Healthcare Economics

ECONOMIC EVALUATION OF
HEALTH PROGRAMS AND
INTERVENTIONS

Economic Evaluation Methods

Identify, measure, value and compare

the cost and outcome (consequence)
Is there comparison of two or more
alternatives?

Are both cost and consequence (outcome)

of the alternatives examined

IMPORTANCE Of ECONOMIC EVALUATION

1. In case of scarce resource
2. In case of difference in objectives

3. In matter of life and death- it is important that

we approach and decide for the the resources
allocation in a clear and systematic way.

OBJECTIVE OF ECONOMICS: in production

of goods and services
INPUT

Objectives:
Use efficiently
Use in optimal
Combinations

PROCESS

OUTPUT

Efficiency in
Processing
inputs

Maximize

Example: Process Flow of Basic Vaccination

Programs

INPUT

PROCESS

OUTPUT
# of children
Immunized

Vaccines
Syringes
Manpower
Other logistic
Financing

Training
Information
Dissemination
Implementation
Monitoring

COSTS

Geographic
Region
Covered

EFFECTS/BENEFITS

Economics:

concern with the assessment of every

option available for the attainment of
every objective.
Each option have different costs and
outcome
Cost and Outcomes are measurable
and have an effect on the future of
those who made the decision.

APPLICATION: Assessing Health Programs

whether

1. Health resources are used optimally

(right quantities, right mix)
2. Health programs are implemented
efficiently
3. Health outputs are maximized

Pharmacoeconomics
Description and analysis of the cost of
drug therapy to health care system and
society
Division of outcomes research that can be
used to quantify the value of
Pharmaceutical care
"Weighing the cost of providing a
product or service against the
consequence (outcome)"

WHY?

To determine which alternatives yields the

optimal outcome per monetary value spent

Assist clinicians to decide on what options

would be the most Cost Effective

COST vs OUTCOME

Cost - Value of the resources

consumed by a program or drug therapy
of interest

OUTCOME - Effects, output or

consequences of the program or drug

MEASURING COSTS
1. Medical care and administration
(Provider Time and Inconvenience)
2. Follow up and Treatment
3. Time and pain of patient and family

Measuring Costs and Outcomes

Ideally, outputs or outcomes of

health intervention (health
effects) should outweigh the
costs of such intervention
To be able to assess this, we
should be able to measure the
costs involved in an
intervention, and compare
them with the effects of such.
Therefore we have to learn the
measurement of costs and
their outcomes

COSTS

EFFECTS

Measuring Costs and Outcomes

Quality Suffers; too much Emphasis on Costs
Savings

QUALITY

COSTS

Measuring Costs and Outcomes

Quality and Costs Balance; Patients Receive Value

QUALITY

COSTS

Viewing Cost and Outcome in

Different Perspectives

Patients Perspective
Ultimate consumer of health care service
Cost - "What the patients pay for?"
OUTCOME - "What is the effect to the
patient?"

Perspectives

Providers Perspective
Cost is the actual expense of providing the
product or service regardless of what the
providers charge
Hospitals, HMO, private physicians
Outcome: Satisfaction of
patients ( health care)

Perspectives

Payers Perspective
Insurance companies, employers, the
government
Charges for both health care products,
services or reimbursed by the payer
Outcome: Satisfaction of patients

Perspective

Societal Perspective

The broadest of all perspectives

Considers the benefit to society as a whole
Patient Morbidity and Mortality
Overall cost of giving and receiving medical
care
OUTCOME: reduce morbidity and mortality,
improve quality of life

UNDERSTANDING COSTS

COSTS

are what society, government or

individuals incur to run a program, or to
produce something that they desire, like
better health

are different from the prices of goods

are monetary value of producing a good

or services, while prices are usually cost
plus markup which is largely driven by
market

DIFFERENT KINDS OF COSTS

1. According to the Behavior of Costs

A. Total Cost is the measure of all the

costs needed in producing a given level
output

B. Marginal Cost is the measure of the

resources associated with a small
incremental change in output. Ex. Adding
extra vaccine

C. Opportunity Cost is the cost of

sacrificing other outputs/outcomes in
favor of a chosen program due to limited
resources.

