Chapter 9. Pharmacoeconomics and Economic Evaluation of Drug Therapies

Health care funders (governments, social security funds, insurance companies) are struggling to meet their rising costs. They make many efforts to contain drug costs, by price negotiation, patient co-payments or dedicated drug budgets. Expenditure on drug therapy is a particular target for their attention for several reasons: the size of the drug bill (10-15 % of most national health care budgets, and usually the second largest item after salaries); the ease of measurement of pharmaceutical costs in isolation, in contrast to most other health care costs; evidence of wasteful prescribing; and a perception that many drugs are overpriced and that the profits of the pharmaceutical industry are excessive. But this focuses on drug costs in isolation, when what should be of greater concern to decision makers, health care professionals and the public is the value of drug therapy, a function of its benefits as well as its costs (1). Payers acknowledge that spending on drugs, which may for instance reduce the need for hospitalisation or produce greater health gain for the same resources than other medical interventions, may be a very efficient use of scarce resources. They therefore respond by demanding evidence of value for money from drug therapy. Drug therapy is open to this simply because there are high quality trials to support most new drugs’ licensing applications, in contrast to the poor evidence around most other health care interventions. Health economics is the science of assessing cost and benefits, not to make decisions about resource use