Cost Effectiveness and Prescribing: What the Young Prescriber Needs to Know

<>Paper to “The Young Prescriber in the Therapeutic Milieu”, ASCEPT Satellite Program, December 4th, 1994, Published in <>“Australian Prescriber”, Vol 19, Supplement 1, 1996, p.25-27.


Keywords: Health;




Crucial to the health economist’s perspective, it is unethical to be wasteful – to use unnecessary resources. [1] Such inefficiency means that resources that could be usefully applied elsewhere are instead squandered, so that others receive less medical care than they could have. This possibility applies to the use of pharmaceuticals, as to many other medical procedures. For various reasons including the size of the drug bill, and the belief there is much waste within it, pharmacologists and related disciplines have a particular responsibility to ensure that little of their prescribing is wasted.


Yet, as we shall see, the issues are not simple. To illustrate them we reflect here on the prescribing of anti-depressants – especially tricyclics (TCAs) and selective serotonin reuptake inhibitors (SSRIs), using a couple of recently published papers. [2,3] Because the presenter is an economist, this paper does not challenge the pharmacology in the papers. However it should be noted there is some emerging – perhaps anecdotal – evidence that the SSRIs may have more side effects and are more capable of overdose than is reported in the two papers. We make this caveat to emphasize that economic analysis is dependent upon good pharmacological information. The economist can assist in making better decisions, but ultimately the prescriber must make a series of judgments of which the economic ones are only a part.



Cost Effective Analysis and it Relatives.


Health economists uses a standard framework to analyze the efficiency of medical procedures. The best known components of this framework are “Cost Effectiveness” and “Cost Benefit Analysis”. A recent paper defined them as follows:


cost-benefit, cost-effectiveness analyses & QALYs. Cost-benefit analysis (CBA) a.k.a. benefit-cost analysis involves the enumeration and evaluation in terms of a common unit, usually money, of all opportunity costs and benefits of taking a particular action. The costs and benefits are measured from the societal viewpoint, and usually ignore the distribution within the nation. If the benefit of an action exceeds the costs then there is a sense in which it is in the interests of the nation to take that course. Where there are costs and benefits occurring through time, the method involves discounting.

Cost-effectiveness analysis (CEA) is the procedure for identifying the least-cost means of pursuing a particular objective. For instance there may be two (or more) treatment alternatives. A CEA would evaluate which treatment produced the given outcome using least resources. QALYs, quality adjusted life years, sometimes used in CEAs, measure years of life gained from a treatment adjusted for consequential changes in the quality of the life as the result of an improvement in the enjoyment of the years from reduced pain, increased mobility, and so forth. [4]


Practically, a Cost Effectiveness Analysis is rarely as confined as the definition here. There is a grey area which hovers between CEA and CBA, sometimes called “cost utility analysis”, which takes into consideration wider issues than the narrow CEA but not as broad as the CBA. A common intermediatory objective is the QALY (quality life adjusted year) described above. This enables the analysis to compare the outcomes of treatments on different medical conditions, without having to incorporate all costs (such as productivity losses from the patient being unable to work, and costs to the family of the treatment).


At issue is that the naming of particular aspects of a framework of analysis does not covert the entire analysis. This point is made here to emphasize CEA, or whatever, is not an approach, but a description of part of an approach.



Choosing between Anti-depressants.


That the approach involves a series of analytic steps, rather than a simple recipe is well illustrated by considering the economic evaluation of anti-depressants. Table I summarizes in qualitative terms what the economist needs when making an evaluation in this case.



Class of Drugs                        Effectiveness  Cost                 Side-effects     Overdose Risk

Older Tricyclics                       Same               Low                 High                High-moderate

Newer Tricyclics & Related    Same               Between          Between          Between

Selective Serotonin Reuptake

Inhibitors                     Same               High                Low                 Low

Source: Table D.1, [2]


Apparently the new anti-depressants are not more effective than the old ones, but they have lower side effects, and there is a lower risk of overdose. The offset is they are more expensive.


It is not easy to assess to what extent the side effects should be included in the analysis. A good prescriber will of course take them into consideration, perhaps trying to identify the drug which is least disruptive to the patient. But a review of over 5000 patients, involved in 58 seperate trials, found that the drop-out rates from side effects for TCAs and SSRIs were largely the same (as were they for inefficacy). [5] Given no other information the evaluation is likely to discount such side-effects as important.


Thus the issue is reduced to a tradeoff between the cheaper TCAs and the lower overdose SSRIs. The cost difference is not insignificant. It has been calculated that if the older tricyclics are completely replaced by SSRIs in England, the drug bill will rise over ,160 million a year. [4] The equivalent figure for New Zealand after adjusting for population and the exchange rate would be around $35 million, or about .8 percent of public outlays on the health sector.


Including the Value of Life


A common approach for economists in such circumstances is to ask what would be the value of life saved from the comprehensive use of SSRIs over the (older) TCAs. In particular overdoses lead to deaths, so a major benefit from the use of SSRIs be to reduce suicides.


The British study found that (under certain assumptions) if the life were valued at around £370,000 then it would be appropriate to use SSRIs instead of TCAs. The New Zealand figure might be around $1,000,000, on an exchange rate adjusted basis.


Such economic calculations can cause ethical distress, so they need to be explained in detail. The economist claims no particular expertise in assessing the value of life, but insists that it should be taken into consideration in public policy evaluation.


Suppose it is argued that it is unethical to include a value of life in an evaluation. There would be a danger here of recommending the use of TCAs, ignoring the reduction in deaths from overdose. This decision, equivalent to valuing life at zero, would seem most unethical.


