basic incentive:
money
41
J. Vella [PH 3340]
A novel Russian idea! (ii)
42
J. Vella [PH 3340]
A novel Russian idea! (iii)
• Although just launched it is anticipated to be a relative
success, at least in raising awareness
• Society does not respond to traditional approaches, with
health promotion campaigns focusing on the same
techniques and having to deal with a lack of funds, at least
as compared to the massive multi-national fast food entities
43
J. Vella [PH 3340]
Cycle to work (i)
44
J. Vella [PH 3340]
Cycle to work (ii)
• On the same lines, a British initiative
• ‘Cyclescheme enables company employees to get a bike
tax-free, saving on average about half the cost‘
• Again, the financial incentive is leveraged to obtain a gain in
health and long-term savings in state disbursement for
conditions related to obesity and fitness levels
45
J. Vella [PH 3340]
A Fat tax? (i)
46
J. Vella [PH 3340]
A Fat tax? (ii)
• A paper drawn up in the UK five or six years ago
• The main recommendations were:
• (i) pilot the tax prior to legislation
• (ii) attempt to defray the impact on low-income
individuals
• (iii) set up a framework to channel funds directly to
health promotion initiatives
47
J. Vella [PH 3340]
A Fat tax? (iii)
48
J. Vella [PH 3340]
A Fat tax? (iv)
49
J. Vella [PH 3340]
Vaccines are big money(i)
J. Vella [PH 3340]
Vaccines are big money(ii)
• Research is costly
• Few specialised companies, high barrier to entry
• Pfizer acquired Prevenar through its acquisition of Wyeth
• 175,000 cases and 6,000 deaths per year in the US
• Vaccines eliminate their own need over time!
2013 [UNIT PH 3340] 52
Health Consumer
Powerhouse Report 2013
[John Vella B.Pharm.(Hons.) M.Sc.(Pharmacoeconomics)]
J. Vella [PH 3340]
HCP Report 2013 (i)
53
J. Vella [PH 3340]
HCP Report 2013 (ii)
• Malta in 27th place!
• Relatively low share of public expenditure from total
• Median position for PPP adjusted per capita spend
• Bottom rankings in patient access to information and
records, and also e-prescribing
• No data collected regarding the consumption of antibiotics!
54
J. Vella [PH 3340]
HCP Report 2013 (i)
J. Vella [PH 3340] 56
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2013 [UNIT PH 3340] 63
A comparison of vital
statistics: Malta & the US
[John Vella B.Pharm.(Hons.) M.Sc.(Pharmacoeconomics)]
J. Vella [PH 3340]
David & Goliath
• At first glance the comparison might seem ludicrous
• A country of close to 300 million should definitely win hands
down when placed side by side to one with 400,000
individuals
• First thoughts and certain ingrained misconceptions are
however deceiving, as we shall see
64
J. Vella [PH 3340]
Population
65
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GDP per capita(in 2009 PPP international $)
66
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Health Exp per capita(PPP Int $ 2008, WHO)
67
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Health Exp as a % of GDP(2000/2009)
68
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Health Exp as a % of GDP over time (US)
69
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Life Expectancy at birth
70
J. Vella [PH 3340]
Once again prosperity = long life!
71
J. Vella [PH 3340]
Physicians per 100,000 pop.
72
J. Vella [PH 3340]
Malta in 2000 WHO rankings
73
J. Vella [PH 3340]
Why?
• The 2000 WHO health system rankings were revealing!
• Malta placed 5th whilst the US placed 37th
• This, regardless of the great disparity in resources deployed
• All the more so intriguing since there are obvious
deficiencies in the Maltese system
74
J. Vella [PH 3340]
Not how much but how!