DIFFERENT KINDS OF COSTS

1. According to the Behavior of Costs

D. Average Cost is the measure of the

total cost of production associated
with each unit of output
Total Cost/Quantity of Output
Example:
If the total cost of vaccination is P1,000,000.00
and the program was able to vaccinate P10,000
children, then the average cost would be P100.00
child immunized

P1,000,000.00/10,000
Average Costs = P100 per child immunized

per

DIFFERENT KINDS OF COSTS

2. According to the relationship of costs to the
product or service produced

A. Direct Costs These are costs that can

be directly attributed to a specific output
product.

B. Indirect Costs These costs are

or

incurred
as sacrifice for being in an ill
health, or in
performing a health- producing activity.

C. Intangible Costs These are costs

attached to entities that we cannot touch
and feel.

Direct Medical Cost

Cost incurred for medical products and

services used to prevent, detect, and/or
treat a disease

Fundamental transactions associated

with medical care that contribute in the
portion of gross national product spent
on health care

Direct Medical Cost

Direct Non-medical Cost

Any cost for non-medical services that

are result of illness or disease but do
not involve purchasing medical supplies
or services

Consumed to purchase service other

than medical care

Direct Non-medical

Indirect Non- Medical Cost

Cost of reduced productivity (Morbidity

and Mortality)

Morbidity Cost - Cost incurred from

missing work

Mortality Cost - Represents the years

lost because of premature death

Indirect Medical Cost

2. Techniques to Estimate Indirect
Nonmedical Cost
Human Capital - Values morbidity and
mortality losses based on an individuals
earning capacity
Willingness to Pay - "How much money are
they willing to spend to reduce likelihood of
illness"

Intangible Cost

Other nonfinancial outcomes of disease and

medical care

Example: Pain, Suffering, Inconvenient

Difficult to quantify and impossible to measure in

terms of economic value

DIFFERENT KINDS OF COSTS

3. According to the frequency of incurring Costs

A. Capital Costs These are costs for

item with a life expectancy of more than a
year .These costs are divided by their
total usable life span.
Example:
A building worth P10,000,000.00 was erected for a certain
health program which will last for ten years. The monthly
cost of the building will be computed as follows:
P10,000,000.00/10 years/12 months per year =
P83,333.33 per month

DIFFERENT KINDS OF COSTS

B. Recurrent Costs These are costs

necessarily incurred each year or each month

Examples:
salaries and wages of personnel; medical
supplies, drugs, electricity, etc are all incurred,
commonly, on a monthly basis

TOTAL COSTS = Capital and Recurrent Costs

TERMS RELATED TO COST

Explicit Costs - Money paid by a firm to purchase
the services of productive resources
(outsource)
Implicit Costs - The opportunity costs associated
with a firms use of resources of it owns.
These costs do not involve a direct money
payment - wages, interest
Total Costs - The costs, both explicit and implicit,
of all the resources used by the firm

 Fixed Costs - Cost that does not vary

with output.

Fixed cost
divided by the number of units
produced. It always
declines
as output increases

Average Fixed Costs

 Variable Costs

- Costs that vary with the

rate of output. Ex. Wages paid to workers and
payments for raw materials

Average Variable Costs

variable
produced

- The total
cost divided by the number of units

 Average Total Costs

- cost divided by the

number of units produced. It is sometimes
called per unit cost

Marginal Costs

- The change in total cost

required to produce an additional unit output

 Incremental cost-Additional cost that a

service or treatment alternative imposes over
another compared with the additional benefit,
effect or outcome
Extra cost required to purchase an additional
unit of effect and provide another way to assess
the pharmacoeconomic impact of a service or
treatment option on a population

TERMS .
Relationships among a Firms Costs
1. Total cost includes both explicit and implicit
costs
2. Total costs = fixed cost + variable cost
3. Marginal cost = change in total cost per added
unit of output
4. Average total cost = total cost / output
5. Average fixed cost = fixed cost/output
6. Average variable cost= variable cost/output
7. Average total cost = average fixed cost + average
variable cost

3 Basic Elements determine the Total Cost of Therapy

1. Production costs - are the cost of producing the

treatment

Example: The production costs of treating hypertension

include the costs of physician office visits to

initiate and monitor therapy.

the costs of any testing required to diagnose and

monitor the disease.
the cost of pharmaceutical products and services used to
treat the disease.

2. Induced resource losses - are those

costs incurred of treating and managing
adverse effects of treatment
Example: patients treated with
antihypertensive medications frequently
experience side effects such as dizziness,
impotence and nasal congestion

3. Induced resource savings - are costs

that are prevented as a result of successful
treatment
Example: untreated hypertension
results strokes and heart attacks.

