Benefits and Costs of Newer Drugs: An Update

We update and extend our previous study of the effect of drug age -- years since FDA approval -- on total medical expenditure, in several respects. The estimates indicate that, in the entire population, a reduction in the age of drugs utilized reduces non-drug expenditure 7.2 times as much as it increases drug expenditure. In the Medicare population, a reduction in the age of drugs utilized reduces non-drug expenditure by all payers 8.3 times as much as it increases drug expenditure; it reduces Medicare non-drug expenditure 6.0 times as much as it increases drug expenditure. About two-thirds of the non-drug Medicare cost reduction is due to reduced hospital costs. The remaining third is approximately evenly divided between reduced Medicare home health care cost and reduced Medicare office-visit cost. We also found that the mean age of drugs used by Medicare enrollees with private Rx insurance is about 9% lower than the mean age of drugs used by Medicare enrollees without either private or public Rx insurance.

Clinical and Financial Implications of Medicine Consumption Patterns at a Leading Referral Hospital in Kenya to Guide Future Planning of Care

Background: Medicines can constitute up to 70% of total health care budgets in developing countries as well as considerable expenditure in hospitals. Inventory management techniques can assist with managing resources efficiently. In Kenyatta National Hospital (KNH), a leading hospital in Kenya, over 30% of medical expenses are currently allocated to medicines, and this needs to be optimally managed. Objective: To investigate drug consumption patterns, their costs and morbidity patterns at KNH in recent year. Methodology: Cross-sectional retrospective record review. Inventory control techniques, ABC (Always, Better, Control), VEN (Vital, Essential and Non-essential) and ABC-VEN matrix analysis used to study drug expenditure patterns. Morbidity data extracted from the Medical Records. Results: Out of an average of 811 medicine types procured annually (ATC 5), 80% were formulary drugs and 20% were non-formulary. Class A medicines constituted 13.2% to 14.2% of different medicines procured each year but accounted for an average of 80% of total annual drug expenditure. Class B medicines constituted 15.9%-17% of all the drugs procured yearly but accounted for 15% of the annual expenditure, whilst Class C medicines constituted 70% of total medicines procured but only 5% of the total expenditure. Vital and Essential medicines consumed the highest percentage of drug expenditure. ABC-VEN categorization showed that an average of 31% medicine types consumed an average of 85% of total drug expenditure. Therapeutic category and Morbidity patterns analysis showed a mismatch between drug expenditure and morbidity patterns in over 85% of the categories. Conclusion: Class A medicines are few but consume the largest proportion of hospital drug expenditure. Vital and essential items consume the highest drug expenditure, and need to be carefully managed. ABC-VEN categorization identified medicines were major savings could potentially be made helped by Therapeutic category and Morbidity pattern analysis. There was a high percentage of non-formulary items, which needs to be addressed. Inventory control techniques should be applied routinely to optimize medicine use within available budgets especially in low and middle income countries. This is now being implemented

Pharmacoeconomic analysis of drug expenditure in government medical college and hospital, Vijayawada, India

Background: To conduct economic analysis in tertiary care hospital with a view to identify the categories of drugs needing stringent management control.Methods: The annual consumption and expenditure data is obtained from the drug store of government general hospital, Vijayawada, for the period of April 2015 to March 2016. ABC-VED analysis of the drugs are done based on cost and criticality criteria respectively. ABC-VED matrix analysis was done to classify drugs into category I, II, III.Results: The total annual drug expenditure incurred on 299 drug items for the year 2015-2016 was found to be Rs:4,47,04,446. On ABC analysis, 4%, 9.36%, 86.64% of drugs were found to be Always, Better, and Control category items respectively, amounting to 68.92%, 20.05%, 11.03% of annual drug expenditure. VED analysis showed that 32.10%, 45.5%, 22.4% of drug items were Vital, Essential, and Desirable category items respectively, amounting to 35.3%, 37.1%, 27.6% of annual drug expenditure respectively. By ABC-VED matrix analysis, 34.11%, 46.49%, 19.4% of drug items were found to be category I (high stringent), II (medium stringent), III (low stringent) respectively, amounting to 80.76%, 17.46%, 1.77% of annual drug expenditure respectively.Conclusions: The study identified 34.11% of drug items belonging to category I which require high priority monitoring. Inventory management tools must be routinely used for the better control and judicious use of the resources

Impact of high-cost drugs for individual patient use

To document and describe the individual patient use (IPU) scheme at St Vincent's Hospital, Sydney in terms of submissions and approvals and assess the financial impact of the scheme on the hospital drug expenditure. Method: All submissions for IPU approvals received between January 1997 and December 2001 were reviewed. Submissions were collected on a calendar year basis. Data collection and analysis included identification of approved medication and indication, off- label or approved indication, prescriber, ward, outcome of therapy, person deciding the approval, approval date duration and expiry, amount of medication dispensed and the cost of therapy. The annual cost and proportion of overall drug expenditure for each approval was calculated. Results: The number of approvals had a trend to increase each year. 67.1% of the IPU approvals were for off-label indications. Requested feedback on clinical outcomes was provided only in 18% of cases. The drug acquisition cost of the IPU scheme more than doubled in the period between 1999 and 2001. Similarly the proportion of the drug expenditure on IPU drugs increased significantly (p<0.001) from 1.6% in 1999 to 3.6% in 2001. Conclusion: The results indicated that the number of approvals and submissions for IPU had a tendency to increase. The financial impact of the IPU scheme increased over the years reviewed

