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Understanding the economics of healthcare

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December 17, 2012

Author: Understanding the economics of healthcare

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Patients, gov­ern­ment, and industry spend some $3 tril­lion a year on health­care, making it one of the most pressing issues facing our country. Unsur­pris­ingly, rising health­care costs have sparked a national debate, one that is largely asso­ci­ated with the uncer­tain­ties sur­rounding health­care spending, according to Roger Edwards, an assis­tant pro­fessor in the depart­ment of phar­macy prac­tice.

For tomorrow's health­care workers, nav­i­gating that debate is of crit­ical impor­tance. For this reason, "Eval­u­a­tion of Phar­ma­ceu­ti­cals and Phar­macy Practice"—a class for doc­toral stu­dents in the phar­macy program—is treated as the equiv­a­lent of a cap­stone course.

This semester, Edwards worked with some 135 fifth-​​year stu­dents on 23 projects that syn­the­sized eco­nomic and clin­ical infor­ma­tion. Each project aimed to tease out the cost effec­tive­ness of phar­ma­ceu­tical treat­ments for var­ious health con­di­tions, from HIV to Alzheimer's dis­ease. Twenty projects were sub­mitted to the pro­fes­sional sec­tion of the Amer­ican Society of Health-​​System Phar­ma­cists Midyear Clin­ical Meeting in Las Vegas, Nev., and all of them were accepted.

Ear­lier this month, 71 of the stu­dents attended the meeting and pre­sented their find­ings to a pro­fes­sional audi­ence com­prising health­care deci­sion makers in industry and acad­emia. An Under­grad­uate Provost Research award cov­ered travel expenses for the stu­dents who pre­sented their work.

The entire research expe­ri­ence has grown my con­fi­dence in being able to apply these skills in any future set­ting," said stu­dent Dennis Tung. In col­lab­o­ra­tion with five class­mates, he pre­sented an analysis of Rilu­zole, the drug used in Vet­erans Admin­is­tra­tion hos­pi­tals across the country to treat ALS, an ill­ness that dis­pro­por­tion­ately affects veterans.Rilu­zole treat­ments cost a total of $10.6 mil­lion per year, accounting for approx­i­mately two per­cent of the VA's budget. After reviewing nine studies per­taining to the safety, effi­cacy, and patient out­comes of Rilu­zole treat­ment and four eco­nomic studies per­taining to the drug's cost effec­tive­ness, the stu­dent group per­formed a budget-​​impact analysis.

Ulti­mately, the group used its data to rec­om­mend that the VA keep Rilu­zole in its treat­ment protocol.

Other groups designed deci­sion trees to eval­uate the cost effec­tive­ness of one drug over another. For example, fidax­omicin and van­comycin both treat a bac­te­rial infec­tion that kills 14,000 patients each year. The cur­rent treat­ment, van­comycin, costs $1 bil­lion annu­ally. Fidax­omicin, on the other hand, was newly approved in the spring of 2011 and costs more per treat­ment, but some studies have shown that it reduces read­mis­sion rates. The stu­dent group ana­lyzing this tradeoff found that hos­pi­tals would lose the cost of 50 to 80 hos­pital days per 100 patients if they switched to the new treatment.

These two models—decision tree and budget analysis—are the dom­i­nant methods for eval­u­ating the eco­nomic and clin­ical impli­ca­tions of health­care prac­tices, said Edwards. "If we can teach our stu­dents to be better con­sumers of health-​​economic infor­ma­tion then we are serving a broader pur­pose of them being health pro­fes­sionals in the com­mu­nity," he explained. "They need to be crit­ical con­sumers of this kind of infor­ma­tion and they cannot do that unless they study the lit­er­a­ture and do a hands-​​on project."

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