Factors Affecting Health Cost

1.
2.
3.
4.
5.
6.

Growth in the aging population

Abundance of specialized providers
Surplus of hospital beds
Inadequate financing of services
Passive role of consumers
Increase in number of lawsuits

Encouraging Cost Awareness

1.

Some countries are trying doctors to be aware of more

economical prescription to practices

2.

Pharmacists are empowered to substitute cheaper

equivalents unless the doctor has specifically forbidden
substitution on the prescription

3.

Consumer rights also play a role in economic in health services

4.

The common practice of making specialist care accessible using

referral from another doctor has the potential of reducing the
cost of health care

5.

Cost sharing can induce the consumer to require the provider to

be cost conscious, but it does not work when patients have
private insurance to cover their share of the costs. Cost sharing
can have perverse effects

MEASURING OUTCOME

Economical
Direct, indirect and intangible cost
compared with the consequence of a
treatment alternative

Clinical
Medical events that occur as a result of
disease or treatment

Humanistic
Function or status or quality of life

MEASURING Intermediate
and Final OUTCOME

Example

Achieving a decrease lipid level with the

use of HMG CoA reductase inhibitor
thus preventing myocardial infarction

Positive vs. Negative OUTCOME

Positive OUTCOME
Desired effect of a drug
example: benefit, Life years gained,
improved health condition

Negative OUTCOME
Undesired or adverse effect of a drug, drug
toxicity or even death

MEASURING OUTCOMES
Outcomes are the effects of the health interventions
for which the costs were incurred.
Outcomes of Health Interventions
Health Intervention

Outcome Measure

Improvement of
health

Renal Dialysis or
Coronary Artery Bypass
Graft Surgery

Life years gained as a

result of the health
intervention

Improvement of
quality of life

Steroid + B2 Agonist
Inhaler (Anti-Asthma
Inhalers)

Better, more active life

Increased economic
output

Influenza vaccination

Less work days lost

because of better health

Monetary saving

Expanded program of
Immunization

Less expenses for acute

care and hospitalization
because illness is
prevented

Outcome

ANALYSIS
1.
2.
3.
4.
5.
6.

Cost Minimization Analysis (CMA)

Cost Benefit Analysis (CBA)
Cost Effectiveness Analysis (CEA)
Cost Utilization Analysis (CUA)
Cost- Consequence Analysis (CCA)
Cost of Illness (COI)

BASIC PRINCIPLES OF ECONOMIC EVALUATION

1. DECISION MAKING
Economic evaluations are techniques done to
evaluate options which all promise to
produce better health
2. Comparing Costs with benefits
Costs attached to the available options are
measured against the health effects or benefits
that they will produce
Economic evaluation should be done

3. Bang and Buck

The comparison in an EE are made in term of cost and

consequences (outcome). The specific cost to be
included in the analysis are determined by

1. The individual patients (patient)

2. Health insurance company (payer)

3. Health plan of hospital/ physician (provider)

4. Government agency (payer)

5. Society as a whole (societal)

COST MINIMIZATION
ANALYSIS

1. Cost Minimization Analysis

Determination of the least costly

alternatives when comparing two or
more treatment alternatives

Alternatives must have an assumed

equivalency in safety and efficacy with

the assumption that the outcomes of the

interventions are measurably identical,
the least cost option is chosen

Cost Minimization Analysis

"Cost Savings"

Finds the least expensive cost alternative

Out come
- identical among alternatives

CMA ANALYSIS
Compares the costs of therapies that achieve the
same outcomes
Example:
Ondansetron and Granisetron are both
used for the prevention of chemotherapyinduced nausea and vomiting
If they are equally effective, then the choice
between them could be made using a CMA.

COST MINIMIZATION IN ANTIBIOTIC THERAPHY

DRUG A: BRAND AMX ANTIBIOTIC

COST: P 385/treatment course

90% treatment
Success
10% failure
DRUG B: AMOXICILLIN
COST: P189/treatment course

