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
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 (Duragesic, Actiq), and
sufentantil. Even the fentanyl patch vs extended release 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
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.
1. Bedder MD, Burchiel K, Larson A: Cost analysis of two implantable
narcotic delivery systems. J Pain Symptom Manage 6(6):368-373, 1991.
2. de Lissovoy G, Brown RE, Halpern M, et al: Cost-effectiveness of
long-term intrathecal morphine therapy for pain associated with
failed back surgery syndrome. Clin Ther 19(1): 96-112, 1997.
3. Red Book-1994, Medical Economic Data. Montvale, New Jersey, 1994.