Pharmacy and Therapeutics (P&T) Committee
In early 1960s, hospitals started to establish P&T committees in order to maximize rational drug use through consideration of a pharmaceutical product's safety and efficacy. Later, this became a standard practice by most hospitals. During the 1980s, the newly emerged managed care organizations adopted use of P&T committee to create drug formularies for outpatient setting to designate preferred drugs based on safety, efficacy, and costs. This process was also used as leverage to obtain discounts or rebates from pharmaceutical manufacturers.
Role and purpose of P&T:
The role of P&T committee is to select drugs for formulary listing, to decide on the co-pay and tie structure, to advise other committees and health professionals to maximize rational drug use, to identify problems with drug use and to implement strategies to improve drug use. The P&T committee normally evaluates the clinical merit of drug under consideration. If equivalent, then business issues, such as costs, are determining factors.
Who is in the P&T Committee?
The key members of P&T committee include physicians (various specialties), pharmacists (director, clinical, quality control, and drug information), administrators (institutional setting), quality-assurance coordinators/legal, and nurses (may be a voting or a non-voting member). The chairperson is typically a physician and pharmacists are typically designated as secretaries.
Type of P&T committees:
There are several types of P&T committees in the US and it includes State Medicaid P&T, Federal P&T, Managed Care P&T, and Institutions P&T. The state Medicaid P&T decides on the formulary listing at state level for Medicaid program. The Federal P&T decides on the formulary listing for federal funded programs such as VA and Department of defense. The Managed care P&T represents the private sector and decides on each plan's formulary coverage. And the Institution P&T decides formulary coverage based on hospital needs.
Current methods of evaluation:
The current evaluation process is centered on an evidence-based approach. The decision is based on available evidence from clinical trails, database studies, clinical case studies, costs, and other information. Due to the budget limitation, cost increasingly becomes an important factor in the decision making process. All the P&T committees have been gradually paying attention to more and more of the pharmacy costs and the total health costs when a specific drug is added to the formulary. A pharmaceutical product has potential to reduce other direct medical costs such as hospitalizations, and emergency visits will likely receive better acceptance into formulary because its cost-offset ability.
Many factors tend to influence the P&T decision-making process that might include efficacy, safety, consumer expectations, productivities, quality of life, physician support, budget impact, contract/rebate, regulatory issues, cost-effectiveness, politics and public image, and DTC advertising etc. The negotiation process is not only complex, but as more and more payers in the U.S. are concentrated into managed care and government programs, it is even more critical for pharmaceutical companies to be able to stand up to the P&T committees and present convincing evidence on their products from all perspectives (not only just efficacy and safety). The traditional efficacy and safety argument still impels the governmen's approval process but is no longer adequate to address the payer's needs on their willingness to pay for the drugs. For pharmaceutical companies, regulatory approval is not automatically equal to market access; instead, the pharmaceutical industry should come up with innovative ways to demonstrate the value of their products beyond efficacy and safety measures.
Outcomes Researches
In recent years, outcomes researches have played an increasingly important role in supporting the drug formulary listing process. Outcomes research is a newly developed research area using multidisciplinary approaches including clinical research, epidemiology, biostatics, economics, and patient oriented researches to address the information needs addressed above. Nearly all the major multinational pharmaceutical companies has its internal outcomes research units with a group highly of highly trained professionals to conduct researches to demonstrate the value of its medicines. Recently, US FSA also started to evaluate outcome research based information for approval and advertisement. Starting in 2006, pending Medicare reform will need the government to play an increasing role in defining and regulating outcomes researches.
What is outcomes research?
Outcomes research typically contains two major components: one is patient centered outcomes evaluation, and the other is system centered health economic evaluation.
Patient centered outcomes evaluation:
Patient centered outcomes evaluation concentrate on the evaluation of reported patient outcomes during clinical trials and observational study. Typically, the evaluation goes beyond the traditional efficacy and safety measures allowing the end results to include patient reported quality of life, impact on patients� daily functions and living, impact on sexuality/sleeping, impact on work productivity, patient preference, and patient satisfaction etc.
Health economic evaluation:
Health economic evaluation takes a different point of view in evaluating emerging health care technology including new drugs. It is system oriented rather than patient oriented, and it evaluates the new technology impact on the health care system in terms of dollars. Often, what health economic research goes through is to translate the demonstrated clinical efficacy and safety information into dollar terms to evaluate the total economic impact of the new drugs. For example, if you have a new drug that just came out on market with a higher price compared with your direct competitor, the pharmacy acquisition costs will put you at disadvantages. But if the new product has potential, compared with the competitors, such as shortening hospital stay, reducing infections, and preventing future occurrences of the diseas, then we are able to conduct a health economic study to translate these benefits into concrete savings. We then will more than likely be able to show that the new product actually saved the health care system money based on the cost offsets; therefore, this created the convincing evidence for payers to cover the newer drug even with higher pharmacy costs.
Outcomes research to support formulary decision:
There is an increasing trend that outcomes research information which is demanded at the review of formulary coverage. The UK, Australia, Netherlands, and Canadian government has created a designated government agency to evaluate such evidence, and the evaluation will form the base for a coverage decision. In the US, the payers (insurance companies and the government) are increasingly requesting outcomes information to enable them to make an evidence-based and informed decision. Consequently, it is critical for multinational pharmaceutical companies to have solid outcomes research capacity to address the payer� needs, otherwise they will be left in a position considered to be competitively disadvantageous.
China's basic drug formulary listing process and potential impact with outcomes research information
In August 1981 and May 1999, China promulgated the National Formulary and Basic Medical Insurance Formulary, respectively. These formularies had certain successes in reducing overall healthcare costs, but the review process is still at its early stages and largely without the scientific support of Pharmacoeconimic data.
As China's economy continues to grow, the population will demand for better and more innovative drugs to satisfy their needs. The entire pharmaceutical market in China will expand significantly and potentially leap into the top 5 nations/regions in terms of drug sales in the next a few years. Chinese people will be able to afford more innovative medicines; therefore, Chinese pharmaceutical companies have to significantly increase their new drug development and commercialization capability and start to compete with the global industry leaders. It is inevitable that the government will increasingly look at the trade-off of medicinal cost, improved outcomes for patients, and reduced costs for the nation's healthcare system. Outcomes research will be able to provide answers to these important questions. Again, for emerging research-based Chinese pharmaceutical companies, outcomes research information can significantly add value for innovative products and improve the chance to be covered by National Formulary to create commercial success locally and globally.