This column focuses on an area that is critical to all medical oncologists: the pharmacoeconomic analysis. Why should you take note of this?
- If you are responsible for treating patients on managed care contracts, you must understand how to interpret the increasingly prevalent reports of cost effectiveness of established and new therapies. If you use the least expensive treatment with the same or better outcome, you will have helped fulfill the goal of the managed care revolution in medicine.
- If you are responsible for overseeing the managed care contract for your group/institution, you should be using the results of published pharmacoeconomic analyses to gen-erate practice guidelines for the diseases you treat. In this way, your group will be a better partner for insurers and will have an advantage in competing for contracts.
- If you are a clinical investigator, you must be aware that if you are fortunate enough to develop a much better, more curative treatment for a disease, it will most probably be widely used only if you can document the cost-benefit in terms of QALYs saved. You have the responsibility to understand not only the terminology but also the technology of these studies.
Dr. Ramsey describes well the new paradigms in clinical practice and investigation that will be the foundation of medical oncology in the decades to come--Cary Presant, MD, Series Editor.
A few years ago, pharmaceutical companies had a simple motto: Design a product that performs better than the competitors in clinical trials and the medical world will beat a path to your doorstep. Today, the credo has changed: Design a product that is effective and lowers the cost of care, and managed care plans will consider adding it to the formulary.
Managed care is revolutionizing the pharmaceutical industry in several ways: Companies are performing cost-effectiveness studies of new drugs, changing their marketing and price setting strategies, and ceasing development of drugs that offer only a marginal improvement in benefits over currently available agents within a medication class.
The reasons for these changes relate to the change in decision making regarding use of drugs, from its traditional source-physicians and patients-to managed care firms themselves. Managed care insurers are expected to reimburse approximately 45% of all outpatient prescriptions in 1995, and 70% by the year 2000.
Physicians caring for patients in these plans often face restrictions for prescribing drugs that are "formulary" approved. Patients must make a substantial copay for nonformulary prescriptions.
Formulary decisions that traditionally were heavily influenced by the requests of individual physicians are now shifting to the managed care organizations' pharmacy and therapeutics (P&T) committees, which often have a very different set of priorities. Unlike individual physicians, these P&T committees focus heavily on costs in their approve/disapprove decisions for new and existing drugs.