Glossary
- ABPI
- Association of the British Pharmaceutical Industry.
- CNS
- Central nervous system.
- Cost benefit analysis
- A form of economic evaluation in which the outcomes as well as the costs are valued in monetary terms.
- Cost consequences analysis (CCA)
- A form of economic evaluation in which the outcomes (of which a variety of measures are normally presented) are reported separately from costs.
- Cost minimisation analysis (CMA)
- A form of economic evaluation comparing the costs of alternative interventions which have equal effects.
- Cost utility analysis
- A form of cost-effectiveness analysis in which the results are expressed in terms of cost per QALY gained.
- Cost-effective
- The description applied to an intervention for which the costs are considered to be justified by the benefits provided.
- Cost-effectiveness analysis
- A form of economic evaluation in which the results are expressed as a ratio of cost per unit of health outcome, the latter normally being expressed in ‘natural units’ (e.g. mm Hg change in blood pressure, symptom free days).
- Cost-effectiveness league table
- A list of health care interventions in ascending order of incremental cost-effectiveness ratio (ICER) (from low to high), frequently with the ICER expressed as cost per quality adjusted life year (QALY) gained. If the goal of the health care system is to generate as many QALYs as possible, then a cost per QALY league table represents a prioritized list of interventions, from high priority (low cost per QALY) to low priority (high cost per QALY).
- Cost-effectiveness threshold
- The ceiling ICER beyond which interventions are no longer considered cost-effective, reflecting the maximum value decision makers attach to health benefits. This may be stated in terms of cost per QALY gained.
- Disability adjusted life year (DALY)
- A measure of life years lost from disease or injury, adjusted for the severity of mental or physical disability as well as age and discounted over time.
- Direct costs
- The value of those resources directly involved in providing health care, such as the time of health care professionals (and those from other agencies such as social services), medicines, equipment etc. and patients’ costs (e.g. travelling time and expenses) to receive treatment.
- Dominance
- The property characterising an intervention which has lower costs and the same or greater benefits, or has the same costs and greater benefits, than an alternative.
- Economic evaluation
- A comparative analysis of two or more alternatives in terms of their costs and benefits.
- Economic regulation
- Measures taken to correct situations where markets left to their own devices are expected to yield socially undesirable outcomes. Economic regulation in particular deals with the regulation in the final product market, for example the extent to which prices or profits are constrained.
- Effectiveness
- The effect of a treatment as measured in the usual clinical environment.
- Efficacy
- The effect of treatment as measured in the controlled environment of a clinical trial.
- Efficiency
- The allocation of resources in such a way as to maximize the total amount of benefit.
- EU
- European Union. Comprised 15 members in 2003: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, The Netherlands, Portugal, Spain, Sweden and the UK. On 1 May 2004, under the EU extension programme, ten new members joined: Cyprus (Greek part), the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia.
- GB
- Great Britain. Comprises England, Scotland and Wales.
- Generic medicine
- A generic medicine is marketed in accordance with patent law after the patent of the original product expires. It contains the same active substance as the original brand name medicinal product and is identified either by its own brand name (branded generic) or by its internationally approved proprietary scientific name. Generics can be bioequivalent or non-equivalent with respect to the original product. Bioequivalence testing involves determining whether the generic version releases its active ingredient into the bloodstream at virtually the same speed and in virtually the same amounts as the original medicine. In most developed countries, generic medicines now usually require a proof of bioequivalence, but in Central and Eastern European countries, for example, pharmaceutical copies exist without proof of their equivalence.
- GP
- General medical practitioner – i.e. a primary care physician.
- Health economics
- The application of the theories, tools and concepts of economics to the topics of health and health care. Economics is concerned with the allocation of scarce resources, and health economics is concerned with issues relating to the allocation of scarce resources to improve health. This includes both resource allocation within the economy to the health care system and within the health care system to different activities and individuals.
- Health state
- The description of a person’s quality of life.
- Health technology assessment/appraisal
- A review of the evidence (usually a systematic review) on the impact of a health care intervention (or ‘technology’), often including (e.g. in the case of NICE) economic evaluation evidence.
- Incremental cost-effectiveness ratio (ICER)
- The difference in costs between one intervention and an alternative, divided by the difference in outcomes.
- Indirect costs
- The impact of illness and treatment on paid and non-paid work time (and the ability to work) and leisure time. Also known as productivity costs.
- Inpatient
- A person occupying a hospital bed for at least one night.
- Intangible costs
- The pain and suffering that result from undergoing a treatment (rarely included as a cost in economic evaluation but may be captured in part by quality of life measures).
- Life expectancy
- The average further number of years that a person at a specified age may expect to live.
- Mean
- A measure of the central value of a set of observations. The arithmetic mean of a set of n observations x1, x2, x3,....,xn, is defined as the sum of all the xi divided by the number of observations, n. The geometric mean is defined as the nth root of the product of the xi.
- Median
- A measure of the central value of a set of observations. The median is the value in a set of ranked numbers that divides the data into two equal parts. For example, for the set of numbers 1, 2, 2, 5, 6, 10, 13, the median is 5. For an even number of observations, the median is defined as the mean of the two central observations.
- Meta-analysis
- A method of combining the results of more than one study (usually measures of effect from randomized trials).
- Morbidity
- Relating to illness or disease.
- Mortality
- Relating to death.
