ORGANIZATION: MDACC. PROBLEM OR ISSUE ADDRESSED: The addition of targeted therapies to standard cancer treatments contributes greatly to increasing hospital budgets. As part of our formulary management process, we conducted and presented an economic analysis of bevacizumab in combination with standard. GOAL: The purpose of this project was to incorporate cost effectiveness considerations into the Pharmacy and Therapeutics Committee’s deliberations about the addition of a new product to the MDACC formulary. OUTCOMES ITEMS USED IN THE DECISION: The institutional cost-effectiveness analysis was conducted using direct medical costs, life years saved, and the incremental cost effectiveness ratio. Only direct medical costs in 2003 United States dollars were considered. IMPLEMENTATION STRATEGY: A model was built based on the following assumptions: standard of care chemotherapy for previously untreated metastatic colorectal cancer was considered to be 5-FU plus leucovorin plus either oxaliplatin (FOLFOX) or irinotecan (FOLFIRI); improvement in median overall survival, time to progression, and increased incidence of adverse events with the addition of bevacizumab was based on published trials; duration of treatment was equal to time to progression; cost of therapy beyond disease progression was not included in the cost effectiveness or budget impact analyses; and budget impact analysis was based on the assumption that 40% of those patients initially presenting with metastatic colorectal receive treatment at UT M.D. Anderson Cancer Center (50% on FOLFOX and 50% on FOLFIRI). Non FDA-indicated use of bevacizumab was not included in the budget impact analysis. Direct medical costs of treatment with FOLFOX are $140,114, and $270,049 for FOLFOX/bevacizumab, incremental cost of bevacizumab is $129,935. Comparable numbers are $68,519 for FOLFIRI, and $165,330 for FOLFIRI/bevacizumab, incremental cost is $96,811. Using published outcomes measurements of 0.39 life years saved (LYS) with the addition of bevacizumab to either FOLFOX or FOLFIRI, the incremental cost effectiveness ratio was $333,167 per life year saved for the FOLFOX and $248,233 per LYS for FOLFIRI. For our expected annual patient population of 250, the annual budget impact of chemotherapy and bevacizumab for our institution was projected to be $25,804,250. This model, along with a clinical monograph, was presented to the P&T Committee at the same time as the vote for bevacizumab’s inclusion onto formulary. Bevacizumab was added to the formulary without restriction for its use with regards to its FDA-indication. RESULTS: We reviewed MDACC usage for the first six months of 2006. We had 411 unique patients, with 237 (60%) receiving the drug for a gastrointestinal (GI) malignancy. Of these 237 GI patients, there were 185 unique patients (78%) who received bevacizumab for colorectal cancer, of which only 132 patients (71%) received 5-FU/leucovorin plus bevacizumab plus either oxaliplatin or irinotecan. This means that out of the 411 unique patients who received bevacizumab at MDACC, only 132 patients (32%) actually used it in the manner our model detailed. In order to estimate the accuracy of our model, we used these 132 patients as the basis to check our model’s validity and accuracy. For colo-rectal cancer patients receiving bevacizumab added to either FOLFOX or FOLFIRI regimens, our model is accurate to within 5% ($26.4M, actual versus $25.2M, model). However, there are some caveats to the institution-wide validity of the model. We multiplied the number of patients actually seen in the first six months by two to estimate an annual number. Our model excludes 279 patients (68%) who did not receive bevacizumab for colo-rectal cancer. Determining the institutional reimbursement pattern for the patients who received bevacizumab is ongoing. LESSONS LEARNED: For any drug that shows an improvement in overall survival for a solid tumor, we should expect MDACC usage to surpass the usage estimated by a model based solely on its FDA indication. However, building a model to incorporate all possible uses, without controlling its prescribing, is an impossibility, so we base our models on the FDA-indication(s) for the drug. Patient outcomes for non-FDA approved usages should be captured in prospective clinical trials, and included in the model when they can be quantified. A structured formulary management process, which includes an economic impact analysis section, is an appropriate platform to delineate the cost effectiveness of new oncology products. In an era of rising costs, coupled with dwindling resources, a coherent plan for the allocation of resources is an imperative for any institution that strives to provide continued patient care.