Pharmacoeconomics

Interlink White Paper - 2012
Pharmacoeconomics -
Key to affordable
medicines
Pharma | Healthcare | Wellness | Lifesciences

Contents
Preface........................................................................................................ 1
Health economics and Pharmacoeconomics.............................................. 2
Shift in focus of the healthcare consumer.................................................. 3
Healthcare industry challenges and pharmacoeconomic solutions............ 4
Drug selection using Pharmacoeconomics: A case study.......................... 8
Pharmacoeconomics around the globe..................................................... 10
Establishing Pharmacoeconomics in India.............................................. 10
Perspectives for Indian CEOs.................................................................. 14
Annexure I: Implementation of
Pharmacoeconomics around the globe..................................................... 15
References................................................................................................ 20
Content published in this publication is copyright material of Interlink, no part of this Interlink White Paper
may be given, lent, resold, or disclosed to third parties without written permission from Interlink. No part of this
White Paper may be reproduced, stored in a retrieval system, or transmitted in any form or by means, electronic,
mechanical, photocopying, recording or otherwise, without the permission of the Interlink. After permission, if
the White Paper is used in part or in whole, it should be acknowledged as, ‘Text first published in Interlink White
Paper2012 and has been republished here with permission from Interlink Marketing Consultancy Pvt. Ltd.’

Pharmacoeconomics - Key to affordable medicines
White Paper - 20121
Preface
Interlink’sKnowledgeteamisprivilegedtopresentthiswhitepaperon‘Pharmacoeconomics
- Key to affordable medicines’.
Citizens and physicians worldwide are increasingly facing problems in deciding which
treatment is most effective medically and economically. Addressing this dilemma of
balancing cost and treatment, President Obama provided a vivid analogy of choosing
between a red pill and a blue pill, indicating that the decision is based on the most viable
medical and economic options. In order to survive and thrive in this recessionary world,
pharma and healthcare businesses will have to rigorously analyse and interpret comparative
effectiveness research (CER) results or in other words, perform pharmacoeconomic
evaluations.
This white paper first discusses the relationship between Health Economics and
Pharmacoeconomics,followedbyabriefdescriptionoftheconceptofPharmacoeconomics.
It then focuses on the changing behaviour of today’s healthcare consumer and its effect on
the industry. Considering the variety of problems faced by the industry today, the paper
then focuses on the solutions provided by Pharmacoeconomics to these problems, thus
aiming to help our readers understand the significance of Pharmacoeconomics and its
relevance today.
This paper also includes a case study of drug selection based on pharmacoeconomic analysis
in an attempt to help readers understand the real-time application of Pharmacoeconomics
The paper then describes the worldwide presence of Pharmacoeconomics and the current
scenario of Pharmacoeconomics in India considering the Indian pharma industry, wherein
the challenges, benefits and requirements of boosting Pharmacoeconomics in the Indian
system are discussed. The focus then shifts to the role that can be played by governmental,
non-governmental organizations, academicians and pharmacists in the introduction of
Pharmacoeconomics in India.
Pharmacoeconomic perspectives for Indian CEOs and decision-makers are also a key
aspect of the discussion. Country-specific implementation of the Pharmacoeconomics
concept is detailed in Annexure I.
We believe that Pharmacoeconomics will provide a comprehensive solution to industry
issues and challenges faceds by regulatory bodies. Synchronising efforts to balance the
interests of the industry, regulators and consumers is the way challenges can be addressed;
hence we consider this white paper to be of utmost interest to our esteemed readers.
Acknowledgements
The vast experience of our consultants in the pharma industry and their insights along
with the contribution of our research team has made this white paper insightful and
meaningful.
We had the benefit of receiving well-considered suggestions and comments during the
preparation of this white paper from Dr. R.B. Smarta, Ms. Ruth D’Souza and Mrs. Mala
Raj.
We acknowledge the efforts of Interlink team including Mr. Sachin Adawade, for writing
this paper, Mr. Pratik Rane, a research intern, for his content-related contribution, Ria
Kalghatgi, for editing support & Aarti Paradkar for production.
We believe that this paper will provide clues to policy-makers, industry and other
stakeholders for actions to lead India globally.
Dr. R. B. Smarta
Managing Director
Interlink Marketing Consultancy Pvt. Ltd.

Interlink Marketing Consultancy Pvt. Ltd. 2
Health Economics and Pharmacoeconomics
Economic evaluation is the formal process of weighing benefits and costs
in an incremental analysis. It is essentially a framework that draws up a
balance sheet between costs and benefits to assist decision-making.
In a world where resources are limited, health economics is used to make
informed decisions on which health treatments, medications or technologies
to choose and which to avoid in order to maximize health of the overall
population of a country. Health economics is gaining importance worldwide
as an important decision-making support science. It is a subset of the broader
concept of health technology assessment (HTA), which includes not only
drugs but also devices, medical and surgical procedures, diagnostics and the
systems, processes and programmes that influence healthcare.An important
subset of Health Economics is Pharmacoeconomics, which focuses solely
on pharmaceuticals.
Economics concepts can be applied to the healthcare industry for assessing
healthcare technology, which includes drugs, medical equipment, services
and programmes. This specialized application has given birth to Health
Economics, a concept that can be further applied to the pharma industry
issues, thus giving rise to the concept of Pharmacoeconomics.
Figure 1: Relationship between Healthcare Delivery and Economics
Introduction to Pharmacoeconomics
Pharmacoeconomics is an economics discipline that evaluates the behaviour
of individuals, firms and markets relevant to the use of pharmaceutical
products, services and programmes. It focuses on the costs (inputs) and
consequences (outcomes) of such a use. It applies the theories and tools of
economics, including Managerial Economics, to the science and business
of pharmaceuticals.
Healthcare Delivery Economics
Health Technology Assessment
HTA assesses drugs, devices, dignostics and healthcare systems,
processes and programmes
Health Economics
Health economics of drugs, devices, dignostics and
healthcare systems, processes and programmes
Pharmacoeconomics
Health economics of drugs and drug
treatment

