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The past, present, and future of health economics in India

Singh, Nihaal 1, ; Shukla, Rushikesh 1 ; Acharya, Sourya 1 ; Shukla, Samarth 2

1 Department of Medicine, Jawaharlal Nehru Medical College, DMIMS (DU), Sawangi, Wardha, Maharashtra, India

2 Department of Pathology, Jawaharlal Nehru Medical College, DMIMS (DU), Sawangi, Wardha, Maharashtra, India

Address for correspondence: Nihaal Singh, MBBS Student, Jawaharlal Nehru Medical College, DMIMS (DU), Sawangi, Wardha, Maharashtra - 442 001, India. E-mail: [email protected]

This is an open-access article distributed under the terms of the Creative Commons Attribution-Noncommercial-Share Alike 4.0 Unported, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Health economics has long been neglected as a subset of the larger discipline of Economics and Finance. However, this could not be further from the truth. There is a large body of researchers and professionals alike that are of the consensus that extensive studying and working upon Healthcare Economics can help us avert the situation that arose in the wake of the recent COVID-19 pandemic. Applying the core principles of Health Economics to a situation like that would help avert bad outcomes. In this article, the authors begin by defining and establishing the concepts of Health Economics and then building on them. We further explain the concepts in light of the Indian Economy and Healthcare Sector and how it has seen unprecedented growth in the last decade. Furthermore, we touch on the various diseases that put the most strain on the healthcare infrastructure and what we can do to make the situation better. We also shed light on how the COVID-19 pandemic affected the Health Economics in the Indian setting and go on to elaborate how India managed to tackle it. Finally, we elaborate on what steps we can take, as researchers and healthcare professionals, to make it easier for the common man to get access to better and more economical healthcare. We determine the importance and effectiveness of data collection and processing and also how to make better research attempts to study, evaluate and process that said data. The onus falls on the academic and the healthcare professional to ensure that the true meaning of Health Economics is not reduced to a mere numbers game, but is something which is truly subjective and for the benefit of the masses.

Introduction

Health Economics is an amalgamation of two very distinct schools of thought. One is heavily reliant on trying to describe what health means to an individual and what factors influence health, both at the individual and at the community level. The other ties healthcare to its monetary statistics and tries to point out how tweaking certain modalities can influence the final cost that the individual seeking healthcare services has to bear. We will talk about both these lines of investigation in the sections that follow.

Health economists since times immemorial have faced an important dilemma. The dilemma being that health economics is remarkably distinct from its parent branch, which is Classical Economics. This situation arises due to the often constant involvement of third-party players like insurance companies and hospital financing infrastructure. This, combined with issues such as the vagueness of involved metrics, viz-a-viz. QALY (Quality Adjusted Life Years), which are very commonly used to measure healthcare statistics makes it increasingly difficult to trust the computations that are churned out when the numbers are run.

Factors such as the presence of third-party insurers, external intervention, barriers to entry, inevitability of uncertain outcomes, and heavy government involvement make it extremely difficult to consider healthcare in the same domain as other goods and services. Thus, a very distinct perspective is required to evaluate healthcare from the economic lens.

It is important to note that healthcare is conceptually very distinct from other goods that are dealt with in Classical Economics. This is due to the fact that healthcare can be incredibly subjective in terms of success. And this subjective viewpoint can vary from individual to individual and community to community. To avoid making erroneous calculations and coming to conclusions that are based on a standardized metric, we must ensure that healthcare data are collected and processed with due context always analyzed with respect to the individual or community in question.

Health economics in the Indian context

There have been several factors that have caused a massive growth of the healthcare sector in India. Some of these are increase in population, increased life-expectancy, affordable private healthcare, more spare income, and Government’s emphasis on improving healthcare.

This growth means that Indian Healthcare is now valued at over a massive $40 billion. And out of this more that 80% of spending is in private sector and by means of money-at-hand. India thus, has various growth opportunities along with challenges that India has to tackle on its way to success. Medical tourism has become one of the most popular destinations in India, with a $2 billion business. Many super-specialty hospitals, highly qualified medical staff, telemedicine, and government incentives all help to boost health tourism in the country. The huge population, diverse genetic pool, and wide range of disorders make it ideal for clinical trials and personalized medicine research. [ 1 ]

By 2030, India will become the most populated nation on this planet, and approximately 200 million Indians would be at minimum 60-years-old. The expanding ageing demographic, on the other hand, is putting a huge strain on the healthcare infrastructure. With the growth in infectious and behavioral illnesses, urbanization has put a strain on national infrastructure.

