Managing the Long-Term Medical Expenses of Adverse Drug Events
By Keith Hoffman, Ph.D., Vice President of Scientific Affairs, Advera Health Analytics
Focus on improving patient outcomes, lowering costs, and optimizing formularies
Pharmaceutical developers purposefully enroll subjects who are relatively homogenous in pre-approval clinical trials. They do this to help obtain clear statistical descriptions regarding a compound’s efficacy. Safety profiles, however, can differ greatly between such homogenous pre-approval patients and the heterogeneous population of real world patients.
Far too often, serious and life-threatening side effects that were not exposed during pre-approval testing only become evident after drug approval. A member of the Food and Drug Administration’s (FDA’s) Office of Drug Safety explained these issues well: 1) “the complete adverse event profile of a drug is not known at the time of approval because of the small sample size, short duration, and limited generalizability of pre-approval clinical trials” and, 2) “since most trials exclude the elderly, children, pregnant women, patients with multiple diseases, and those on medications suspected of interaction with the study drug, the studies’ participants may not be representative of the real world where the drug is eventually used.”1
Indeed, approximately 1,500,000 Adverse Events (AEs) are currently reported to FDA each year regarding approved drugs.2 These side effects cause significant burdens on both the healthcare system and patients. Not only are AEs a major cause of hospital admissions, they also are a frequent in-patient complication and are the fifth leading cause of death in the United States.3-8 The financial impact of AEs varies by the type of harm they create for the patient. The downstream effects of AEs and/or poor patient outcomes can result in many thousands of dollars in added costs per event.9-19 Current methods to analyze AEs and poor patient outcomes and their related costs to the healthcare system are lacking.
The true financial burden of a given medication can be properly calculated by examining the costs associated with: 1) procurement; 2) treatment regimes; 3) healthcare provider expenditures needed to administer the medication, and, 4) downstream medical burdens from AEs and poor patient outcomes triggered by it. While the industry has a good understanding of #1-3, a method for tracking costs associated with point #4 is missing. To estimate direct downstream medical costs associated with the treatment and consequences of AEs Managed Care Organizations (MCOs) need a method to link patient outcomes to both accurate financial estimates and real world AE data.
The use of a platform that financially quantifies AEs and patient outcomes will allow the pharmaceutical industry to accurately understand the true costs of a given medication. It will also improve drug safety by identifying medications that cause undue burdens on patients and the healthcare system.
How AEs are Reported: FDA’s Adverse Event Reporting System (FAERS)
AE reports (five million and counting) are logged into the FDA’s centralized computerized information database for post-marketing drug safety surveillance known as the FDA Adverse Event Reporting System (FAERS).20 For healthcare professionals and consumers reporting is voluntary, but drug manufacturers must submit all known AE reports to FDA.
FDA professionals and pharmacovigilance experts routinely look to FAERS data as both a guide to, and a signal generator of, drug safety issues. Both groups employ a wide array of sophisticated data mining and signal detection techniques.21-22 FDA uses such analyses to issue alerts and warnings, mandate label changes, and remove drugs from the US market after the incidence or severity of their side effects is determined to significantly differ from what pre-approval clinical trial results suggested.23
Unfortunately, FAERS is inaccessible to most healthcare professionals. In fact, publicly available FAERS information can only be obtained through burdensome Freedom of Information Act requests or complicated data downloads by individuals familiar with relational archives. As FDA states, “a simple search of FAERS data cannot be performed with these files by persons who are not familiar with the creation of relational databases.”20
The Relationship between Patient Outcome and Medical Costs
Although significant efforts have been exerted over the past decade with regard to improving patient safety, little progress is apparent.24 One positive step, however, is that health systems and providers are becoming increasingly vigilant in monitoring AEs. As discussed, it is the tracking of specific outcomes that result from those AEs that will allow the true assessment of the medical and economic impact of a given drug safety profile.
To calculate the economic impact of real world AEs, one must link AEs and poor patient outcomes to the direct medical costs associated with treating them. Such associations enable a downstream view of AEs and therefore provide needed insights on how to lower such costs and improve patient outcomes. Examples of what these data can be used for include: 1) driving safer prescribing behavior, 2) making preemptive decisions before AEs arise, and 3) optimizing the construction of drug formularies.
Outcomes determine the treatment(s) that are needed to care for a patient that experiences an AE and are therefore the major determinant in what costs are associated with the patient’s recovery.
As an example, assume hypertension drug X produces bleeding 10% of the time that it is prescribed, while hypertension drug Y triggers bleeding in 5% of patients who take it. Armed with just these data, one might assume that drug Y is a better choice for both patient (safer) and provider (less downstream costs). However, the bleeding triggered by the use of drug X only requires hospital admission to resolve it 10% of the time, but drug Y’s AE requires hospital admission and treatment 80% of the time. So even though drug X causes more cases of bleeding, it turns out to be safer for patients, and is therefore less of a financial burden for providers than drug Y.
Software Can Predict the Impact of Drug Safety on Long-Term Medical Costs
MCOs have a strong understanding of how much they pay manufacturers to purchase medications. However, those product prices are only one part of a drug’s true cost. Indeed, the downstream medical costs from AEs can eclipse a drug’s initial price tag. Having a quantitative metric for direct downstream medical costs associated with AEs and poor patient outcomes gives managed care professionals a much-needed tool to make informed decisions about which drugs to include in, or exclude from, formularies and coverage. MCOs are able to objectively connect AEs and patient outcomes to actual downstream medical costs. When healthcare professionals have access to an AE signaling tool and a platform for analyzing downstream medical costs they can make formulary decisions that will lead to both significantly better financial results and improved patient outcomes.
About the Author
Keith Hoffman has 18 years of science, business, and intellectual property development experience in the biotechnology, pharmaceutical, and consumer goods industries. He can be reached at keith@adverahealth.com.
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