White Paper - 20123
The purpose of Pharmacoeconomics is to establish the relative worth of
a product/service that can be used by decision-makers who face limited
budgets.
Operationally, the field of Pharmacoeconomics consists of analysis
and evaluation of outcomes (clinical, economic, or humanistic), cost
consequences and cost comparison (for example, considering resource
consumption); identification of alternatives; and decision-making
considering limited (fixed) budget/resources.
Pharmacoeconomics thus addresses critical questions like
• Are there two or more alternatives?
• Do the interventions examine cost and health effects?
• Which drugs should be included in a hospital formulary?
• Which is the best drug for a particular patient?
• Which is the best drug that a Pharma manufacturer can develop?
• How can two clinical pharmacy services be compared?
• Which drug delivery system is the best for a hospital?
• Will a patient’s quality of life improve by a particular drug therapy
decision?
• Which is the best drug for a particular disease?
• What are patient outcomes of various treatment modalities?
By addressing these questions, Pharmacoeconomics becomes important
and relevant to all the different stakeholders of the Healthcare and Pharma
industry of any country.
Shift in focus of the healthcare consumer
There has been a distinct shift in the patient/consumer focus and attitude
towards health and disease. A few decades ago, patient groups had a
‘reactive’ approach towards disease wherein patients aimed for a cure
by using pharmaceutical products and healthcare services. Based on the
consumer needs, the industry shaped accordingly. However, in the last 2
decades, this reactive approach has changed. The focus of both the industry
and the consumer is on disease management and prevention. This shift in
focus has led both consumers and businesses to diversify their options in
order to achieve their respective goals. Apart from offering a wide variety
of medicines for disease cure and treatment, the pharmaceutical and
healthcare industry has focussed on making preventive measures available
to both patients and healthy individuals in order for them to have healthier
lifestyles and prevent diseases.

These measures include the following options:
• Genetic and other molecular level tests for determining the probability of
contracting a particular disease. Such tests help in taking the necessary
preventive measures in advance.
• State-of-the-art diagnostic facilities for diagnosing and treating diseases.
• Wide variety of dietary/nutritional supplements, fitness equipment and
gymnasiums with expert guidance for a healthier lifestyle.
• Advanced medical procedures and medicinal treatment options
This shift in consumer attitude and behaviour will change the future
direction of the industry and create new opportunities for businesses
across the healthcare spectrum. In such an evolutionary scenario, it will be
veryimportanttosubstantiatethecosts(inputs)andconsequences(outcomes)
of a particular product or service, for which pharmacoeconomics is a viable
tool.
Healthcare industry challenges and pharmacoeconomic solutions
The pharma industry product pipelines are drying up, leading to a high
dependence on existing products for survival. The branded generic drugs
segment has become commoditized due to ever increasing and fierce
competition.
Price plays a major role in drug prescription and buying decisions. High
price may not always assure high quality or more benefits and companies
are finding it difficult to substantiate higher prices with commensurate
benefits.
Meanwhile government is tightening the regulatory framework in an attempt
to curb manufacturing and marketing malpractices. In such a scenario
Pharmacoeconomics seems to be a viable tool for balancing the interests of
all stakeholders of the industry.
Below is a brief description of the perspectives of each stakeholder in
the industry and how Pharmacoeconomics can provide solutions to their
problems.
Patient’s perspective
Patients are always concerned about the cost of therapy prescribed while
doctors are concerned about affordable treatment to ensure compliance
and complete recovery. If the pharmacoeconomic profile of a medicine is
available, doctors can know and evaluate the additional benefits available
from such a medicine over existing medicines and determine whether the
incremental price is commensurate with the additional benefits claimed.