A few of the major issues is that healthcare in India is primarily paid for out of cash; over 3/4 th of hospitals and almost half of hospital beds are privately owned. The lower classes cannot pay private health insurance since it is mostly private. [ 1 ]

Our healthcare expenditure is insufficient; overall healthcare spending accounts for only 4.1 percent of gross domestic product (GDP), the lowest among the Brazil, Russia, India, China and South Africa (BRICS) countries. In India, there is a difference in the providing of resources and infrastructure among various socio-economic regions. In comparison to the WHO’s assessment of the global averages of 3,960 beds/million people, India has roughly 860 beds/million inhabitants.

Conditions that most severely burden Health Economics in India

A place like in India where you have less to eat and more glucose in one’s body creates an irony that by itself remains unsolved. Thousands of cases of explosively high numbers of patients with uncontrolled diabetes are handled and often lead to the worst prognosis. The number of patients suffering from diabetes in India, mainly type 2, is rising each day. It also raises the cases of ophthalmic issues and requirement of dialysis machines. As dreadful this disease is, the more dreadful its outcome on economics is. It holds a major chunk of India’s economy to deliver dialysis machines to every Primary Health Centre and government aided hospitals. Even after adjusting for GDP per capita, our regression study found that direct diabetes expenses are closely and positively linked with a country’s GDP per capita, and that the United States stands out as having exceptionally high expenditures. [ 2 ]

Dialysis is not just expensive for the individual itself but it is a major monetary setback even for the country’s GDP. The cataract and glaucoma caused by the same needs equal monetary help for treatment. Carelessness of the patient and the doctors leading to such preceding health concerns require a stronghold in the money. India has to report every case to the WHO which sets up a margin of how the work needs to proceed. The work to reduce its monetary dependence needs to be started at the level of doctors and government aided hospitals itself. Diabetes being 13 th most dangerous cause of death in India, each diabetes case needs to be examined well and its related prognosis needs to be set so that we do not suffer from its allied morbid progression like renal failure in case of diabetes. Renal failure being another burden for Indian economics. The dependence of patients on dialysis machines needs to be reduced as well. The next step that needs to be taken is at the state level and to improve prevention methodologies.

Hypertension

Ischemic heart disease being the sixth most common form of disability-related death in India and hypertension being the most important etiology of it. The prevalence of hypertension in the Indian subcontinent however is due to various factors like poor nutrition due to poverty, low air quality, and the proportion of people who are aware of risk factors like smoking. According to data released in 2017, hypertension, often known as high blood pressure, affects nearly three out of ten Indians and is responsible for 17.5% of all deaths and 9.7% of disability-adjusted life years (DALYS) in the country. DALYS are a unit of measurement that measures the entire disease burden as well as the years lost owing to disability, illness, and premature mortality. [ 3 ] Obesity had the largest socioeconomic status gradient, followed by diabetes and hypertension. [ 4 ]

The associated treatment is also very expensive. The government of India provides the poor with generic medicine for the same. The ischemic heart damage associated with hypertension also bridges a lot of problems along with them. The diagnosis of such heart disease requires a lot of expensive interventions and also the cost of a basic ECG has to be taken into account. Stenting being the most expensive intervention whereas anticoagulant and statin therapy being another one. Even after all of the medicine provided by the doctors and the government at dirt cheap costs, the prognosis of such illness is not always good. The increase in death in relation to this demands an increase in incineration plants and dumping grounds. Bio-waste management is also required. All of this increases the monetary demand from the government and hence bending the economy more towards the decline.

Tuberculosis

The burden of tuberculosis (TB) in India outweighs any other factor that droop the monetary use in health economics India. According to a paper published in The Lancet, TB-related fatalities cost India $32 billion per year, or over Rs 2 lakh crore. [ 5 ] The extreme poverty commonly linked with TB is one of the most important characteristics of the disease’s burden in India. Despite the availability of free TB diagnosis and treatment services, persons with TB may become impoverished. [ 6 ]

For impoverished TB patients, getting nominally free TB testing and treatment facilities can be costly. The Indian government puts innumerable efforts in building vaccines for TB, giving vaccines to people for free, preventing TB by cleanliness, despite all the effort, it goes in vain if people are not educated enough to understand the situation. Cost of BCG vaccination surges high due to the huge population. The reporting of all cases has to be mandatorily done to the WHO and hence, WHO creates a lot of pressure on the country for it to escape such lethal and highly contagious disease. The progression of TB to lung abscess or any pulmonary condition may also be very difficult to treat. The reports of drug-resistant TB have been on rise for a long time in India. No specific treatment modality or regime offers 100% better prognosis to this.

