The economic considerations relative to spinal infusion can be assessed with different types of economic models. What will be discussed in this article are cost-minimization analyses: how much does it cost to deliver a drug by one route vs another? This is the bottom line for the payersassuming the outcomes are equal.
Most published data concern chargeswhat is charged to an insurance company or to a patientnot what the real cost is. Cost is a different issue. An example of cost would be how much money it costs a hospital to support an operating room, including the indirect cost of the operating room itself, the rent on the space, the upkeep, the cleaning of the space, the supplies, the salaries for the staff, etc. Charges is what is billed for an operation. Hopefully, there is a profit margin in those charges, although increasingly with managed care and discounted fees, the difference between cost and charges may in fact approach 0, or even a negative dollar amount.
Cost-utility analysis groups together all sorts of disparate and possible outcomes and end points, not just, for example, survival time or drug use, but a patients satisfaction, too. Cost-utility analysis basically asks: for the amount of money paid, what is the utility to the patient in an overall sense? Cost-utility analysis looks at patient satisfaction vs the cost of achieving that satisfaction.
Cost-effectiveness models look at the costs of different means to achieve one particular outcome, for example, tumor shrinkage. The means in this case could be radiation vs surgery vs chemotherapy. Cost-effectiveness models would evaluate the different associated charges or costs of these therapies to get to that one outcome.
Cost-benefit analysis offers more of a societal viewpoint, and might be more relevant to Medicare or government. What is the bottom line for society? What are the costs, and what are the benefits to society in terms of dollars? Using a noncancer example, what would be the cost of various treatments to get a sick person back to work? That would be the specific outcome, as in cost-effectiveness. The cost-benefit, however, would be the benefit to society of the person returning to work. An employed person would generate taxes for the government and more productivity for our country as a whole. So, cost-benefit analysis on that particular back-to-work issue is a much larger picture than just simply getting the patient back in his or her job.
The bulk of analyses relative to neuraxial infusion have been cost-minimization studies. The Bedder et al study from 1991, which is a bit dated now, is an example. The Bedder et al study was a comparison of an externalized epidural catheter vs an implanted pump. The exteriorized Du Pen epidural catheter was placed in five patients with cancer pain who had a survival of 2.5 months. The SynchroMed pump was implanted in 15 patients, 7 patients with cancer pain who survived 5 months, and 8 patients with noncancer pain. Records of actual services provided and home care vendor quotations were reviewed, but these were charges not costs.
What were the charges to third-party payers for the two scenarios, given the disparate nature in terms of the patient mix and even the number of the patients in the two cohorts? With an external catheter, the costs incurred include a pump rental fee, drug feewhich is the cassette preparation and the drug-dispensing fee for that cassettedressing supplies, and nursing visits. This raises the issue of how these patients are managed as outpatients. With an implanted pump, the costs incurred pertain to the drug itself, as well as the actual supplies, namely the pump, and the professional fee for implanting the device.
The Bedder et al study found that the initial cost for an implanted pump is about $15,000 and the initial cost for an externalized catheter placement is $9,000 (Table 1). The $9,000 cost could probably be lowered significantly depending on the approach used in placing the catheter and getting the patient in and out of the hospital. Monthly follow-up is the critical issue, however. In this particular paradigm in 1991, the charge associated with the monthly follow-up for care of an externalized epidural system was about $2,000 a month, as opposed to $273 a month for an implanted system.
Obviously it costs more money initially to implant the pump, although the upkeep of this implanted system is significantly lower than the upkeep of the externalized system. In such cases there will always be a breakeven point (Figure 1). If a patient survives and requires spinal delivery longer than that breakeven point, there would be less cost, or cost minimization, incurred with the implanted system.
Keep in mind, however, that these calculations are based on assumptions of how this externalized system is treated. This particular technique can be reduced in various ways to save money. The Europeans have found ways, whether it be epidural or intrathecal, of lessening some of the expenses. In many European countries, however, there are still charges associated, but they are hidden charges because they are assumed by the government. Nevertheless, money is being spent if somebody is actually doing work, even if it does not actually show up on a ledger and get charged to a hospital or to a patient. Such hidden costs need to be evaluated.
M. D. Anderson Theoretical Predictive Model
Bedder et als model was taken from actual vendor quotations of charges. The model that was put together at M. D. Anderson about 2 years ago is based on a theoretical modeling viewpoint. We took a computer modelbasically just a spreadsheetand looked at actual charges for various items, then put these charges into the model and worked out issues of how they come together. This is really a theoretical predictive model based on actual charges for various entities.
There are five different parameters in this model:
initial charges for screening and start of opioid delivery;
ongoing drug charges in the follow-up period;
ongoing service in the follow-up period (such as nursing home health care);
professional fees for follow-up visits to the outpatient clinic; and
readmission or complication charges.
Relative potency can be evaluated across routes of administration (oral vs intravenous, epidural, intrathecal) and among different drugshydromorphone (Dilaudid), fentanyl(Drug information on fentanyl) (Duragesic, Actiq), and sufentantil. Even the fentanyl patch vs extended release morphine(Drug information on morphine) can be evaluated in this scenario. The potency of epidural delivery is approximately 10 times greater than that of intravenous, and that of intrathecal is 100 times greater than intravenous. This means that 10 times less drug is required by epidural administration vs intravenous, and 100 times less drug is required with intrathecal vs intravenous administration (Table 2).
Data to Support Model
This is a theoretical predictive model, but wherever possible, actual data were used to support the particular elements on a basis of levels, from the strongest data to the weakest. Level 1, the strongest level of support, is published material with median figures for geographical areas across the United States. For example, if you want to look at a Current Procedural Terminology (CPT) physician charge for a particular procedure, you can find manuals that have both the CPT code and a median, with various standards of deviation for charges for that particular CPT code across the United States.
There are a number of publications that list hospital charges, for example, what a standard hospital bed costs per day in the United States. The Red Book lists average pharmaceutical wholesale charges. Likewise, there are published surveys that actually give some idea of what the commercial markup is for the wholesale price for drugs.
Level 2 supportive data include wholesale price quotations from various manufacturers. These price quotations do not summarize all data, but do provide information about what a specific device would cost. Level 3 data include surveys in multiple geographical areas from hospitals and national home health care agenciesasking hospitals or agencies around the country what they charge in various situations. At level 4, there are no published data, rather a best estimate based on the clinical experience of leaders in the field. This is at least useful information in the absence of other data.
Most of the information used to support this theoretical model, was obtained from level 1 and 2 data. There are few data from level 3, and rarely, information from level 4.