Treatment Options

2% minimal
Side effects

IDENTICAL
OUTCOMES
(BOTH IN
NATURE AND
MAGNITUDE

Cost Minimization Analysis

Cost of Therapies
Drug A

Drug B
250

350

Administration Cost

75

Monitoring

75

25

100

25

90%

90%

Acquisition cost

ADR
Subtotal

Outcome
Antibiotic
Effectiveness

Cost Minimization Analysis

Acquisition cost

Administration Cost
Monitoring
ADR
Subtotal

Outcome
Antibiotic
Effectiveness

Cost of Therapies
Drug A
Drug B
250
350
75
0
75
25
100
25
500
400
90%

90%

Cost of Drug A > Cost of Drug B

COST BENEFIT
ANALYSIS

2.Cost Benefit Analysis

Identification, measurement, and

comparison of the benefit and cost of
programs or treatment alternatives

Cost and benefit are measure and

converted into equivalent monetary
value

Valuing Benefits
what is the value of human life
@ the values individuals place on things
are based on the prices they are willing
to pay for them
@ Benefits are typically valued using the
willingness-to-pay approach

4 Factors (individuals willingness to pay)

1. Wealth
2. Life expectancy
3. Current health status
4. The possibility of substitute

CBA may be used in

1. Comparing interventions with
different outcomes
Choice between investing in a prenatal
nutrition program or an AIDS awareness
program

Useful when funds are limited and

budget allocation decisions have
to be made

CBA may be used in:

2. Assessing single or multiple
interventions or programs
Effect of diet and exercise to
control hypertension or
diabetes
Medication use in controlling
hypertension and diabetes vs
diet and exercise

COST BENEF IT ANALYSIS

Expressed as ratio, net benefit or net

cost

Cost Benefit Analysis

Benefit
Cost

If B/C > 1, the program is of value

If B/C = 1,the program is equivalent to the
cost
If B/C < 1, the program cost overweighs
the benefit

Cost Benefit Analysis

Drug A

Drug B

COST
Acquisition

300

600

Administration

50

Monitoring

50

100

Days at Work

1000

1000

Extra Months of Life

1500

3000

Adverse Effect
Subtotal
BENEFIT

Subtotal

Cost Benefit Ratio

Cost Benefit Analysis

Drug A
COST
Acquisition

Drug B
300

600

Administration
Monitoring

50
50

0
0

Adverse Effect

100
500

0
600

Days at Work

1000

1000

Extra Months of Life

1500

3000

2500
5

4000
6.7

Subtotal
BENEFIT

Subtotal
Cost Benefit Ratio

Example of a Cost-Benefit
Analysis (prevent future cost)
Assume that we are evaluating a project
proposing to vaccinate 2,000 children for
measles in a certain distant province. Assume
also that the cost per child immunized is
P300.00. We know that if we do not immunize
these children for measles, there is good
chance that they will contract it. Is it costbeneficial for us to immunize all of them?

Assume that all these parameters are true

90% of unimmunized children will contract measles
of those who will contract it, 30% will have complications
of those who develop complications, 30% will have
meningo-encephalitis, and 70% will have
bronchopneumonia
Costs are as follows
uncomplicated cases

= P500.00/case

meningo-encephalitis = P20,000.00/case
Bronchopneumonia

= P15,000.00/case

ANALYSIS:
Costs of immunizing 2,000 children at P300.00
P600,000.00

each =

Cost of not immunizing children:

200 without
measles
2,000 children
with measles
1,800

1,260
Uncomplicated
cases
Complicated
cases 540

meningoencephalitis
162
bronchopneumonia
378

Costs
1,260 uncomplicated cases x P500

= P630,000.00

162 meningoencephalitis

= P3,240,000.00

x P20,000

378 measles bronchopneumonia

x P15,000

= P5,670,000.00

TOTAL COST of non-immunization

P9,540,000.00

Cost Benefit Ratio = 9,540,000/600,000 = 15.9 therefore the project is

highly beneficial

COST
EFFECTIVENESS
ANALYSIS

3. Cost Effectiveness Analysis

A way of summarizing the health benefit

and resources used by competing
health care programs.