Burden due to overpopulation

The population, though not having an ill effect on the health of an individual, has major concerns when it comes to economics for the country. Feeding the population of the country and looking after its wellbeing and its unfurling illnesses is not a piece of cake and surely requires a handful of money. With each additional member aged 60 years and above, the likelihood of catastrophic health expenditures increases: 33% of households with one 60+ member and 38% of households with 2 or more 60+ members experienced catastrophic health expenditures, compared to only 20% of households with all members under the age of 60 years. [ 7 ]

The major burden carried by the population is the spread of infectious diseases like TB, COVID-19. Both of them explained further. Spread of such highly contagious diseases piles up a plethora of patients under latency. With such a skyrocketing population, waste management becomes an undefeatable issue. For that matter, not just India but many other Asian countries suffer from the same issue. Malnutrition also accompanies the population. The protein energy malnutrition burden has also seen a rise in numbers in India. The fact that per square meter of space shared by a set of people is not enough to suffice the entire population. The majority of patients with lung disorders in India are chronic obstructive pulmonary disorders or a vast number of people suffer from exaggerated allergy in India. Most of these illnesses are in dire need of clean air. The pollution in India is indexed at peak. All such factors need special attention from the government and enough funding has to be made to engulf them all. The more the population, the greater will be the monetary support required. Increase in morbidity associated with population-related disease, will lead to rise in the requirement of better end care facilities. More hospice care will hence require more economic grasp from the country. The grasp of which is really loose in a country like India.

How COVID-19 affected health economics in India

The COVID-19 pandemic was a global catastrophe that caused a massive and ugly strain on the healthcare infrastructure. However, during the second wave of the infection, no country was as strained for medical resources, as India.

India’s corporate medical industry has made a considerable contribution, accounting for over 2/3 rd s of inpatient treatment. Several private hospitals began their preparations in reaction to the COVID-19 outbreak, which included considerable expenditures in infrastructure for treatment, as well as appropriate equipment and increased labor. Furthermore, owing to prolonged treatment times for other diseases and elective procedures, clinics, and laboratories have seen a significant drop in income, as the outbreak is expected to reduce private institutions’ operating profit by nearly half this year. [ 8 ]

The medical industry, in collaboration with the federal and local agencies, developed a sophisticated reaction strategy to counter the outbreak, including the establishment of specialized COVID-19 clinics, exclusion facilities, and technology-enabled identification of resources. The Government of India also used software to efficiently control the pandemic, developing a variety of programs at the federal and local strata. The Aarogya Setu smartphone app, which helped with symptomatic detection and tracing of contacts, was commonly deployed across India. [ 8 ]

We saw unprecedented number of hospitalizations and deaths following the pandemic and the wave upon wave of rise in infections was not mitigated by loose government regulations. This must be a wake-up call to authorities in the nation to make better policies for future situations that keep in mind the fragile state in which it puts the Healthcare Economy.

What can be done to improve the state of health economics in India

Health technology assessments (HTAs) are an essential tool for determining the economic worth of medical treatments across the world. It is utilized to divide healthcare spending in an effective and equitable manner. There is no centralized medical reimbursement system in India, no payee-willingness levels, no general statement, regulations, or standards for health economics assessment models. Furthermore, healthcare delivery is not consistent. [ 1 ]

Nevertheless, HTAs could still be used to navigate general compensation of medical procedures, to advise valuation process for new drugs or drug categories, and to assist healthcare authorities in developing clinical practice framework to ensure uniformity in delivery and scientifically backed treatments for peak effectiveness.

The majority of health economics research in India are partnerships with scholars from other countries. In India, there is a dearth of understanding of the ideas and methodologies for performing pharmaco-economic analyses. In India, there is presence of a few practitioners of healthcare economic analysis working in education and professional institutes, although these are small communities of expertise. On a national basis, we need educational sessions and the exchange of best practices. This will aid in the provision of information as well as a reservoir of qualified academics. [ 1 ]

The outcome of an investigation is determined by the data. As a result, the input obtaining process for these studies must be reliable. In India, policies for healthcare evaluation models must be authorized by the administration. There is still a lot of work to be done, even though the maiden pharmaco-economic recommendations have seen development and delivery to consumers.

Thus, delivering upon better data collection and processing, institutions, both private and public can make better and more informed decisions that will make it easier for the healthcare sector, as well as the individual gain benefit out of situations. This is only possible if everyone involved makes a collective effort in the spirit of improving the Health Economy of the nation.

Health Economics is a discipline that has only been vaguely defined and intensely debated. In order to make better decisions that are data-driven and justifiable by number crunching, we must partake in extensive research and planning at both national and international levels. This will enable us to make bold and substantial claim about how to better manage situations that strain the Healthcare Infrastructure and the associated financial institutions.

There are some diseases that affect the individual and the collective more so and in higher frequencies than the others, and it is imperative that we target them and isolate them. Following Pareto’s distribution, 20% of work will solve 80% of our problems. With this spirit, we must move forward by being both optimistic and rational. This will help us tackle the problems posed to us, such as the recent COVID-19 pandemic much more efficiently and economically.