White Paper - 20125
Treatment choices
There is always a tension in the minds of patients, doctors and hospital
authorities to choose and decide between providing medical services that
are technically feasible or available and the patient’s willingness to pay for
the services from his limited resources. Pharmacoeconomic evaluations can
be applied to assess the value of treatments, to compare the medical cost
and health outcomes associated with new therapies/medicines to the cost
and to determine the outcome of the existing alternative treatment.
Physician’s perspective
New medicines are launched very often by pharma companies claiming
incremental benefits over existing products available in the market. This
incremental benefit comes at an extra cost which is to be paid from the
patient’s pocket. In this context, performing an economic evaluation of
a new medicine and comparing it with existing ones provides significant
advantage from the viewpoint of medical practitioners. It will empower
physicians to compare medicines on different pharmacological parameters
including safety and efficacy.
Health Insurer’s perspective
The health insurance business is growing at a rapid rate and individuals
today are presented with a wide variety of health insurance options from
both government bodies and private insurance companies. Currently, a
standardized list or formulary of medicines and their cost is unavailable.
This list is essential for determining the eligibility criteria for reimbursement
at the insurer and patient levels irrespective of the insurance policy and the
insurer. Pharmacoeconomics will prove to be an essential tool in preparing
this standardized list or formulary based on cost-effective analyses of drugs,
which will benefit both patients and insurers in the process of reimbursement
and impart further clarity and transparency to the health insurance system
by helping insurers determine the clinical criteria for coverage.
Manufacturer’s perspective
For a number of critical diseases like cancer and diabetes, therapy is costly.
It is feasible to develop public–private partnership between health insurance
companies and pharmaceutical companies manufacturing these medicines
for developing a viable business model. Pharmacoeconomics can thus
provide a methodology to design a mutually beneficial model.
The principles of Pharmacoeconomics can be extended to taking critical
pricing decisions for acute and chronic diseases. These principles can
also be useful in preparing the necessary documentation for justifying
the proposed prices of beneficial therapeutic treatments and submitting to
regulatory authorities for approval.

Researcher’s perspective
Pharmacoeconomics concepts were mostly used for the retrospective
evaluation of clinical trial data. Implications of efficacy or safety aspects
were examined by pharmacoeconomic analyses, data bases were examined,
literature was surveyed and expert opinions were solicited. This information
was clubbed with retrospective analyses of trial data to develop a decision
analysis model.
A recent trend indicates that clinical trial designs explicitly incorporate
economic data collection. Some studies incorporate an element of modelling
to either adapt the findings of the trial to other settings or to project costs
and outcomes beyond the period observed in the trial. Several regulatory
agencies are now evaluating the use of pharmacoeconomic parameters as a
part of the drug regulatory process. A Pharmacoeconomics study from the
researcher’s perspective will usually consist of a decision analysis model
containing an economic evaluation.
Policy-maker’s perspective
Measures of health-related quality of life (HRQOL) are increasingly viewed
as important outcomes of medical and surgical interventions.
The expenditure associated with adopting the new medical treatment,
including new medicines, will have to be valued in terms of health outcomes.
Such outcomes will include, among others, mortality, morbidity, cost, length
of hospital stay, quality of care, and most importantly patient satisfaction.
Policy makers are often beset with ethical, financial and political dilemmas.
Illustratively, some of the key dilemmas include the following:
• How can finite resources be fairly and appropriately used to cover infinite
needs?
• Do costly life-saving prescription therapies offered to one patient
population come at the expense of the other?
• Which patients can best benefit from specific interventions?
• Is there a solution that includes humanity and a desire to improve lives
apart from employing logic and data?
Pharmacoeconomics provides clues to resolve some of the complex issues
in developing a policy framework to balance the economic imperative
of industry growth and social need of providing an access to affordable
medicines.
It is thus imperative for all players in healthcare to realize and appreciate the
utility and contribution of pharmacoeconomics to harmonise the interests
of the patient, the provider and other stakeholders.

Pharmacoeconomics-Keytoaffordablemedicines
WhitePaper-20127
Figure 2: Stakeholders’ perspectives and pharmacoeconomic solutions
Stakeholders’
Perspectives
Pharmacoeconomic
Solution
Area of Stakeholders’ Concerns
• What additional benefit does a new medicine provide over existing medicines? Is the
additional price commensurate with the claimed benefit?
• How does one determine the value of medicines and treatments, and compare the medical
cost and health outcome associated with new therapies/medicines to the cost and outcome
of the existing alternative medicine/treatment?
• How does one evaluate new medicines from the viewpoint of medical practitioners,
such as safety, efficacy and other pharmacological parameters?
• How does one evaluate the cost and outcome of medicines as well as prepare a list or
formulary of medicines for reimbursement eligibility?
• How does one take critical pricing decisions? How does one prepare accurate
documentation for regulatory authorities to demonstrate therapeutic benefits, which will
help in justifying the proposed price and benefits over existing alternatives?
• How does one perform retrospective evaluation of clinical trial data and analyses
implications of certain efficacy or safety aspects and develop a decision analysis model
for economic evaluation?
• How does one resolve complex issues in developing a policy framework to balance the economic
imperative of industry growth and the social need of providing an access to affordable medicines, thus
harmonizing the interests of patients, providers and other stakeholders?
Cost benefit comparison
between available medicines
Patient
Treatment
Choices
Physician
Insurer
Manufacturer
Researcher
Policy Maker
New molecule economic
evaluation
Medical cost and health
outcome comparison
Use in policy framework for
balancing industry, regulatory
and consumer needs
Drugs list and
reimbursement eligibility
New medicine selection
Medicine pricing decision