Cost is measured in monetary value,

while effect is measured with specific
therapeutic outcome or clinical
measurement

COST EFFECTIVE ANALYSIS (CEA)

@ the most frequently used
@ investigate the best way of achieving a single objective
by comparing effects and costs
@ when given a fixed budget, which intervention
maximizes the effectiveness of the expenditures
@ This ratio can be simplified by
TOTAL COST/TOTAL HEALTH EFFECT
Remember CEA is a ratio that compares
costs per health effect

MEASURING
EFFECTIVENESS in CEA
1. Surrogate measures examine the clinical
effect of a treatment option or its clinical
efficacy but this is difficult to measure
---- Ex. Heart transplant
2. Intermediate measures include clinical
effectiveness, or outcome
Ex. Life years added due to Recovery

EXAMPLE OF CEA
1. CEA relates the cost of 2 or more treatment options to
a single, common consequences that differs among
options

Examples: immunization, blood pressure reduction,

hip fracture, or increase life expectancy

Example: Evaluating options in undertaking an

Immunization Drive
Options

Number of
Immunized
Children

Total Costs of
the project

Costs
effectiveness

Use Barangay 35,000

Health Centers

P3,500,000.00

P98.59/child
immunized

Use mobile
clinics

45,000

P5,750,000

P127.77/child
immunized

Use Jollibee
stores

38,670

P3,750,000

P96.97/child
immunized

Lesser CER, better intervention

EXAMPLES of CEA
2. The treatment options may be different treatments for
the same conditions
Example:
a. kidney dialysis compared with kidney transplantation
b. Drug A and Drug B for the treatment of renal failure

Lesser CER, better intervention

Cost Effectiveness
Drug A

Drug B

COST
Acquisition

300

400

Administration

50

Monitoring

50

100

500

400

1.5

1.6

Adverse Effect
Subtotal
Effect
Extra Year of life (NSO)
Cost-Effectiveness Ratio

Cost Effectiveness
Drug A

Drug B

COST
Acquisition

300

400

Administration

50

Monitoring

50

100

500

400

1.5

1.6

$333/life year
added

$250/ life year

added

Adverse Effect
Subtotal
Effect

Extra Year of life ( NSO)

Cost-Effectiveness Ratio

Examples of CEA
3. Unrelated treatments with a common effect
Example: life-saving treatment for heart disease
compared to life saving treatment in end stage renal
failure

Heart Disease

Renal failure

$ 45,000

$35,000

Life Expectancy
(NSO)

15 years

9 years

CER

$3000/ life year

added

$3889/ life year

added

Direct Medical
cost
Effect:

EXAMPLES of CEA
4. New, more expensive and more effective agent is compared
with an older, less expensive, and less effective product,
which is the current standard of therapy
Consider the ICER (incremental Cost- effectiveness Ratio)
to achieve the same type of health outcome:
- to prolong life, reducing blood sugar, helping patients
stop smoking, etc.

CEA (Current vs. New product)

Costs and are compared in CEA by means of an
Incremental cost-effectiveness ratio.

ICER

= Cost nt Cost cst

Effectiveness nt Effectiveness cst

where

ICER = Incremental cost-effectiveness ratio

Cost new = cost of the new treatment

Cost cst = cost of the current standard treatment
Effectiveness nt = effectiveness of the new treatment
Effectiveness cst = effectiveness of the current standard of
treatment

Costs and patient outcomes of 2

treatments for colon cancer:

Direct medical
cost

Surgery

Surgery and
Chemo

6000

13000

13.25

15.65

Effect
Average life
expectancy
(NSO)
ICER

ICER =

Additional costs of (surgery plus chemotherapy)

Additional effectiveness of (surgery plus chemotherapy)

= $13,000 -$6,000
15.65-13.25

= $2,917

The ICE ratio is $2,917 per life year saved. This indicates that use of
both surgery and chemotherapy will result in longer life for patients,
but at an additional cost of $2,917 for each year of life saved

COST UTILIZATION
ANALYSIS

4. Cost Utilization Analysis

is another form of CEA but differs

slightly because it measures the effect
of a project program in terms of utilities

Measures both effects on morbidity

(quality of life) and mortality (quantity of
life) in a single preference weighted
index.

4. Cost Utilization Analysis

Ratio is translated as cost per QualityAdjusted Life Year (QALY)

QALY- means the quality of life gained

COST UTILITY ANALYSIS (CUA)

assess perceived mental, physical
and general functioning over
time of the management of
chronic diseases
better understanding of how
patients function from day to day
with their illness

COST UTILITY ANALYSIS (CUA)

Treatment of patients with

chronic diseases focusing more
on their quality of life
than
premature death or reduction of
hospitalization days
( sense of well being, ability to perform
daily activities, emotional state..)