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Effect of Health Insurance in India: A Randomized Controlled Trial

We report on a large randomized controlled trial of hospital insurance for above-poverty-line Indian households. Households were assigned to free insurance, sale of insurance, sale plus cash transfer, or control. To estimate spillovers, the fraction of households offered insurance varied across villages. The opportunity to purchase insurance led to 59.91% uptake and access to free insurance to 78.71% uptake. Access increased insurance utilization. Positive spillover effects on utilization suggest learning from peers. Many beneficiaries were unable to use insurance, demonstrating hurdles to expanding access via insurance. Across a range of health measures, we estimate no significant impacts on health.

We thank Kate Baicker, Amitabh Chandra, Pascaline Dupas, Johannes Haushofer, Rick Hornbeck, Joe Newhouse, Neale Mahoney, Julian Reif, Joshua Gottlieb, and seminar participants at Brown University, University of Chicago, Harvard, and Stanford for comments. This study was funded by the Department for International Development in the UK Government; the Tata Trusts through the Tata Centre for Development at the University of Chicago; the MacLean Center, the Becker-Friedman Institute, the Neubauer Collegium, and the Law School at the University of Chicago; the Sloan Foundation; SRM University; and the International Growth Centre. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.

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100+ ICMR Research Topics: Unlocking Health Insights

The landscape of healthcare research in India has been significantly shaped by the endeavors of the Indian Council of Medical Research (ICMR). Established in 1911, the ICMR has played a pivotal role in advancing medical knowledge, informing health policies, and fostering collaborations to address pressing health challenges in the country.

In this blog, we embark on a journey through the corridors of ICMR research topics, shedding light on the council’s current and noteworthy research topics that are contributing to the nation’s health and well-being.

The Role of ICMR in Health Research

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The Indian Council of Medical Research operates as the apex body in India for the formulation, coordination, and promotion of biomedical research. With a mission to nurture and harness the potential of medical research for the benefit of society, ICMR has become a cornerstone in shaping health policies and practices. 

By fostering collaborations with researchers and institutions across the nation, ICMR has emerged as a driving force in advancing healthcare knowledge and outcomes.

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Understanding ICMR Research Methodology

The success of ICMR’s research lies not only in its expansive scope but also in its rigorous methodology and ethical considerations. ICMR has established guidelines that researchers must adhere to, ensuring that studies funded by the council are not only scientifically sound but also ethically conducted. 

This commitment to ethical research practices has been a cornerstone in building public trust and confidence in the findings generated by ICMR-funded studies.

