Pharmacoeconomic Evaluations & Methods
Costs are central to all forms of economic evaluation and are important that those undertaking such analyses are aware of (i) the cost classification appropriate to pharmacoeconomic evaluations and (ii) the underlying technology in the production of health care outcomes, the treatment of efficiency and how the technology of production drives cost relations. Just as it is important to understand the relation between total, average and marginal costs (the perspective of the economist) so it is important to consider which costs are appropriate given the perspective of an economic evaluation. These issues are reviewed in Cost Analysis in Pharmacoeconomics (I) – The Classification of Costs and Cost Analysis in Economics (II) - The Health Care Production Function.
Central to many of the modeling endeavors in traditional pharmacoeconomics is decision theory. An understanding of the key concepts is important, not only to traditional cost-outcomes analyses and the construction of synthetic models, but also to modeling drug interventions from a systems perspective. Two core modules are presented: An Introduction to Decision Theory and Using Matrix Algebra to Solve Markov Modeling. The former is concerned with providing an overview of the standard approach to clinically based decision modeling; the latter is concerned with not only providing an introduction to more complex decision modeling but in introducing readers to the essentials of matrix algebra and how these techniques can be applied to various types of Markov model. The latter module includes both worked examples of Markov models but also an introduction to the techniques of matrix algebra as they apply to Markov processes.
One issue that is always of concern is how a pharmacoeconomic study should be evaluated. This question is addressed in Evaluating a Pharmacoeconomic Study. In contrast to evaluation frameworks that are provided in textbooks on Pharmacoeconomics, this module includes criteria for evaluating studies from a systems perspective.
A further issue that is always raised in respect of costs (and, of course, outcomes) is the role of discounting in economic evaluations. Discounting is considered in Discounting Costs and Benefits. The module considers both the cases for and against discounting from the perspective of managed care health systems, together with worked examples of discounting approaches.
Modeling is central to both traditional and systems approaches to economic evaluations. The purpose of Modeling in Pharmacoeconomics is to consider what is meant by the term ‘modeling’ and the types of models, including decision models, which may be used in pharmacoeconomic evaluations. This is a critical module because it emphasizes the dichotomy that exists between those who take a decision theoretic approach and argue that models do not have to be verified and those who would see prediction and verification are central to the claim that pharmacoeconomics has the status of a science.
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