Drug selection using Pharmacoeconomics: A case study
Physicians worldwide have multiple options for the treatment of pain caused by
osteoarthritis. Among these options, the most suitable ones comprise NSAIDs and COX-II
inhibitors. However, in order to choose which drug is best in terms of efficacy and price,
with minimum side effects, a pharmacoeconomic evaluation was conducted in the US by
Spiegel et al. (2003), which is presented below:
1. Etiological and demographical facts about Osteoarthritis
• Pain results in significant disability and resource utilization
• Affects 15% of the US population and is a leading cause of chronic disability in the US
• Affects ~8 million people in the UK and ~27 million in the US
• Results in >100,000 hospitalizations annually
• Most frequent joint disease with prevalence of 22% to 39% in India
2. Comparison of treatment options
NSAIDs COX-II inhibitors
Effective pain relief Effective pain relief
24%–30% the cost of Cox-II inhibitors Substantially expensive than NSAIDs
Associated with a significant risk of adverse
effects such as dyspeptic symptoms.
Associated with a lower risk of GI side effectsTheir use causes more serious non-
dyspeptic effects, symptomatic ulcers, ulcer
haemorrhage, and ulcer perforation
3. How should the physician treat his patient considering cost and side effects?
a. NSAIDs are inexpensive compared to Cox-II inhibitors, but will the more
expensive agent pay for itself by preventing an expensive GI bleeding in
patients?
- Dyspeptic symptoms are decreased by 15% and clinically significant ulcer
complications are reduced by 50%
b. Risk of GI bleeding: how much can it be altered?
- Not all osteoarthritis patients have an equal risk of developing GI bleeding
- Though the relative risk reduction of GI complications with Cox-II
inhibitors catches our eye, the actual risk reduction is small, being just 1
to 2% for overall ulcer complications and 1% for serious haemorrhage and
perforation.

White Paper - 20129
4. Is paying extra for GI protection justified in all patients? What value is really
purchased for the extra cost?
Cost-Effectiveness Analysis using Pharmacoeconomics
Population Drug Total
Annual
Cost
QALYs*
Gained
Incremental
cost per QALY
gained
No History of GI
ulceration
Naproxen $ 4859 15.2613 -
Cox-II inhibitor $ 16,443 15.3033 $275,809
History of GI
ulceration
Naproxen $ 14,294 14.7235 -
Cox-II inhibitor $ 19,015 14.8081 $55,803
*QALYs-Quality-Adjusted Life Years
5. How do cardiovascular problems affect the choice of using Cox-II inhibitors or
NSAIDs?
Population Drug Annual
Cost
QALYs*
Gained
Incremental cost per
QALYs gained
All patients
Naproxen $5,037 15.2539 -
Cox-II $16,620 15.2832 $395,324
*QALYs-Quality-Adjusted Life Years
6. Conclusion
1. Risk reduction for GI complications seen with Cox-II inhibitors is unlikely
to offset their increased cost in the management of average risk patients with
osteoarthritis pain
• With no history of GI bleeding choosing naproxen
• With a history of GI bleeding choosing Cox-II inhibitors
2. In all patients with osteoarthritis, the decision to use Cox-II inhibitors should be
made with the awareness of the effect of the added risk for cardiovascular events
on cost-effectiveness
3. Currently, sufficient information is unavailable about the association between
Cox-II inhibitors and cardiovascular events, but it may be prudent to avoid these
drugs in patients with a cardiovascular history, especially in patients with history
of GI bleeding.

Pharmacoeconomics around the globe
Currently European countries are making the maximum use of
pharmacoeconomic data for reimbursement and other financial decisions
and most have officially introduced Pharmacoeconomics guidelines in their
countries. Australia in comparison with European countries has a relatively
well-developed pharmacoeconomic structure. Countries in the North
American continent, South American continent and South Africa have
introduced the concept of Pharmacoeconomics and outcomes research data
lately but its full introduction is not visible until today. Countries in Asia
like China, Hong Kong, Japan, Korea and Singapore have a well-developed
Pharmacoeconomics and outcomes research structure. However, the Indian
healthcare system has not yet undertaken research in Pharmacoeconomics
and outcomes. Please refer to Annexure I for details of Pharmacoeconomics
in specific markets.
Establishing Pharmacoeconomics in India
The Indian pharmaceutical industry (IPI) is the world’s fourth-largest
by volume and is likely to lead the manufacturing sector in India. The
Indian Patent Act in 1970 played a major role in developing a base for
the manufacturing unit in India. The change in law in 2005 has created
opportunities for both international firms and local Indian companies for
sharing expertise. This has certainly created tremendous job opportunities
mainly in the field of clinical research, thus making way for health outcomes
research.
In addition, many governments worldwide are seeking to curb their soaring
prescription drug costs by greater use of generics, thus giving importance
to cost-effectiveness and cost-benefit analysis studies. In other words, they
are implementing the concept of Pharmacoeconomics. Unfortunately, even
after the availability of tremendous data on health sciences and clinical
research, this data is not used for outcomes research and pharmacoeconomic
analysis, the reason for this being the quality of primary data available and
its suitability for secondary database research. Therefore, the centrepoint
for the future of outcomes research and pharmacoeconomic analysis in
India is the development of a proper database to be used for comparative
effectiveness research.
In India, the concept of Pharmacoeconomics is still not used by the
government in order to make reimbursement decisions. Furthermore, the
concept of Pharmacoeconomics is not being used in academic research