100+ ICMR Research Topics For All Level Students

• Infectious Diseases: Emerging pathogens and control strategies.
• Non-Communicable Diseases (NCDs): Diabetes, cardiovascular research.
• Maternal and Child Health: Strategies for mortality reduction.
• Biomedical Research: Molecular insights into diseases.
• Cancer Research: Innovative approaches for treatment.
• Epidemiology: Studying disease patterns and trends.
• Vaccination Strategies: Enhancing immunization programs.
• Public Health Interventions: Effective community health measures.
• Antibiotic Resistance: Combating microbial resistance.
• Genetic Studies: Understanding genetic contributions to diseases.
• Neurological Disorders: Research on neurological conditions.
• Mental Health: Addressing mental health challenges.
• Nutrition and Health: Studying dietary impacts on health.
• Health Systems Research: Improving healthcare delivery.
• Ayurveda Research: Integrating traditional medicine practices.
• Environmental Health: Impact of environment on health.
• Emerging Technologies: Utilizing tech for healthcare innovations.
• Pharmacological Research: Advancements in drug discovery.
• Global Health Collaborations: International health partnerships.
• Waterborne Diseases: Prevention and control strategies.
• Health Policy Research: Shaping evidence-based policies.
• Health Economics: Studying economic aspects of healthcare.
• Telemedicine: Harnessing technology for remote healthcare.
• Rare Diseases: Understanding and treating rare disorders.
• Community Health: Promoting health at the grassroots level.
• HIV/AIDS Research: Advancements in HIV prevention and treatment.
• Aging and Health: Research on geriatric health issues.
• Cardiovascular Health: Preventive measures and treatments.
• Respiratory Diseases: Understanding lung-related conditions.
• Zoonotic Diseases: Investigating diseases transmitted from animals.
• Stem Cell Research: Applications in regenerative medicine.
• Yoga and Health: Studying the health benefits of yoga.
• Gender and Health: Research on gender-specific health issues.
• Oral Health: Preventive measures and treatments for oral diseases.
• Health Informatics: Utilizing data for healthcare improvements.
• Health Education: Promoting awareness for better health.
• Drug Resistance: Research on antimicrobial resistance.
• Hepatitis Research: Prevention and treatment strategies.
• Telehealth: Remote healthcare services and accessibility.
• Diabetes Management: Strategies for diabetes prevention and control.
• Tuberculosis Research: Advancements in TB diagnosis and treatment.
• Fertility Research: Understanding reproductive health issues.
• Artificial Intelligence in Healthcare: Integrating AI for diagnostics.
• Health Disparities: Addressing inequalities in healthcare access.
• Mental Health Stigma: Research on reducing stigma.
• Mobile Health (mHealth): Applications for mobile-based healthcare.
• Vector-Borne Diseases: Prevention and control measures.
• Nanotechnology in Medicine: Applications in healthcare.
• Occupational Health: Research on workplace health issues.
• Biobanking: Storing and utilizing biological samples for research.
• Telepsychiatry: Providing mental health services remotely.
• Health Equity: Promoting fairness in healthcare delivery.
• Community-Based Participatory Research: Engaging communities in research.
• E-health: Electronic methods for healthcare delivery.
• Sleep Disorders: Understanding and treating sleep-related conditions.
• Health Communication: Effective communication in healthcare.
• Global Burden of Disease: Research on disease prevalence and impact.
• Traditional Medicine: Studying traditional healing practices.
• Nutraceuticals: Research on health-promoting food components.
• Health Data Security: Ensuring privacy and security of health data.
• Regenerative Medicine: Advancements in tissue engineering.
• Social Determinants of Health: Studying social factors affecting health.
• Pharmacovigilance: Monitoring and ensuring drug safety.
• Gerontology: Research on aging and the elderly.
• Mobile Apps in Healthcare: Applications for health monitoring.
• Genetic Counseling: Supporting individuals with genetic conditions.
• Community Health Workers: Role in improving healthcare access.
• Health Behavior Change: Strategies for promoting healthier habits.
• Palliative Care Research: Enhancing end-of-life care.
• Nanomedicine: Applications of nanotechnology in medicine.
• Climate Change and Health: Impact on public health.
• Health Literacy: Promoting understanding of health information.
• Antibody Therapeutics: Advancements in antibody-based treatments.
• Digital Health Records: Electronic health record systems.
• Microbiome Research: Understanding the role of microorganisms in health.
• Disaster Preparedness: Research on health response during disasters.
• Food Safety and Health: Ensuring safe food consumption.
• Artificial Organs: Advancements in organ transplantation.
• Telepharmacy: Remote pharmaceutical services.
• Environmental Epidemiology: Studying the link between environment and health.
• E-mental Health: Digital tools for mental health support.
• Precision Medicine: Tailoring treatments based on individual characteristics.
• Health Impact Assessment: Evaluating the consequences of policies on health.
• Genome Editing: Applications in modifying genetic material.
• Mobile Clinics: Bringing healthcare to underserved areas.
• Telecardiology: Remote cardiac care services.
• Health Robotics: Utilizing robots in healthcare settings.
• Precision Agriculture and Health: Linking agriculture practices to health outcomes.
• Community-Based Rehabilitation: Supporting rehabilitation at the community level.
• Nanotoxicology: Studying the toxicological effects of nanomaterials.
• Community Mental Health: Strategies for promoting mental well-being.
• Health Financing: Research on funding models for healthcare.
• Augmented Reality in Healthcare: Applications in medical training and diagnostics.
• One Health Approach: Integrating human, animal, and environmental health.
• Disaster Mental Health: Addressing mental health issues after disasters.
• Mobile Laboratory Units: Rapid response in disease outbreaks.
• Health Impact Investing: Investing for positive health outcomes.
• Rehabilitation Robotics: Assisting in physical therapy.
• Human Microbiota: Understanding the microorganisms living in and on the human body.
• 3D Printing in Medicine: Applications in medical device manufacturing.

Success Stories from ICMR-Funded Research

Highlighting the impact of ICMR-funded research is essential in appreciating the council’s contribution to healthcare in India. From breakthrough discoveries to successful interventions, ICMR-supported studies have led to tangible improvements in health outcomes. 

Case studies showcasing the journey from ICMR research topics and findings to real-world applications serve as inspiring examples of how scientific knowledge can translate into positive societal impacts.

Challenges and Opportunities in ICMR Research

While ICMR has achieved remarkable success in advancing health research, it is not without its challenges. Researchers face obstacles in conducting studies, ranging from resource constraints to logistical issues. 

Acknowledging these challenges is crucial in finding solutions and optimizing the impact of ICMR-funded research. Additionally, there are opportunities for collaboration, both nationally and internationally, that can further enrich the research landscape and accelerate progress in addressing health challenges.

The Future of Health Research in India: ICMR’s Vision

Looking ahead, ICMR envisions a future where health research continues to play a central role in shaping the well-being of the nation. Strategic goals include harnessing the power of technology and innovation to drive research advancements, fostering interdisciplinary collaborations, and addressing emerging health challenges. 

The vision extends beyond the laboratory, emphasizing the translation of research findings into practical solutions that can positively impact the lives of individuals and communities across India.

