Drug Prices Versus Drug Costs: Getting It Right To Show Value

Main Category: Pharmacy / Pharmacist
Article Date: 10 Feb 2010 - 0:00 PDT

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Setting drug prices by the manufacturer and estimating the true drug costs by the purchaser are important issues for decision-makers, manufacturers, and patients when assessing the value of a drug therapy.

In January, the International Society for Pharmacoeconomics and Outcomes Research (ISPOR) published 6 good research practice guidelines that examine how drug prices are set in the US and internationally, and how drug costs should be measured.

Joel W. Hay, PhD, study co-author and Professor of Clinical Pharmacy and Pharmaceutical Economics & Policy at the University of Southern California comments, "Drug pricing is extremely complex and opaque. This is the first set of guidelines ever developed on how to obtain and use drug cost information for cost-effectiveness research to determine the value of a drug therapy. These guidelines provide valuable information on how drug prices are established and how drug costs should be evaluated by cost-effectiveness researchers and health care decision-makers in diverse settings including government, managed care and industry."

The reports address drug cost measurements and issues surrounding drug costs in countries like the US, Australia, China, South Korea, as well as Western European countries, and include perspective-specific recommendations and general guidelines for estimating drug costs. C. Daniel Mullins, PhD, study co-author and Professor and Chair of the Pharmaceutical Health Services Research Department at the University of Maryland School of Pharmacy comments on the relevance of these reports for the US, "The federal focus on comparative effectiveness specifically avoids discussion of cost, yet many payers incorporate cost as part of the value equation in assessing coverage for drugs and other medical technologies. This is true for Medicaid programs and private insurers that administer Medicare benefits. Without an appropriate estimate of cost to these decision-makers, a cost-effectiveness analysis is less informative and impactful."

Value in Health (ISSN 1098-3015), ISPOR's scientific journal, publishes papers, concepts, and ideas that advance the field of pharmacoeconomics and outcomes research and help health care leaders to make decisions that are solidly evidence-based. The journal is published bi-monthly and has a regular readership of over 5,000 clinicians, decision-makers, and researchers worldwide.

Source
ISPOR

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