White Paper - 201211
though cost-effectiveness studies have been performed in various parts of
India.
Challenges in using Pharmacoeconomics
1. Great diversity in India namely socioeconomic development and
population size make it difficult to adapt to the Pharmacoeconomics
research being conducted in other countries.
2. Lack of full appreciation of the potential importance and application of
Pharmacoeconomics studies.
3. Poor technical skills of healthcare professionals, especially of
pharmacists.
4. Lack of appropriate database of the healthcare system in order to bring
about research adaptation from another country.
Benefits of Pharmacoeconomics
1. Optimal use of finances for pharmaceutical expenditure.
2. Provision of job opportunities in the clinical, health economic and
market research sectors.
Implementing the Pharmacoeconomics concept – way forward
In a stepwise manner, the following measures can be undertaken to extend
Pharmacoeconomics practice in India.
1. Introduction of the Pharmacoeconomics concept at the undergraduate
level.
2. Workshops on how to implement the concept of Pharmacoeconomics
in pharmacy practice.
3. Use of cost-effectiveness data in the pharmaceutical industry for
reimbursement and other financial decisions, thus decreasing
pharmaceutical expenditure.
4. Encouragement of pharma students to present posters on
Pharmacoeconomics and participate in the student chapters of
International Society of Pharmacoeconomics and Outcomes Research
(ISPOR).
Pharmacoeconomics and role of governing bodies
At present, there are two International Society of Pharmacoeconomics and
Outcomes Research (ISPOR) regional chapters in India, namely ISPOR
India and ISPOR Manipal. The National Institute of Pharmaceutical
Education and Research (NIPER) is currently India’s centre for excellence
in pharmaceutical education and research. Collaboration of the existing

and future ISPOR regional chapters and NIPER could accelerate current
research and produce quality projects useful for allocation and effective
resource utilization in India.
Government’s Role
Pharmacoeconomics utilization in India would require the healthcare
system to be operated under a single roof in the country. At present, there
is no definite healthcare system followed in India; there is no nationalized
prescription service as well. The drugs purchased by pharmacies are not via
centralized systems such as state associations thus encouraging middlemen
and increasing the price a common man would pay had the drug been brought
by the pharmacies from state associations at a much cheaper rate. All these
increase the expenses paid by the common man as his health expenditure.
This indirectly increases the expenditure on the healthcare system of the
country.
The government can play a major role by including Pharmacoeconomics in
the healthcare system by taking the following measures:
• A government-operated centralized healthcare system is required that
would not only regulate government hospitals but would also undertake
the regulation of pharmaceutical drugs and services. This action would
entertain the usage of pharmacoeconomic studies in evaluating the drugs
for its cost-effectiveness and cost minimization, thus optimizing the
health expenditure of the country.
• Stategovernmentsshouldundertakemeasuresofsupplyingpharmaceutical
drugs to local pharmacies by its direct purchase from the pharmaceutical
industries or manufacturers. This would avoid middlemen like super-
stockists, authorized stockists and semi-wholesalers, thus lowering the
overall cost of the drug in the market.
• Currently the approval of new drugs for marketing is the function
of the Central Drugs Standard Control Organization (CDSCO)
headed by the Drug Controller General (India). Before approval basic
information on chemistry, physicochemical information, complete
monograph specifications and data on the formulation including
quality control data, animal pharmacology and toxicology and human/
clinical pharmacology are reviewed. During the review process of
the new drug by DCGI, pharmacoeconomic evaluation studies should
be requested from the manufacturing company, thus giving an idea
of cost-effectiveness and cost utility of the newly submitted drug.
This would ensure long-term benefits of the newly introduced drug in the
market.

Role of National Pharmaceutical Pricing Authority (NPPA)
NPPA, as a part of its monitoring activity, monitors and analyses
month-wise price movement of non-scheduled drugs. The prices of these
manufacturers are fixed based on various factors like cost of production,
market competition and the company’s profitability status. NPPA monitors
the prices of non-scheduled drugs by various methods such as scrutiny of
price lists submitted by manufacturers, analysis of monthly retail store audit
reports and complaints/references received from official and unofficial
sources. NPPA has the authority to fund relevant studies with respect to
pricing of drugs/pharmaceuticals in order to monitor the pricing of various
drugs. When NPPAmonitors the prices of non-scheduled drugs by accepting
the price list from the manufacturers, it should request manufacturers to
submit the Pharmacoeconomics study data in order to make optimized
decisions with respect to cost and efficacy of drugs.
NPPA could grant funds to universities in order to conduct
pharmacoeconomic and health outcomes research studies. This would
provide the government with necessary Pharmacoeconomics data of the
drugs under scrutiny and give research opportunities to academicians,
thereby providing a stronger educational base for pharmacoeconomic and
outcomes research studies in the country.
Role of Insurance
Till date, only 3% to 5% of Indians are covered under any form of health
insurance. This includes those covered under the Central Government
Health Scheme (CGHS; 4 million beneficiaries), the Railway Health Scheme
(1.2 million) and the Employees State Insurance Scheme (0.3 million), all
examples of social health insurance.
On the other hand, private insurance covers about 11.2 million individuals.
Nevertheless, private insurance is not the answer for India’s objective
of equity, efficiency and quality in health because it tends to cater to the
affluent classes, covering the healthiest and the wealthiest thereby resulting
in limited social gain.
In order to implement pharmacoeconomic studies in the reimbursement
aspect of the Indian pharmaceutical industry, there is a need for the
government to undertake a centralized insurance system like other countries
in the Asia-Pacific region. Although an initiative was taken by the Indian
government in 2003 to implement a Universal Health Insurance Scheme,
the initiative failed because of its failure to cover the poor population.
However, in April 2008, the Union Ministry of Labor and Employment in
India launched a Rashtriya Swasthya Bima Yojna (RSBY) smart card to
combat the so-called ‘health-based poverty trap’ in the country. The RSBY
initiative provides health insurance coverage for below poverty line (BPL)