In conclusion, the Indian Council of Medical Research stands as a beacon in the realm of healthcare research, tirelessly working towards advancements that contribute to the well-being of the nation. 

By exploring ICMR research topics, understanding its methodology, and reflecting on success stories, we gain insight into the transformative power of scientific inquiry. 

As ICMR continues to forge ahead, the future of health research in India looks promising, guided by a vision of innovation, collaboration, and a steadfast commitment to improving the health of all citizens.

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A Systematic Review of the State of Economic Evaluation for Health Care in India

Affiliations.

• 1 School of Public Health, Post Graduate Institute of Medical Education and Research, Sector-12, Chandigarh, 160012, India. [email protected].
• 2 School of Public Health, Post Graduate Institute of Medical Education and Research, Sector-12, Chandigarh, 160012, India.
• 3 The George Institute for Global Health, Camperdown, NSW, 2050, Australia.
• 4 Health Policy Research Unit, Institute of Economic Growth, University of Delhi Enclave, Delhi, 110007, India.
• 5 Sydney Medical School, University of Sydney, Sydney, Australia.
• PMID: 26449485
• DOI: 10.1007/s40258-015-0201-6

Background and objective: Economic evaluations are one of the important tools in policy making for rational allocation of resources. Given the very low public investment in the health sector in India, it is critical that resources are used wisely on interventions proven to yield best results. Hence, we undertook this study to assess the extent and quality of evidence for economic evaluation of health-care interventions and programmes in India.

Methods: A comprehensive search was conducted to search for published full economic evaluations pertaining to India and addressing a health-related intervention or programme. PubMed, Scopus, Embase, ScienceDirect, and York CRD database and websites of important research agencies were identified to search for economic evaluations published from January 1980 to the middle of November 2014. Two researchers independently assessed the quality of the studies based on Drummond and modelling checklist.

Results: Out of a total of 5013 articles enlisted after literature search, a total of 104 met the inclusion criteria for this systematic review. The majority of these papers were cost-effectiveness studies (64%), led by a clinician or public-health professional (77%), using decision analysis-based methods (59%), published in an international journal (80%) and addressing communicable diseases (58%). In addition, 42% were funded by an international funding agency or UN/bilateral aid agency, and 30% focussed on pharmaceuticals. The average quality score of these full economic evaluations was 65.1%. The major limitation was the inability to address uncertainties involved in modelling as only about one-third of the studies assessed modelling structural uncertainties (33%), or ran sub-group analyses to account for heterogeneity (36.5%) or analysed methodological uncertainty (32%).

Conclusion: The existing literature on economic evaluations in India is inadequate to feed into sound policy making. There is an urgent need to generate awareness within the government of how economic evaluation can inform and benefit policy making, and at the same time build capacity of health-care professionals in understanding the economic principles of health-care delivery system.

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• Systematic review of economic evaluations of interventions for high risk young people. Edmunds K, Ling R, Shakeshaft A, Doran C, Searles A. Edmunds K, et al. BMC Health Serv Res. 2018 Aug 23;18(1):660. doi: 10.1186/s12913-018-3450-x. BMC Health Serv Res. 2018. PMID: 30139384 Free PMC article. Review.
• Economic Studies on Non-Communicable Diseases and Injuries in India: A Systematic Review. Gupta I, Roy A. Gupta I, et al. Appl Health Econ Health Policy. 2018 Jun;16(3):303-315. doi: 10.1007/s40258-018-0370-1. Appl Health Econ Health Policy. 2018. PMID: 29611047
• The influence of cost-per-DALY information in health prioritisation and desirable features for a registry: a survey of health policy experts in Vietnam, India and Bangladesh. Teerawattananon Y, Tantivess S, Yamabhai I, Tritasavit N, Walker DG, Cohen JT, Neumann PJ. Teerawattananon Y, et al. Health Res Policy Syst. 2016 Dec 3;14(1):86. doi: 10.1186/s12961-016-0156-6. Health Res Policy Syst. 2016. PMID: 27912780 Free PMC article.
• Cost-Effectiveness and Affordability of Interventions, Policies, and Platforms for the Prevention and Treatment of Mental, Neurological, and Substance Use Disorders. Levin C, Chisholm D. Levin C, et al. In: Patel V, Chisholm D, Dua T, Laxminarayan R, Medina-Mora ME, editors. Mental, Neurological, and Substance Use Disorders: Disease Control Priorities, Third Edition (Volume 4). Washington (DC): The International Bank for Reconstruction and Development / The World Bank; 2016 Mar 14. Chapter 12. In: Patel V, Chisholm D, Dua T, Laxminarayan R, Medina-Mora ME, editors. Mental, Neurological, and Substance Use Disorders: Disease Control Priorities, Third Edition (Volume 4). Washington (DC): The International Bank for Reconstruction and Development / The World Bank; 2016 Mar 14. Chapter 12. PMID: 27227237 Free Books & Documents. Review.
• Healthcare Cost of Cochlear Implantation in India. Sharma A, Prinja S, Thakur R, Gupta D, Kaur R, Sharma S, Munjal S, Panda N. Sharma A, et al. Indian J Otolaryngol Head Neck Surg. 2024 Apr;76(2):1716-1723. doi: 10.1007/s12070-023-04389-7. Epub 2023 Nov 28. Indian J Otolaryngol Head Neck Surg. 2024. PMID: 38566707
• Development of the Indian Reference Case for undertaking economic evaluation for health technology assessment. Sharma D, Prinja S, Aggarwal AK, Rajsekar K, Bahuguna P. Sharma D, et al. Lancet Reg Health Southeast Asia. 2023 Jun 17;16:100241. doi: 10.1016/j.lansea.2023.100241. eCollection 2023 Sep. Lancet Reg Health Southeast Asia. 2023. PMID: 37694178 Free PMC article. Review.
• A Systematic Review of Health Economic Evaluations and Budget Impact Analyses to Inform Healthcare Decision-Making in Central America. Rojas-Roque C, Palacios A. Rojas-Roque C, et al. Appl Health Econ Health Policy. 2023 May;21(3):419-440. doi: 10.1007/s40258-023-00791-y. Epub 2023 Jan 31. Appl Health Econ Health Policy. 2023. PMID: 36720754
• Comprehensive league table of cost-utility ratios: A systematic review of cost-effectiveness evidence for health policy decisions in India. Shah K, Singh M, Kotwani P, Tyagi K, Pandya A, Saha S, Saxena D, Rajshekar K. Shah K, et al. Front Public Health. 2022 Oct 13;10:831254. doi: 10.3389/fpubh.2022.831254. eCollection 2022. Front Public Health. 2022. PMID: 36311623 Free PMC article.