On the other hand suppose we set the value of life at infinity. That would imply that society should direct all its resources towards saving lives. Presumably the advocate of such an evaluation would want the potentially suicidal to be under total surveillance, as well as pouring all the nation’s resources into preventing traffic accidents and other avoidable deaths.


The economist observes dryly that in practice each nation does not do this. It devotes considerable resources into life saving, but not unlimited resources. An economist outside the public sector might try to infer what are the implicit values of life from the decisions that are made. [6] As like as not the conclusion might be that the implicit value of life vary from decision to decision, and that more lives could be saved with the same total resources by using a common value of life in the public sector decisions.


Those inside the public sector face the more difficult task of deciding on and implementing a value of life. There is no official figure for the New Zealand health sector, but the transport sector uses a figure of $1,250,000 a life when calculating the benefits from avoiding a road accident death. [7]


The figure for use of SSRIs rather than TCAs appears to be $1,000,000 per life saved. That means that it would appear to be more valuable to save a life from this anti-depressant prescribing than for current road improvements.


(To see this consider the extra outlay of $35 million a year on SSRIs, which would save, say, 35 lives. Using the road accident figure of $1.25 million a life, the return from the $35 million outlay would be $43.75 million, so the nation makes a “profit” of $8.75 million a year. More strictly it makes sense to transfer resources from road accident prevention to the health sector. In fairness to the transport sector it must be reported, however, that funding limitations are such that many transport projects which meet the $1.25 million cut off are not being implemented, so the value of life implicit in the practicalities of decision making is somewhat lower. Insofar as the $1.25 million value of life is a fair assessment of the value society places on life, there is probably a case for increasing funding to both the transport and health sectors.)



The Older Prescriber


It may seem from the above that the prescriber has a carte blanche to prescribe SSRIs over TCAs. However the issue is more subtle than this. The choice is not simply one of prescribing TCAs over SSRIs. Ideally TCAs should be prescribed, all other things equal, where the patient is not prone to overdose. Moreover the newer TCAs, which are cheaper than SSRIs may be the best option in some circumstances, especially if as reported it is less easy to overdose with some of them. Nor should alternative non-drug therapies be dismissed, especially where they are cheaper or more efficacious. [2]


Practically then, there is no simple economic prescription for the prescriber as to their choice of anti-depressant. On the other hand the prescriber cannot be expected to carry out a CEA as each patient presents. The need is for simple practical rules, which the prescriber can use which are on the whole efficient. To what extent (and in detail) these rules need to be codified is a matter for the profession. An economist would expect there to be a process of ongoing revision as new information became available.


Probably too the prescriber needs an ongoing monitoring of the costs of prescribing. A British Audit Commission noted considerable variations in SSRI prescribing as a proportion of total anti-depressant prescriptions among 4878 practices. [8] No doubt some of the variation is justified, but those that are exceeding, say, double the national average probably need to review their practice, which first involves their knowing they appear out of line.


The danger is that if these measures are not taken at the practice level other measures may be taken at the funder level. Undoubtedly Pharmac, or whomever, have an interest in efficient prescribing, but it would be unfortunate if that led to close control of the doctor-patient decision by government agencies.



The Young Prescriber


The issue of procedures for the older prescriber has been touched upon by way of introduction to the needs of the younger prescriber. Ultimately the issue for the younger prescriber is to attain practice standards comparable to the best of the older prescribers – which alas is almost certainly markedly superior to the average.


Already in many fifth year course, medical students are being introduced in formal health economics courses to some of the economic ideas which this paper has used. That is not enough. There needs to be also an incorporation of the economic-ethics interface in the ethics course they are also likely to be receiving.


But more important than this is that the practical application of the economics (and ethics) programs must be an integral part of the use of the medicine. It is one thing for an economist (or ethicist) to talk of the need to be cost efficient: it is much more important that the student sees the teacher-practitioner, who is also a mentor, putting the concepts into practice. At appropriate points in the fifth year pharmacological teaching there needs to be some attention to the cost issues involved in the use of drugs.


This applies as the student proceeds. The hospital environment should be one of best practice, and the senior staff aware of their mentor role in cost effectiveness as in other pharmacological practices.

One is not proposing here a revolutionary change, but the integration of cost effectiveness into prescribing. Underpinning this change is the way revolutionary development of drug therapies are pressing on the resources available for treatment. Unless this pressure is addressed at the prescribing level there will be waste in the first instance, and ultimately there will be detailed direction from funding agencies which is unnecessary providing prescribers are willing to accept the economic challenges the new therapies present.



[1] Bowie R. Informed consent and economic efficiency, NZMJ, Vol., 103, No.884, 1990.

[2] Freemantle N, Long A, Mason J, Sheldon T, Song F, Watson C, Wilson C. The treatment of depression in primary care, Effective Health Care, No 5, March 1993.

[3] Freemantle N, House A, Song F, Mason J, Sheldon T. Prescribing selective serotonin reuptake inhibitors as a strategy for prevention of suicide, BMJ 1994:309 (23 July)

[4] Bowie R, Easton B. Glossary in Single E, Collins D, Easton B, Harwood H, Lapsley H, Maynard A. International Guidelines for Estimating the Costs of Substance Abuse, consultation draft, CCSA-Policy and Research Unit, Toronto, November 1994.

[5] Song F, Freemantle N, Sheldon T, et al. Selective serotonin reuptake inhibitors: efficacy, acceptability and effectiveness, a meta analysis. BMJ 1993:306 (13 Mar)

[6] Propper C. Valuing Human Life in New Zealand: A New Methodology and a Review of Previously Used Techniques, NZIER WP 83/35.


[8] AUDIT Commission A Prescription for Improvement: Towards More Rational Prescribing in General Practice.