families and there are currently, 28.6 million RSBY card holders and their
115 million family members across India. This initiative has proved to be
beneficial for the poor in India.
Although the current insurance companies could make use of
pharmacoeconomic studies for the purpose of reimbursement, the
entire Indian population will not benefit because of the limited size of
the population covered by the current insurance schemes in India.
To resolve this issue, insurance companies need to expand their coverage to
different economic strata of the society and ensure better health coverage
plans for all.
Pharmacoeconomic perspectives for Indian CEOs
Economic evaluations are important for choosing existing alternatives
for improving health. They also play a key role in creating incentives for
the development of new medicines. If economic evaluations are used for
allocation of resources within the healthcare system, it will be possible
for firms to develop new medicines and use pharmacoeconomic studies to
evaluate different strategies.
The social and economic development of the people is a major concern for
policy-makers having a socio-political agenda. It is an equally important
concern for the pharmaceutical industry in pursuance of its business agenda.
In a market economy, where global competition is intense, pharmaceutical
researchers, manufacturers and marketers will have to reckon the need for
evaluating resources vis-à-vis outcomes. This could indeed be a valuable
instrument in designing and implementing business strategies in the current
volatile business world.
Greater challenges in decision-making coupled with improvements in
pharmacoeconomicresearchindicateagreaterroleforPharmacoeconomics
into the new millennium. This in turn will have consequences for companies
in the pharmaceutical industry. More successful access to markets and better
commercialization of products will be the rewards for those companies
committing to Pharmacoeconomics and to the broader goal of delivering
value for money in healthcare.
The opportunities emerging in the Indian Pharmaceutical Industry,
changes in patent laws and development of pharmaceutical education
specializing in Pharmacoeconomics indicate a promising future for
outcomes research and pharmacoeconomic analysis in the country.
The knowledge thus developed can be used by government organizations
for the reimbursement of pharmaceutical drugs and services aiding profits
in the health and pharmaceutical sector.

Annexure I: Implementation of Pharmacoeconomics around the globe
1. Australia
Australia is one of the first countries to incorporate formal guidelines for
Pharmacoeconomics and outcomes research.
• It has a national health insurance system (medicare) funded by the state
government (funded by income tax and state general revenues) and
private hospitals are funded by private insurance. There is a selective
list of drugs for drug reimbursement to pharmacists, which is done
consideringthepharmacoeconomicdatainwhichthecost-effectiveness
of the drugs and services is measured.
• Each prescription is charged AUS $ 20 and beneficiaries are charged
AUS $2.60 per prescription, which is waived after a threshold.
• Australia operates a Prescription Benefit Scheme (PBS), which
reimburses pharmacists for the cost of a selective range of drugs. PBS is
operated with the help of an advisory committee called Pharmaceutical
Benefits Advisory Committee (PBAS).
• The selective range of pharmaceutical drugs used for reimbursement
by the government has been decided on the basis of the therapeutic
effectiveness and cost-effectiveness of the drugs.
• According to the Australian guidelines for Pharmacoeconomics, the
pharmaceutical company along with drug safety and efficacy data
is required to submit the cost effectiveness data for the purpose of
reimbursement.
The purpose of pharmacoeconomic data as per Australian guidelines is
stated to be:
• Rationalize the use of drugs
• Cost containment (though not considered first)
• Greater health outcome results
2. North America
Considering North America, Canada was among the first few countries
to introduce pharmacoeconomic studies for drug economic evaluation.
The third edition of Guidelines for the Economic Evaluation of Health
Technologies was introduced in 2006. Pharmacoeconomic studies are
used by Canadian decision- and policy-makers who are responsible for
the funding of decisions for health technologies.
In USA, the healthcare system is mainly managed by the private sector
with minimum involvement of the federal government. Even though a

large amount of funds is provided for research in Pharmacoeconomics,
the healthcare providers, government, and companies rarely use it.
Furthermore, there is a dearth of Pharmacoeconomics research in the US.
Research in Pharmacoeconomics is essential for appropriate decision-
making as discussed earlier. Therefore, USAneeds to conduct appropriate
outcomes research of pharmaceutical drugs and services in order to make
comparative decisions for the authority.
3. South America
In Latin America, Pharmacoeconomics and outcomes research data has
been considered to play an important role in improving the health of
people. Latin America is characterized by double burden of diseases:
persistence of infectious and parasitic diseases and increased incidence of
chronic and degenerative diseases that are otherwise found in developed
countries. There is an increase in aging population. With regards to
monetary expenditure, Latin America spends a reasonable amount of
7% of GDP on healthcare services. The organization of many healthcare
systems in LatinAmerica, except in Costa Rica and Cuba, is characterized
by social healthcare insurance for the formally employed population,
private insurance for the moderately rich, public insurance for the poor,
or a combination.
4. Africa
The early stage of Pharmacoeconomics in South Africa was from 1992
to 1994 as a result of the ‘push-and-pull’ mechanism: the pull from the
Minister of Health and the managed care organizations and the push
from multinational drug producers with established departments for
Pharmacoeconomics in the US and Europe. In 1996, the National Drug
Policy stated the need for Pharmacoeconomics in the rationalization of the
pricing structure for pharmaceuticals. To date, there is constant conflict
among the ministry, industry and other stakeholders over the pricing of
pharmaceuticals, which is exacerbated by the surge of theAIDS epidemic
in the country.
Pharmacoeconomics is considered to be a decision-making tool in
the Gauteng province healthcare system of South Africa. The private
sector in this country is mainly demonstrating the application of
Pharmacoeconomics with common uses such as formulary for disease
management, funding and comparison studies to rationalize price,
whereas the public sector is restricted to training of pharmacy students
and in formulary decisions by pharmacy and therapeutics committees.