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The role of pharmacoeconomics in current Indian healthcare system

Akram ahmad.

1 Department of Pharmacy Practice, Annamalai University, Annamalai Nagar, Tamil Nadu, India

2 Department of Clinical, Social and Administrative Sciences, University of Michigan, Ann Arbor, MI, USA

Sundararajan Parimilakrishnan

Guru prasad mohanta, haechung chung.

3 Department of Public Health Sciences, The Pennsylvania State University, Pennsylvania, USA

Jongwha Chang

Phamacoeconomics can aid the policy makers and the healthcare providers in decision making in evaluating the affordability of and access to rational drug use. Efficiency is a key concept of pharmacoeconomics, and various strategies are suggested for buying the greatest amount of benefits for a given resource use. Phamacoeconomic evaluation techniques such as cost minimization analysis, cost effectiveness analysis, cost benefit analysis, and cost utilization analysis, which support identification and quantification of cost of drugs, are conducted in a similar way, but vary in measurement of value of health benefits and outcomes. This article provides a brief overview about pharmacoeconomics, its utility with respect to the Indian pharmaceutical industry, and the expanding insurance system in India. Pharmacoeconomic evidences can be utilized to support decisions on licensing, pricing, reimbursement, and maintenance of formulary procedure of pharmaceuticals. For the insurance companies to give better facility at minimum cost, India must develop the platform for pharmacoeconomics with a validating methodology and appropriate training. The role of clinical pharmacists including PharmD graduates are expected to be more beneficial than the conventional pharmacists, as they will be able to apply the principles of economics in daily basis practice in community and hospital pharmacy.

INTRODUCTION

Healthcare community is ever more sensitive to costs, as the overall health expenditures are escalating. Accordingly, appraisal of goods and services in healthcare goes beyond evaluation of safety and efficacy in which the economic impact of these goods and services on the cost of healthcare is also considered. As in economics, efficiency is the key concept in the pharmacoeconomics, and this principle helps one to design strategies for buying the greatest amount of benefits for a given resource use.[ 1 ]

Resources such as materials and equipments allocated for healthcare are scarce; nevertheless, their possible usages are infinite. Hence, it is a challenge for healthcare professionals to provide quality patient care with minimum cost. Given the limitations on healthcare resources, there is increased interest in assessing the value for money, or economic efficiency of healthcare treatments and programs. Economic evaluation, analyzing costs and outcomes of several alternative therapies can also be a useful approach; though can be very difficult to accomplish.[ 2 ]