COST UTILITY ANALYSIS (CUA)

outcome is measured in terms

of patient preference,
willingness to pay or
quality of the healthcare

COST-UTILITY ANALYSIS (CUA)

@ costs are expressed in terms of costs per
QALY or QALYs per monetary unit
@ CEA, CMA, and CUA have costs as numerator
and health effects as denominators
@ therefore: Costs/Health Effects

How much money do we spend for every unit

of health effect we want to get

Cost Utilization Analysis

Compare drugs or programs that are:
life extending but with serious side
effect
that produce reduction in morbidity

MEASURING UTILIZATION
1. Surrogate measures examine the clinical
effect of a treatment option or its clinical
efficacy ( difficult to measure)
---- Ex. Heart transplant
2. Intermediate measures include clinical
effectiveness, or outcome
Ex. Life years added due to Recovery
3. Final outcomes measures economic
effectiveness - disease free days, life years
saved, QALY (Quality Adjusted Life Year)

HOW TO MEASURE QALY

RATE OF QALYs
Rate quality of life between 0.0 (death) and Perfect
health (1.00)

QALY= length of life X quality of life

QALY= estimated survival X Estimated QL (relative to perfect health)

QALY= duration (disease, confinement, treatment) X

Estimated QL (relative to perfect

health)

Estimated Quality of Life Adjustment Factors Relative to Perfect Health

Duration

Health State

Adjustment

Reference State: Perfect Health

3 months Home confinement, tuberculosis

1.00
0.68

3 months

Home confinement, contagious disease

0.65

3 months

Hospital dialysis

0.62

3 months

Hospital confinement

3 months

Hospital confinement, contagious disease 0.56

3 months

Depression

0.44

3 months

Home Dialysis

0.65

8 years

Mastectomy for injury

0.63

8 years

Kidney transplant

0.58

8 years

Hospital dialysis

0.56

8 years

Mastectomy for breast cancer

0.48

8 years

Hospital confinement, contagious disease 0.33

Life

Home dialysis

0.40

Life

Hospital dialysis

0.32

Life

Hospital confinement, contagious disease 0.16

Reference State: Dead

0.60

0.00

Example: QALYs
Example 1:
living for 3 months confined for tuberculosis
treatment was worth only 1.8 months ( 3 months X
0.6) of regular time spent at home in good health

Example 2:
Living more 10 years confined in a hospital being treated
for a contagious disease was considered to
be worth only
1.6 years of normal life. (10 years x

0.16)

Example: QALY (hypothetical)

Treatment X

Without Treatment

$18,000

Estimated survival

10 years

5 years

Estimated QL
relative to perfect
health

0.7

0.5

QALY

7.0

2.5

QALY gained from

treatment

7-2.5= 4.5 QALYs

Cost gained /QALY

for using treatment x

$18,000/4.5= $4000/QALY

Total Cost
UTILITIES

COSTCONSEQUENCE
ANALYSIS

5. Cost-consequence Analysis-

Identical to cost-effectiveness
analysis; except that there is more
than one outcome measure and
the costs and benefits are presented
in disaggregated form.

COST OF
ILLNESS

Cost-of-illness Evaluation
attempt to represent the burden of
the disease from a particular
ailment or medical condition in
monetary terms.
Cost-of-illness studies are usually
done to assess the cost to society
of illness (e.g. stroke, cancer, and
others).

Cost-of-illness studies merely look at

the costs associated with an illness
and does not consider benefits.
Hence, it does not belong to a
category of a pure economic
evaluation.
Cost-of-illness studies are usually
conducted by pharmaceutical
companies in order to test their
product marketing.

Cost of Illness Evaluation

Identifies and estimates the overall cost

of a particular disease

Used to provide baseline to compare

prevention or treatment options

Direct Cost + Indirect Cost

Cost of Illness
Example:
Cost of Hypertension in the Philippines

Direct Cost
Medications
Monitoring
ADR
Admissions

Indirect Cost
Lost of productivity
Income forgone
(Premature death)

Sources of Data for

Pecon Analysis
stock/purchasing records
adverse drug reaction data
non-essential/non-formulary
monitoring

Applications
1. Drug Development

(clinical research
and post marketing phase)

2. Drug Formulary Decisions

3. Evaluation of clinical treatment
4. Evaluation of pharmaceutical
care services
5. Budget
6. Pricing

DRUG NOT TOXIC

BUT NOT
BENEFECIAL

DRUG TOXIC
BUT BENEFICIAL

PATIENT

DRUG TOXIC AND

NOT BENEFICIAL

DRUG NOT TOXIC

BUT
BENEFICIAL

POSSIBLE OUTCOMES OF DRUG THERAPHY