5. Europe
Compared to other countries in the world, many European countries use
pharmacoeconomic data for reimbursement and other funding decisions
by the public and private sectors. They have also formally introduced
Pharmacoeconomics guidelines for the use of Pharmacoeconomics
concepts in the decision-making process.
6. Asia
6.1 Japan
1. At present, Pharmacoeconomics is at an early stage of evolution
in the healthcare scenario in Japan, mainly because of the way in
which their healthcare policy is formulated. On the other hand, many
academic programmes and institutes have been established recently
to gather pharmacoeconomic data. Institute for Health Economics
and Policy was originally funded by the Ministry of Health in 1993.
University of Tokyo established a division of Pharmacoeconomics in
Japan in 2000.
2. Previously in Japan, few economic incentives were given to healthcare
providers for the cost-effective service provided. However, recently,
the need for pharmacoeconomic data has been realized because this
data could be used for cost-effective healthcare delivery, which is a
means of controlling healthcare inflation.
3. In 1994, pharmacoeconomic data was used for price negotiations for
new and approved pharmaceuticals. Although the impact of this data
on actual pricing is unclear, companies receive high incentives to
conduct these studies.
4. Promising future for Pharmacoeconomics: Many studies on cost-
effectiveness have been published academically. The new healthcare
reform plans would directly uplift the need for pharmacoeconomic
data studies. Health reformation considering the need for evidence-
based medicines in Japan has given more importance to the
introduction of Pharmacoeconomics studies in the country. The drug
pricing organization in Japan has reiterated the point of considering
Pharmacoeconomics studies in their decisions.
5. About 44% of drug companies in Japan use pharmacoeconomic data
in their drug pricing negotiation processes.
6. Thus, the Japanese government took considerable time in accepting
the need for including pharmacoeconomic data in the healthcare
benefit plan, but gradually, the plans for its introduction are being

implemented with the current healthcare reformation happening in
the country. Many academicians are contributing to and providing
pharmacoeconomic data to the government through their research in
universities.
6.2 China
1. The share of drug expenditure in overall healthcare expenditure is
larger compared to that in US
2. Need of Pharmacoeconomics and outcomes research for wide
insurance coverage, policy reform, Pharma pricing and World Trade
Organization (WTO) entry.
3. Numerous studies in Pharmacoeconomics have been performed based
on ‘cost-effectiveness’ models.
4. The entry of China in WTO would allow the entry of foreign vendors
in important goods, thus making Pharmacoeconomics essential in
order to have a competitive advantage, especially for imported drugs,
which are relatively costly. Also, since the advertising of prescription
drugs is prohibited in public media in China, Pharmacoeconomics is
an alternative for foreign investors to gain recognition.
5. State drug administration (SDA) has recently stated that
pharmacoeconomic assessments should be considered for the
preparation of phase IV clinical trials.
6.3 Hong Kong
The healthcare system is almost 95% provided for by the government
1. Hong Kong hospital authority (HA) is the sole dealer of healthcare
products in the country. All decisions are made by the HA in relation
to healthcare providers and funding bodies, although the decisions
are not made on the basis of pharmacoeconomic data.
2. Pharmacoeconomics was introduced in 1999 at an international
meeting with the help of academic papers mostly in the gastrointestinal
disease subject area.
3. Many local authorities and healthcare professionals are actively
involved in Pharmacoeconomics and outcomes research activities.
In December 2000, the first Chinese chapter of the International
Society of Pharmacoeconomics and Outcomes Research (ISPOR)
was published in Hong Kong, the first regional chapter of the society
based on the Asia-Pacific area.

6.4 Korea
1. The healthcare system is market oriented and private sector
dominated.
2. Drugs account for 33% of health expenditure. Thus, reimbursement to
the physician and healthcare service providers by the national health
insurance scheme requires the use of pharmacoeconomic data.
3. A new regulation has been passed by the government: the
pharmacoeconomic data of all clinical drugs in Korea and the ones
waiting to be introduced in the country should be submitted to
Pharmacoeconomics authorities.
4. There is lack of resources in universities, government agencies and
pharmaceutical companies for developing pharmacoeconomic and
outcomes research data.
5. The problem in Korea is limited insurance coverage especially in cases
of major risks. Solution to this is a budgetary cap on expenditures as
a long-term strategy and consideration of pharmacoeconomic data as
important for future healthcare reforms.
6.5 Singapore:
1. Healthcare system is controlled by the government with the help of
three ministries.
2. The government uses a standard drug list to specify the process of
drug reimbursement and thus the need of pharmacoeconomic data
does not arise.
3. Government offers the concept of Pharmacoeconomics at the
undergraduate level of the 4 year pharmacy course.
4. The interest of the Ministry of Health is increasing towards
Pharmacoeconomics as its inclusion in decision-making is under
consideration. Involvement of the academic community in
Pharmacoeconomics studies is evolving.
5. The Singapore government formed a task force in 2001 to review
drug prices, and a recommendation of this group was the review
of the standard drug list (SDL). This review would consider cost-
effectiveness studies. Also, for the SDL review, Pharmacoeconomics
studies are recommended.