• The deployment of resources is critical
• In the Maltese Islands our primary care system is relatively well
developed
• Citizens have easy access to physicians who can take timely
decisions on whether to dismiss, treat or refer
• The number of deferred hospitalisations is low
75
J. Vella [PH 3340]
A different approach
• This is not the case in the US
• Primary care has developed along different lines
• The uninsured are only begrudgingly afforded the mandatory
emergency care
• Often the same patients turn up elsewhere in a worse condition, and
now costing more to treat
76
J. Vella [PH 3340]
Multi-layered care systems
• On both countries, the patients, prescribers, dispensers, and
purchasers of pharmaceutical care are distinct
• This leads to a level of disconnect
• The value of the intervention is not passed along the treatment chain
• This leads us to the need to introduce value into HTA and
pharmaceutical care structures
77
2013 [UNIT PH 3340] 78
Healthcare expenditures in a
local and global context
[John Vella B.Pharm.(Hons.) M.Sc.(Pharmacoeconomics)]
J. Vella [PH 3340]
The public health system and
pharmaceutical care
J. Vella [PH 3340]
J. Vella [PH 3340]
Increasing healthcare
expenditure(i)
J. Vella [PH 3340]
Expenditure vs GDP
J. Vella [PH 3340]
Increasing healthcare
expenditure(ii)
• The figure for the Maltese Islands per capita is €
185, or around $ 249 at today‘s rates
• This does not take into account PPPs
• If purchasing power parities are taken into account,
then the figure would be $313 per capita (2009 fig,
from UPenn CIC)
• After adjusting for variation, it still emerges that
spending in Malta is 1/3 that of the US
J. Vella [PH 3340]
Increasing healthcare
expenditure(iii)
J. Vella [PH 3340]
Increasing healthcare
expenditure(iv) (PPP adjusted)
J. Vella [PH 3340]
Increasing healthcare expenditure
(v)
J. Vella [PH 3340]
Increasing healthcare expenditure
(vi)
J. Vella [PH 3340]
A few definitions (i)
• GDP – Gross Domestic Product, which can be
defined as the total market value of all final goods and
services produced in a country in a given year, equal
to total consumer, investment and government
spending, plus the value of exports, minus the value
of imports
• A commonly quoted figure
J. Vella [PH 3340] 89
€0
€1,000,000,000
€2,000,000,000
€3,000,000,000
€4,000,000,000
€5,000,000,000
€6,000,000,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
GDP( CONST€ 2000)
GDP( CONST€ 2000)
A few definitions (ii)
J. Vella [PH 3340]
A few definitions (iii)
• GNP – Gross National Product includes all that is
encompassed by the GDP plus any goods
manufactured abroad by entities owned by nationals
of the said country
• Gross as opposed to the Net Domestic Product,
which is the GDP minus the depreciation of the capital
national stock
J. Vella [PH 3340]
A few definitions (iv)
• Recession is officially defined as two consecutive quarters of
negative GDP figures
• An important economic indicator, together with the Rate of
Inflation, unemployment figures and expenditures in various
vital public sectors
• Politics has a lot to do with spin and ‗feel good‘ factors!
J. Vella [PH 3340]
An example (i)
J. Vella [PH 3340]
An example (ii)
J. Vella [PH 3340]
The American paradox, again! (i)
J. Vella [PH 3340]
The American paradox again! (ii)
• Better survival rates in breast and colorectal cancers
• Higher rates of admission in asthma and COPD
• Primary system is underdeveloped due to a shortage
of physicians
• Administration costs are 2.5x the OECD average
J. Vella [PH 3340]
Annual Expenditure on health in
the Maltese Islands
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
% SHE/TSE 7.96% 7.78% 7.60% 7.74% 7.66% 7.63% 7.77% 8.10% 8.74% 9.44% 9.08% 9.28%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
10.00%
% SHE/TSE
J. Vella [PH 3340]
Annual Expenditure on health in
the Maltese Islands
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
% SHE/GDP 3.33% 3.46% 3.54% 3.75% 4.20% 4.18% 4.22% 4.39% 5.01% 6.08% 5.93% 6.14%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
% SHE/GDP
J. Vella [PH 3340]
New Medicines Increase Longevity They Account for 40% of Increase in Life Expectancy
Data source: Lichtenberg8
0.120.23
0.30
0.570.45
0.76
0.56
1.07
0.62
1.37
0.70
1.65
0.79
1.96
0.0
0.5
1.0
1.5
2.0
2.5
Num
ber o
f Yea
rs In
crea
sed
Long
evity
1988 1990 1992 1994 1996 1998 2000
Increase in Longevity Due to
New Drug Launches
Total Increase in Longevity
J. Vella [PH 3340]
Note: Total health care expenditures for 2004 were $1.9 trillion.
* Now revised to Structures and Equipment
** Now revised to Government Public Health Activities
Data source: U.S. Department of Health and Human Services, Centers for Medicare & Medicaid Services,
Office of the Actuary6
Research and Construction*
Personal Medical Equipment
and Nonprescription Drugs
Nursing Home and Home
Health Care
Net Cost of Private Health
Insurance, Administrative
Costs, and Public Health
Programs**
Hospital Care
Prescription Drugs
Doctors, Dentists, and Other
Professional Services
Health Care Costs: 1965–2004 US
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
$1,600,000
$1,800,000
$2,000,000
'65 '70 '75 '80 '85 '90 '95 '00 '04
Do
llars
(in
Mill
ion
s)
J. Vella [PH 3340]
Therapeutic shift from inpatient to outpatient care with drug therapy Direct-to-consumer (DTC) advertising and consumer demand Existing drugs — expanded applications and more aggressive treatment guidelines New drug ―improvements‖ and ―new markets‖ Price inflation Demographic shifts
Reasons Implications
Why more spending?
