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Related Experiment Videos

Use of cost-consequence models in managed care

H F Blissenbach1

  • 1Diversified Pharmaceutical Services, Minneapolis, Minnesota, USA.

Pharmacotherapy
|September 1, 1995
PubMed
Summary
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Pharmacy benefit managers should consider total treatment costs, not just drug prices. Analyzing value (outcomes/cost) can optimize formulary decisions and improve patient care.

Area of Science:

  • Health Economics
  • Pharmacoeconomics
  • Pharmacy Management

Background:

  • Pharmacy benefit managers (PBMs) aim to procure medications at the lowest cost.
  • Current formulary decisions balance therapeutic necessity with drug price.
  • Focusing solely on drug price may overlook potential long-term cost savings.

Purpose of the Study:

  • To evaluate the impact of considering total medical costs on formulary decisions.
  • To explore the concept of value-based drug formularies.
  • To determine if more expensive drugs can lead to lower overall healthcare expenditures.

Main Methods:

  • Analysis of direct and indirect medical costs associated with different drug choices.
  • Application of the value equation (Value = Outcomes/Cost) to drug selection.

Related Experiment Videos

  • Review of community practice patterns and pricing in formulary decisions.

    • Main Results:

    • Higher drug costs may result in lower total direct medical costs when the entire medical picture is considered.
    • Information on total treatment cost differences enhances therapeutic decision-making.
    • Value assessment is crucial for payers deciding between drugs with different price points.

    Conclusions:

    • Formulary decisions should incorporate comprehensive cost-effectiveness analysis.
    • An outcome-based drug formulary, informed by total treatment costs, can guide better therapeutic choices.
    • Demonstrating value (outcomes relative to cost) is essential for justifying higher drug expenditures.