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Pharmacoeconomics refers to the scientific discipline that compares the value of one pharmaceutical drug or drug therapy to another.[1][2] It is a sub-discipline of health economics. A pharmacoeconomic study evaluates the cost (expressed in monetary terms) and effects (expressed in terms of monetary value, efficacy or enhanced quality of life) of a pharmaceutical product. Pharmacoeconomic studies serve to guide optimal healthcare resource allocation, in a standardized and scientifically grounded manner.

Economic evaluation[edit]

Pharmacoeconomics centers on the economic evaluation of pharmaceuticals, and can use cost-minimization analysis, cost-benefit analysis, cost-effectiveness analysis or cost-utility analysis. Quality-adjusted life years have become the dominant outcome of interest in pharmacoeconomic evaluations, and many studies employ a cost-per-QALY analysis. Economic evaluations are carried out alongside randomized controlled trials and using methods of decision-analytic modeling. Pharmacoeconomics is a useful method of economic evaluation of various treatment options. As more expensive drugs are being developed and licensed it has become imperative especially in context of developing countries where resources are scarce to apply the principles of pharmacoeconomics for various drugs and treatment options so that maximum improvement in quality of life can be achieved in minimum cost.[3]

In policy[edit]

In 1993, Australia became the first nation to use pharmacoeconomic analysis as part of the process for deciding whether new drugs should be subsidized by the Federal Government. The Pharmaceutical Benefits Advisory Committee (PBAC) advises Federal Government ministers on whether new drugs should be placed on a list for of drugs that consumers can then purchase from pharmacies at a subsidized price. Since 1993, this approach to evaluating costs and benefits is used in Canada, Finland, New Zealand, Norway, Sweden, and the UK.

Impact of pharmaceutical innovations[edit]

In the past 30 years, major pharmaceutical innovations have improved condition-related outcomes for six serious medical conditions: ischemic heart disease, lung cancer, breast cancer, human immunodeficiency virus (HIV) infection, type 2 diabetes mellitus, and rheumatoid arthritis (RA). [4]Spending on new pharmaceuticals and R&D, although expensive, is considered to bring net benefits, as it decreases overall health care costs. A study of 30 countries estimated that 73% of the increase in life expectancy in recent decades is due to new pharmaceuticals alone. Another study found that new drugs have reduced hospital usage by 25% per decade by replacing more expensive forms of care like surgery. It has been estimated that the cost per additional life-year gained thanks to pharmaceutical innovation was US$2,730, compared with US$61,000 for dialysis, a commonly used benchmark.[5]

See also[edit]



  1. ^ Mueller, C; Shur, C.; O'Connell, J. (1997). "Prescription Drug Spending: The Impact of Age and Chronic Disease Status". American Journal of Public Health. 87 (10): 1626–29. doi:10.2105/ajph.87.10.1626. PMC 1381124. PMID 9357343.
  2. ^ Arnold, Renée J.G.; Ekins, Sean (2010). "Time for Cooperation in Health Economics among the Modelling Community". PharmacoEconomics. 28 (8): 609–613. doi:10.2165/11537580-000000000-00000. PMID 20513161. S2CID 23088517.
  3. ^ Deepak Bhosle, Asif sayyed*, Shaikh Huzaif, Alimuddin Shaikh, Vasundhara Bhople, Ayman Ali Khan.PHARMACOECONOMICS IN INDIAN CONTEXT. International journal of current pharmceutical and clinical research vol 7 issue 1 -2017 11-14
  4. ^ Herring, William; Ciarametaro, Michael; Mauskopf, Josephine; Wamble, David; Sils, Brian; Dubois, Robert (2022-02-21). "What might have happened: the impact of interrupting entry of innovative drugs on disease outcomes in the United States". Expert Review of Pharmacoeconomics & Outcomes Research: 1–13. doi:10.1080/14737167.2022.2035219. ISSN 1473-7167.
  5. ^ Post, Special to Financial (2020-02-05). "To save lives and money, Ottawa needs to make it more attractive for new drugs to come to Canada". Financial Post. Retrieved 2021-10-25.


  • Rascati, Karen (2013). Essentials of Pharmacoeconomics. Philadelphia, PA: Wolters/Kluwer – Lippincott Williams & Wilkins. ISBN 978-1-4511-7593-6.