More users
More prescriptions per user
More expensive mix
Higher unit costs
Spending on healthcare is increasing annually in the Maltese Islands
J. Vella [PH 3340]
Factors increasing expenditure (i)
• Individually these factors are understandable...
• Together they produce a kind of ―Perfect Storm‖ effect
• E.g. Inpatient to outpatient shift - primary treatment of
ulcers used to be gastric resection surgery; now
surgery is very rare
J. Vella [PH 3340]
Factors increasing expenditure (ii)
• DTC advertising- Claritin captured 80% market share
supported by extensive Direct To Consumer advertising
• Expanded applications and more aggressive treatment
guidelines
• e.g Asthma and allergy drug Singulair now approved for
treatment of allergic rhinitis;
J. Vella [PH 3340]
Factors increasing expenditure
(iii)
• Pre-mid ‗90s guidelines for treating high cholesterol
targeted >222, current guidelines target > 150 (I.e.,
‗more people qualify for treatment‘)
• New drugs - we can treat diseases today that we
couldn‘t treat before - hepatitis, Aids, MS, renal dialysis
(e.g., Cerezyme to treat Gaucher‘s disease costs
$450k/year)
J. Vella [PH 3340]
Solutions to increased costs
• Paradoxically increased investment in pharmaceutical
care can lead to overall reduction in healthcare costs
• This is demonstrated in the following two slides with
data from the United States
• Locally, a strong case is made for considerable
investment in obesity prevention and diabetes
education in an effort to defray future costs
J. Vella [PH 3340]
Disease Management Program Increases
Use of Diabetes Medicines and Reduces
Total Health Spending
Data source: Cranor, Bunting, and Christensen40
Other Prescriptions
Diabetes Prescriptions
Insurance Claims
$6,096
$488
$666
$3,596
$889
$724
$3,492
$1,440
$894
$3,283
$1,572
$1,027
$2,815
$1,409
$1,170
$1,584
$1,702
$1,393
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
Mea
n C
ost p
er P
atie
nt p
er Y
ear
(in 2
001
U.S
. Dol
lars
)
Baseline Year 1 Year 2 Year 3 Year 4 Year 5
Follow-Up (12-Month Intervals Following Baseline)
J. Vella [PH 3340]
Increased Use of Medicines Reduces Overall
Health Care Costs Mental Health/Substance Abuse (MH/SA) Spending per
Patient Fell as Drug Spending Increased, 1992–1999
Data source: Mark and Coffey39
Psychotropic Drug Spending
Inpatient MH/SA Spending
Other MH/SA Spending
$42.70
$55.20
$17.10
$24.10
$25.30
$45.60
$0
$20
$40
$60
$80
$100
$120
$140
Spe
ndin
g pe
r Cov
ered
Life
per
Yea
r
1992 1999
2013 [UNIT PH 3340] 107
Healthcare expenditure and
global inequalities
[John Vella B.Pharm.(Hons.) M.Sc.(Pharmacoeconomics)]
J. Vella [PH 3340]
Shocking!
108
J. Vella [PH 3340]
Health inequality and social conditions
109
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Money is important!
110
J. Vella [PH 3340]
Discussion (i)
• Research demonstrates that social inequality leads to
imbalances in healthcare outcomes
• ‗Tiered‘ healthcare systems where the wealthy have better
treatment options and access to cutting-edge
pharmaceuticals
• This is not ‗fair‘, but it is reality, even to some extent, locally
• Administrators work to reduce this inequality, both locally
and world-wide
111
J. Vella [PH 3340]
Discussion (ii)
• http://www.who.int/features/factfiles/health_inequities/facts/e
n/index.html
• Follow the link above for a reality check
• Although our present system is inefficient, we are privileged
to have the functional basics for a decent existence
• All the more reason to implement changes and improve the
provision of services
112
J. Vella [PH 3340]
Discussion (iii)
• It is the duty of us as pharmacy professionals to
reduce the impact of socio-economic factors on
health outcomes
• This can be done by:
• (i) improving counselling for illiterate patients
• (ii) educating the public about lower priced generics
113
J. Vella [PH 3340]
Discussion (iv)
• (iii) providing specific services to aid the elderly with
compliance and dosage issues
• (iv) improving interpersonal communication skills so
as to enable a more productive patient & health
professional relationship
114
2013 [UNIT PH 3340] 115
The impact of demographics
in pharmacoeconomic
considerations
[John Vella B.Pharm.(Hons.) M.Sc.(Pharmacoeconomics)]
J. Vella [PH 3340]
Healthcare and demography (i)
• Literature and commentators constantly
reference demographic shifts
• Is this a chicken and egg situation?
