Defining Pharmaco Economics



Pharmaco-economics can be defined as the description and analysis of the cost of drug-therapy to the health care system and the society. It is the process of identifying, measuring and comparing the costs, risks and benefits of programs, services or therapies, while determining the best alternatives for health outcomes for the resources invested.

Applied pharmaco-economics can be defined as combining pharmaco-economics principles, methods and theories into practice, to quantify the value of pharmacy products and pharmaceutical care services used in the real world environments

Pharmaco-economics outcomes research and pharmaceutical care can be related to each other. Pharmacoeconomics is the division of outcomes-research that can be used to quantify the value of pharmaceutical care products and services. Outcome-research can be defined as the studies that identify measure and evaluate the result of health care services. Pharmaceutical care has been defined as the provision of drug therapy for achieving definite outcomes.


The perspective of the analysis, determines from whose point of view the decision is being made.

Defining the perspective of the analysis is especially important in pharmaco-economics analysis, because the costs that are incurred, depend heavily on the perspective. Assessment of costs and consequences and the value of pharmaceutical products or service depend on the perspective evaluation.

Common perspective includes patient, provider, payer and society.

1. PATIENT PERSPECTIVE: It is of utmost importance, as the patients are the ultimate consumers of health care services. These costs are essentially paid by the patient for a product or service and are not covered by the insurance companies. This perspective should be considered when assessing the impact of drug therapy on quality of life, or if a patient pays out-of-pocket expenses for a healthcare service.

2. PROVIDER PERSPECTIVES: These are actual expenses of providing a product or service, regardless of what is charged by the provider. The provider can be; hospitals, managed-care organizations or private practice physicians. From this perspective, the direct costs like; drugs hospitalization, laboratory tests and professional services can be identified, measured and compared.

3. PAYER PERSPECTIVES: Payers comprise of insurance companies, employers, or the government. The cost from this perspective represents the charges for healthcare products and services allowed or reimbursed by the payer.

Cost of of payer comes under the direct costs. Other indirect costs such as; lost work days(absenteeism), Low productivity (presenteeism) also contribute to the total cost of healthcare to the payer.

4. SOCIETAL PERSPECTIVES: This is the broadest of all perspectives, as it is the only one that considers the benefit to society. All direct and indirect cost are included in the Pharmaco-economic evaluation performed by the societal perspective, including patient morbidity, mortality and the overall costs of giving and receiving medical care.

May 17, 2014

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