The Benefits and Costs of Newer Drugs: Evidence from the 1996 Medical Expenditure Panel Survey

The nation's spending for prescription drugs has grown dramatically in recent years. Previous studies have shown that the replacement of older drugs by newer, more expensive, drugs is the single most important reason for this increase, but they did not measure how much of the difference between new and old drug prices reflects changes in quality as better, newer drugs replace older, less effective medications. In this paper we analyze data from the 1996 Medical Expenditure Panel Survey (MEPS) to provide evidence about the effect of drug age on mortality, morbidity, and total medical expenditure, controlling for sex, age, education, race, income, insurance status, who paid for the drug, the condition for which the drug was prescribed, how long the person has had the condition, and the number of medical conditions reported by the person. The results provide strong support for the hypothesis that the replacement of older by newer drugs results in reductions in mortality, morbidity, and total medical expenditure. People consuming new drugs were significantly less likely to experience work-loss days and to die by the end of the survey than people consuming older drugs. The estimates indicate that reductions in drug age tend to reduce all types of non-drug medical expenditure, although the reduction in inpatient expenditure is by far the largest. Reducing the age of the drug results in a substantial net reduction in the total cost of treating the condition. Allowing people to use only generic drugs would increase total treatment costs, not reduce them, and would lead to worse outcomes.

Application of ABC-VED analysis for inventory control in drug store of a tertiary care hospital of North Maharashtra

Introduction: The hospital's pharmacy is one of the most heavily used therapeutic services and one of the few places where a significant amount of money is spent on recurrent purchases. This underlines the need of strategically planning, creating, and arranging the pharmacy to ensure effective clinical and administrative services. Materials and Methods:Inventory control techniques like ABC, VED and ABC-VED matrix analysis were used to evaluate the annual drug expenditure at drug store of Government Medical College & Hospital Jalgaon for the financial year 2019-20. Results:Total number of drugs in inventory in Government Medical College & Hospital Jalgaon in the year 2019-20 were 334 and the annual drug expenditure was 54040462/-. Category A comprised of 49 drugs (14.7%) for which annual drug expenditure was 37286500/- i.e. 69%. 87 drugs (26%) accounting to 11324859/- (20.96%) were classified as category B drugs. Category C drugs included 198 drugs comprising 59.3% of total inventory and consumed 5429103/- i.e. 10.05% of total annual drug expenditure. 39 drugs (11.7%) were classified into vital/V category which accounted for 15257089/- i.e. 28.23% of annual drug expenditure, while essential/E category included 127 (38%) drugs for which 30161684/- (55.81%) was incurred for their procurement. 168 (50.3%) drugs accounting to 8621689/- (15.95% of total annual drug expenditure). Conclusion:The application of inventory control strategies such as ABC, VED, and the ABC-VED Matrix will help in significant improvements in patient care

Impact of orphan drugs on Latvian budget

Publisher Copyright: © 2016 Logviss et al.Background: Number of orphan medicinal products on the market and number of rare disease patients, taking these usually expensive products, are increasing. As a result, budget impact of orphan drugs is growing. This factor, along with the cost-effectiveness of orphan drugs, is often considered in the reimbursement decisions, directly affecting accessibility of rare disease therapies. The current study aims to assess the budget impact of orphan drugs in Latvia. Methods: Our study covered a 5-year period, from 2010 to 2014. Impact of orphan drugs on Latvian budget was estimated from the National Health Service's perspective. It was calculated in absolute values and relative to total pharmaceutical market and total drug reimbursement budget. A literature review was performed for comparison with other European countries. Results: Orphan drug annual expenditure ranged between EUR 2.065 and 3.065 million, with total 5-year expenditure EUR 12.467 million. It constituted, on average, 0.84 % of total pharmaceutical market and 2.14 % of total drug reimbursement budget, respectively. Average annual per patient expenditures varied widely, from EUR 1 534 to EUR 580 952. The most costly treatment was enzyme replacement therapy (Elaprase) for MPS II. Glivec had the highest share (34 %) of the total orphan drug expenditure. Oncological drugs represented more than a half of the total orphan drug expenditure, followed by drugs for metabolic and endocrine conditions and medicines for cardiopulmonary diseases. Three indications: Ph+ CML, MPS II, and PAH accounted for nearly 90 % of the total orphan drug expenditure. Conclusions: Budget impact of orphan drugs in Latvia is very small. It increased slightly over a period of five years, due to the slight increase in the number of patients and the number of orphan drugs reimbursed. Current Latvian drug reimbursement system is not sufficient for most orphan drugs.publishersversionPeer reviewe

Out-of-Pocket Prescription Drug Expenditures and Public Prescription Drug Programs

Canadian household prescription drug expenditures are studied using different years of the Statistics Canada Family Expenditure Survey. Master files are used, expanding the number of available years and permitting provincial rather than regional identifiers. Nonparametric Engel curves are estimated. Difference-in-difference mean and 80th percentile regressions examine budget shares by low-income and high-income households before and after the introduction of provincial prescription drug programs. The evidence is consistent with the view that unlike senior prescription drug subsidies, nonsenior prescription drug subsidies are probably more redistributive than an equal-cost proportional income transfer.Prescription drug benefits; incidence