• Is an ageing population driving up
healthcare costs, or
• Is a greater healthcare expenditure making
increased life expectancy possible?
J. Vella [PH 3340]
Healthcare and demography (ii)
J. Vella [PH 3340]
Healthcare and demography (iii)
• Increased spending leads to better outcomes and
longer life expectancy
• The gross exception is the United States
• Malta, with a figure of € 2500 has better results than
the US at € 4500!
• We are more efficient at employing the resources at
hand, probably because the public system still plays
a major role
J. Vella [PH 3340]
Worldwide picture (i)
119
J. Vella [PH 3340]
Worldwide picture (ii)
120
J. Vella [PH 3340]
Worldwide picture (iii)
121
J. Vella [PH 3340]
What does this all mean? (i)
• An older population has a negative effect on
a country or region‘s finances in three main
ways:
• (i) older people require a greater quantity of
more expensive healthcare interventions,
including pharmaceuticals
• (ii) there is a smaller percentage of
productive labour force to pay for the above
J. Vella [PH 3340]
What does this all mean? (ii)
• The ratio is now 4:1 in most industrialised
countries; this is projected to drop to 3:1 in
the US and 2:1 or less in Europe and Japan
in 50 years‘ time
• This problem is also relevant to the Maltese
Islands, as the following slides demonstrate
J. Vella [PH 3340]
Demographic shifts in Malta (i)
124
J. Vella [PH 3340]
Demographic shifts in Malta (ii)
• The latest demographic survey by the NSO illustrates
the problem
• By 2050 the population will decrease to 380,000
• 24% will be aged 65+, as opposed to 15% in 2009
• Our finances are already feeling the strain
J. Vella [PH 3340]
Demographic shifts in Malta (iii)
• Expenditure on pharmaceuticals is increasing
rapidly, and shortages will become more frequent
• All this points to the need for a change in the
approach to the pharmaceutical healthcare provision
paradigm that is presently advocated by
administrators and policy makers
2013
[UNIT PH 3340] 127
Suggestions for improvements
to local practice within the state
pharmaceutical healthcare
system
[John Vella B.Pharm.(Hons.) M.Sc.(Pharmacoeconomics)]
2013 [UNIT PH 3340] 128
Supply chain issues
[John Vella B.Pharm.(Hons.) M.Sc.(Pharmacoeconomics)]
J. Vella [PH 3340]
Reducing local pharmaceutical healthcare
costs (i)
• Better inventory control, both in stock management
and in tendering procedure
• Distributive logistics applied locally would make better
use of the money allocated for rolling stock
• At present, certain areas of the primary care state
system can be OOS, while others have 2-3 months
stocks
J. Vella [PH 3340]
Reducing local pharmaceutical healthcare
costs (ii)
• Minimum level systems to trigger automated re-order
procedures within the context of a pre-determined
contract would ensure less frequent OOS
• Less frequent changes of brand will reduce patient
confusion and medication errors
• Transparent tender systems, possibly online and e-
compliant
2013 [UNIT PH 3340] 131
Care issues
[John Vella B.Pharm.(Hons.) M.Sc.(Pharmacoeconomics)]
J. Vella [PH 3340]
Reducing local pharmaceutical healthcare
costs (iii)
• Focus on patient-centred care, rather than cost control
• Build a system around a central database architecture
that revolves round the patient and the layers of
pharmaceutical care
• Various degrees of care can be applied, according to
the necessity and cost-effectiveness of the treatment
J. Vella [PH 3340]
Reducing local pharmaceutical healthcare
costs (iv)
• Develop a set of indicators for the cost-effectiveness
of pharmaceutical care
• Set a minimum level of care and a set of milestones
to be achieved
• Take the step to e-medicine and do away with
mountains of paperwork, at the same time reducing
administrative costs considerably
J. Vella [PH 3340]
Reducing local pharmaceutical healthcare
costs (v)
• This can only be achieved by pharmacists taking the
lead in this change
• To do so we must have the right attitude and
initiative to blend pharmaceutical care skills together
with administrative and pharmacoeconomic
techniques
• These skills can be developed by putting our
knowledge and profession into the context in which
we learn and practice
2013 [UNIT PH 3340] 135
The future for pharmacists
and pharmaceutical
healthcare administration
[John Vella B.Pharm.(Hons.) M.Sc.(Pharmacoeconomics)]
J. Vella [PH 3340]
Why must we change?