References
1 International Society of Pharmacoeconomics and Outcomes Research (ISPOR)
website
2 India Knowledge@Wharthon, With RSBY, India Tries to Curb the ‘Health-based
Poverty Trap’, May 03, 2012
3 Joshi, R.D., Interlink Insight, 2006
4 Article on Pharmacoeconomics by Mr. Pratik Rane (only hard copy available for
further reading)
5 Singh A.J., Garner P., Floyd K., Cost-effectiveness of public-funded options for
cataract surgery in Mysore, India. The Lancet; Vol. 355, pp. 180–184. 2000.
6 Spiegel M.R., et al. Annals Internal Medicine Issue. 138, Vol. 10, pp. 795–806. 2003.
7 Thatte U., Hussain S., Rosas-Valera M., Malik M., ‘Evidence-Based Decision on
Medical Technologies in Asia Pacific: Experiences from India, Malaysia, Philippines,
and Pakistan’, Value in Health, Vol. 12. 2009.
8 AmitRaval,Pharmacoeconomicsandoutcomesresearch:currentandfutureperspective
in India. website: http://www.ispor.org/awards/InternationalTravelScholarship/amit-
raval.pdf
9 Amrita School of Pharmacy Website: http://aims.amrita.edu/school-of-pharmacy/
conference-pape$php.
10 Audit-Tax-Advisory report 2006 of KPMG’s Pharmaceutical practice group website:
http://www.in.kpmg.com/pdf/indian%20pharma%20outlook.pdf
11 KulkarniU.,DeshmukhY.,MogheV.,RegeN.,KateM.,IntroducingPharmacoeconomics
in medical undergraduate curriculum. 2010. Website: http://www.academicjournals.
org/ajpp/pdf/pdf2010/January/Kulkarni%20et%20al.pdf
12 Pharmacoeconomics in Asia website: http://www.ncbi.nlm.nih.gov pubmed/15164802
13 Principles of Pharmacoeconomics, a study by B. Pharma graduate, http://farmacists.
blogspot.com/2009/05/principles-of-pharmacoeconomics.html
14 Pharmacoeconomics in Africa: http://www.ispor.org/news/articles/dec07/psa.asp
15 Pharmacoeconomics in Latin America: http://www.ispor.org/news/articles/oct08/
latinamericape.asp
16 Saranga H., Phani B.V., The Indian Pharmaceutical Industry- An Overview on Cost
Effectiveness using DEA. PDF copy link: http://home.iitk.ac.in/~bvphani/PHARMA.
pdf
17 The National Pharmaceutical Pricing Authority website http://nppaindia.nic.in/
index1.html The IPA website: http://www.ipapharma.org/contactus.aspx
18 The CDSCO website http://cdsco.nic.in/

Interlink Marketing Consultancy Pvt. Ltd.
3A, Central Plaza, 166, C.S.T. Road, Kalina, Santacruz (East), Mumbai - 400 098, India
Tel: +91 22 2666 6611 / 44 • Fax: +91 22 2666 6463
Website: http://www.interlinkconsultancy.com • Email: interlink@interlinkconsultancy.com
Pharma | Healthcare | Wellness | Lifesciences

Learning System - a pioneering effort by Interlink to facilitate induction, training,
and competency development of a Medical Representative.
Building In-clinic Excellence
In Your Medical Representatives
Key benefits
• Addresses the entire knowledge - skills -
attitude continuum on selling skills
• Builds confidence, business acumen and
competitive edge to deal with day-today
situations
• Facilitates product wise customization to
individual clients and situations
• A cost effective Learning System
Call now on 9664400207 for more details and demonstration
or email at vikas@interlinkconsultancy.com
A
New
Learning
System
to provide
varied
learnings
&
immense
benef
its to the
trainers, participants and
the
organisation
to increase
in-clinic
productivity
3A, Central Plaza, 166, C.S.T. Road, Kalina, Santacruz(E),
Mumbai -400 098. Tel: (022) 2666 6611/ 2666 6644
Email: interlink@interlinkconsultancy.com
Website: www.interlinkconsultancy.com
What does Learning System
contain?
• 5 interactive video based modules
spanning 17 learnings, 28 skills, 72
exercises
• User guide, Facilitator’s manual &
Participant’s manual for conceptual
understanding and lasting impact
• Support from Interlink’s experts to
Train-The-Trainers

Pharmacoeconomics

More Related Content

What's hot (20)

Similar to Pharmacoeconomics (20)

More from CLARAsteven7 (8)

Recently uploaded (20)

Pharmacoeconomics