- National Institute for Health and Clinical Excellence (NICE)
- The government body with responsibility for making recommendations to the NHS in England and Wales on the basis of health technology appraisals of new and existing pharmaceuticals and other health care technologies referred by the Department of Health and National Assembly for Wales.
- Neglected diseases:
- The world’s poorest countries are afflicted by many diseases associated with high level of mortality and/or morbidity but, due to their inability to pay for commercial products, “there is a lack of effective, affordable, or easy to use drug treatments” for these diseases (Yamey, 2002). They differ in:
- the loss of disability adjusted life years (DALYs) caused, with some conditions accounting for significant proportions of the global burden of diseases (e.g. HIV-AIDS) and others having a public health importance only in some areas of the world (e.g. African Trypanosomiasis);
- the geographical area they occur (e.g. visceral leishmaniasis is prevalent in Bangladesh, India and Nepal, while Chagas disease is endemic in Latin American countries);
- the imperfections of the currently available treatments (e.g. the antimalarial Coartem has shown to be highly effective but derived from a relatively costly natural source, while drugs used to treat tuberculosis are effective and inexpensive but require a long treatment course) and the corresponding research needs.
- NHS
- National Health Service of the UK.
- New drug uptake
- Measurement in either value or volume of the usage of in-patent medicines recently launched (normally 2 or 5 years). This is usually expressed as a share of total medicines usage.
- NICE Technology Appraisal
- – see NICE
- OECD
- Organisation for Economic Co-operation and Development.
- OHE
- Office of Health Economics.
- ONS
- Office for National Statistics in the UK.
- Opportunity cost
- The benefit that a resource would yield in its best alternative use. This is the benefit forgone as a result of using the resource. Although, for practical purposes, the cost of a resource is generally expressed in money terms, in some cases there will be no financial payment even though there is an opportunity cost e.g. a voluntary carer.
- OTC
- Over the counter. A medicine available without a prescription.
- PPA
- Prescription Pricing Authority.
- PPRS
- Pharmaceutical Price Regulation Scheme. The PPRS is a non-statutory agreement between the UK government and the research-based pharmaceutical industry operating in the UK, represented by the ABPI. The PPRS regulates the profits earned from sales of branded medicines to the National Health Service (NHS). The current PPRS covers the period from 1 January 2005 to 31 December 2009.
- Prescription charge
- A charge made to patients for NHS prescription medicines.
- Pricing and reimbursement
- Medicines are usually reimbursed (fully or partially) by third party payers (governments or insurers). As a result, once a medicine is granted a marketing authorisation, prices cannot be set freely by companies in most countries. While the exact process used in each country to determine prices of medicines differs, the objective of these processes is similar: companies have to agree with the third party payer the price at which the medicine will be reimbursed. This process is called ‘pricing and reimbursement’.
- Prioritisation
- The process of choosing which health care interventions to provide, and for which patients, with the scarce resources available, and which not to provide. In principle, health care interventions could be prioritized by reference to a cost-effectiveness league table.
- Productivity
- Output per unit of resource input.
- Productivity costs
- – see Indirect costs.
- Quality adjusted life year (QALY)
- A measure of benefit of health care combining the impact on both expected length of life and quality of life.
- Quality of life
- A person’s subjective well-being, often encompassing physical, psychological and social dimensions.
- Randomized trial
- A study in which patients have a (normally equal) chance of being allocated to each of the two or more treatments (which could include placebo) being compared but the treatment any patient receives cannot be predicted.
- Rationing
- – see prioritisation.
- Reference pricing
- There are three possible types of reference pricing (RP): generic RP, therapeutic RP and international RP:
- Therapeutic RP involves grouping patented branded medicines, unless deemed ‘innovative’, together with (usually much cheaper) generic versions of off-patented branded therapeutic competitors to determine the price third party payers will pay for new branded medicines.
- Generic RP only groups medicines with the same active ingredient once the originator brand goes off-patent. The basic principle behind generic RP is the same as with therapeutic RP: there is a limit to the amount reimbursed for all products containing the same active ingredient and the patient needs to pay some additional charge when the price of any medicine within the group is higher than this maximum amount.
- International RP relates the prices of medicines in one market to those observed in other countries. The main objective of this policy is to ‘import’ cheaper prices from abroad when launch prices are being determined/negotiated between companies and third party payers.
- Resources
- Inputs into the production of health care or goods and services in the economy generally. These would include staff time, hospitals, drugs, equipment etc. and patients’ time undergoing treatment (see Direct costs). A person’s availability for, and capacity to, work may also be a relevant resource (see Indirect costs).
- Scarcity
- The fact that there are insufficient resources to undertake every beneficial activity, leading to the necessity to make choices between alternative courses of action (see prioritisation/rationing).
- Systematic review
- A review of evidence based on a comprehensive search of the literature for published and unpublished studies, with extraction (and frequently meta-analysis) of the results of those studies considered relevant, according to the reviewers’ selection criteria, to the question being addressed.
- UK
- United Kingdom. The UK comprises England, Scotland, Wales and Northern Ireland.
- Utility
- In economic evaluation, this term is typically used to mean a measure of the value individuals attach to different outcomes (usually health). These are often used in QALYs to weight periods of time in different health states.
- Value for money
- – see cost-effective.
- WHO
- World Health Organisation. An agency of the United Nations with responsibility for international health matters. It promotes the development of health services and the prevention and control of diseases.