• "If you think that you can run an
organisation in the next 10 years as you've
run it in the past 10 years you're out of your
mind."
CEO, Coca Cola
J. Vella [PH 3340]
Predictions can go awfully wrong!
• "Radio has no future"
• "Heavier than air flying machines are
impossible"
• "X rays will prove to be a hoax‖
Lord Kelvin
J. Vella [PH 3340]
What is instigating change? (i)
• The evolution of the information age:
the internet, databases, globalisation
• Cost containment: healthcare providers
cannot keep increasing expenditure
without budgetary controls
• Ageing world: demographic shifts are
contributing to a greater strain on public
healthcare systems
J. Vella [PH 3340]
What is instigating change? (ii)
• Increasing public accountability: expenditure must be
justified and audited
• Increasing access to all: healthcare for all members of
a global society
• Ethical provision: health systems must function
without discrimination and within professional
boundaries
J. Vella [PH 3340]
What is instigating change? (iii)
• Current approaches to financial investment and
expenditures take into account the new era of
capitalism and money management following the
crash of 2008
• Healthcare and pharmaceutical services have not
been immune to cut-backs
• In fact, medicines are usually the first to feel the force
of budgeting constraints
J. Vella [PH 3340]
Why we must change!
• Population growth, increasing spending and an
increased level of expectancy and accountability
have placed great pressure on pharmaceutical
healthcare administrators and pharmacists at every
level
• We must rise to the challenge by being prepared to
implement our professional skills in a socially
relevant context
J. Vella [PH 3340]
Practical Intelligence (i)
• All the pharmaceutical knowledge to be had is
useless if we cannot bring it to practical use
• We must concentrate on developing a set of problem
solving skills, rather than becoming simple data
collectors
• Memorising quantities of data is no longer relevant as
IT has put all the information we need at arm‘s reach
J. Vella [PH 3340]
Practical Intelligence (ii)
• Rather, our next challenge as pharmacist(s)
administrators and managers is to enable the delivery
of equitable pharmaceutical care within the confines
of the system within which we are placed
• This concept applies both to a public and private
professional placement
J. Vella [PH 3340]
Practical Intelligence (iii)
• Dispensing duties are no longer the only facet of our
profession, but patient counselling, social integration
and the meshing of the public and private sector
pharmaceutical systems are all part of the
pharmacist‘s remit
• This can only be achieved through a complete re-
think of our professional mind-set
J. Vella [PH 3340]
A paradigm shift
“healthcare: a cost to be rationed” dogma to the
opposite vision: “healthcare: a service to deliver
consumer satisfaction” 1
1The Great Healthcare Paradigm Shift- Building the Largest Service Industry in Society,
Arne Björnberg, Ph.D.
J. Vella [PH 3340]
Current approach to
pharmaceutical care
• Presently the focus is on keeping costs down to a
specified limit, usually imposed by administrators from
outside the healthcare circle
• The future is a complete reversal of this approach
• The patient‘s health outcomes must be evaluated
along the whole cycle of care, and a decision taken for
the cheapest holistic option
J. Vella [PH 3340]
Patient-centred care
• This is the evolution of patient-centred care
• A philosophy that is still in its infancy, but that will form
the cornerstone of pharmaceutical care in years to
come
• PE will play a central part in this change, bringing a
measure of reason and justice to a highly-charged and
emotional debate
J. Vella [PH 3340]
PE in this change (i)
• HTAs should be used to speed up access to novel
and/or cheaper technologies
• Not used as a tool for simple cost-containment
• Existing reimbursement and pricing policies delay
patient access
• PE should be used to establish clinical and cost-
effectiveness indicators
J. Vella [PH 3340]
PE in this change (ii)
• Patients W.A.I.T. Indicator, EFPIA, May 2009 – 17 EU
countries covered in the report
• Between 47 to 90% of medicines licensed in the last
three years were available to patients, delays in
patient access to those medicines ranged from 101 to
403 days (beyond the 180 days mandated by EU
legislation).
J. Vella [PH 3340]
Types of Possible Remedies (i)
• Purchasing to Improve Quality/Patient Safety • Performance linked pay • Tiered networks • Strengthening primary care and care coordination
(medical homes) • Improve Efficiency (i.e., appropriate care settings)
• Purchasing Strategies to Reduce Costs
• Pooled purchasing, rebates, etc.
J. Vella [PH 3340]
Types of Possible Remedies (ii)
• Promoting Health and Disease Prevention
• Wellness Programs • Disease Management • Reducing Obesity/Tobacco Use • Positive incentives for Health
• Producing and Using Better Information
• Information Technology
• Evidence-Based Medicine
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