In an environment where the cost of healthcare is sky rocketing, insurers are looking for evidence that can support decisions that determine purchasing, contracting, and inclusion of new medications in the formularies. The producers of medications therefore, have to assess the value of the drugs, both in terms of economic worth and clinical efficacy.[ 3 ] “Doctors prescribe, patients consume and, increasingly throughout the world, third purchasing parties (government insurance companies) pay the bill with money that they have obtained from increasingly reluctant healthy members of the public”.[ 4 ] Pharmacoeconomics identifies, measures, and compares the costs and consequences of pharmaceutical products and services.”[ 5 ] It involves economic evaluation of drug development, drug production, and drug marketing, i.e., all the steps that take place from the time the drug is manufactured to when it reaches the patients.[ 6 ]

Pharmacoeconomics

The International Society for Pharmacoeconomics and Outcomes Research (ISPOR) defines pharmacoeconomics as “the field of study that evaluates the behavior of individuals, firms, and markets relevant to the use of pharmaceutical products, services, and programs, and which frequently focuses on the costs (inputs) and consequences (outcomes) of that use”.[ 7 ]

Genesis of pharmacoeconomics

Pharmacy was finally recognized as a clinical discipline within the healthcare system in the early 1960s. At this time, disciplines within the pharmaceutical sciences such as clinical pharmacy, drug information, and pharmacokinetics became an important part of pharmacy education and sciences. Pharmacoeconomics developed its roots in 1970s.[ 8 ] The first book on health economics was published in 1973 and in 1978, McGhan, Rowland, and Bootman from the University of Minnesota introduced the concept of cost-benefit and cost effectiveness analysis.[ 9 ] Utilizing sophisticated pharmacokinetic protocols, Bootman, et al .,[ 10 ] published an early pharmacy research article in 1979 in which cost-benefit analysis was employed to appraise the outcomes of individualizing aminoglycoside dosages to severely burned patients with gram-negative septicemia. In 1983, Ohio State University College of Pharmacy initiated a specialized pharmacy academic program with the objective of providing an overview of the application of cost benefit and cost effective analysis in healthcare, with emphasis on their application to the delivery of pharmaceutical care.

Initially, defined as “analysis of the costs of drug therapy to healthcare systems and society”,[ 8 ] the actual term “pharmacoeconomics” first appeared in the literature in 1986 when Townsend's work was published to highlight the need to develop research activities in this new discipline. In 1992, a journal named “Pharmacoeconomics” was launched.

Methods of pharmacoeconomic analysis

Pharmaeconomic studies compare costs, clinical, and humanistic outcomes associated with different therapies. The evaluation mechanisms delineated are often helpful in demonstrating the cost impact of innovative treatments, granting greater acceptance by healthcare providers, administrators, and the public.

There are four major types of pharmacoeconomic analysis:

A: Cost-minimization analysis

B: Cost-effectiveness analysis

C: Cost-benefit analysis

D: Cost-utility analysis

Major types of pharmacoeconomic analysis, formula and application given in Table 1 .[ 1 , 11 , 12 ]

Major types of pharmacoeconomic analysis-definition, formula and applications[ 1 , 11 , 12 ]

Healthcare and financing system in India

The Indian pharmaceutical industry is a hub where medications can be produced at a low price and still be of international quality. It witnessed a robust growth from the production turnover of about 1.14 billion dollars in 1990 to over 22.73 billion dollars in 2009-10, comprising about Rs, 14.1 billion dollars of domestic market and 9.58 billion dollars of exports.[ 13 ] In terms of production, the India pharma industry ranks 3 rd on a global scale, whereas in terms of turnover worth, it ranks 14 th . Medication prices are among the lowest prices in the world. However, the overall expenses associated with medications continue to soar in the country.[ 13 ] Although India is a producer of abundance of quality drug at low cost, only one third of its population has access to essential medicines.

More than 68% (Census 2011)[ 14 ] of the population lives in villages and work on farms or perform other menial jobs and are paid on a day to day basis. In rural areas comprised of villages and small towns, primary health-centers and community health-centers are put into service by the state government. On the breadline, the rural population heavily depend on the government funded hospitals for procuring healthcare.

In India, allopathic and alternative medicine healthcare practices (Ayurveda, Unani, Siddha, and Homeopathy) operate side by side. Many patients switch from one practice to another when relief is not adequate. The quality of healthcare services is much better in the urban areas compared with rural areas. Some rural areas might have very minimalistic healthcare. The practice of procuring private healthcare for many people is on the rise. The challenge that the Indian government faces is to make healthcare affordable for the majority of people in the country who cannot afford healthcare. Allopathic medications have a big market in India. In 2004, 5.2% of nominal GDP was spent on producing allopathic medications which is equivalent to US $34.9 billion. In 2005-2009, it grew by 12% per annum, i.e., 5.5% of nominal GDP which is equivalent to US $60.9 billion. As far as the ratio of doctors and nurses to the population is concerned, it is 5.9 doctors, 0.8 nurses, and 0.47 midwives for 1,000 people, which adds up to 1.86 health workers for every 1000 populace. The statistics provided by the Union Ministry of Health and Family Welfare's Health Information of India state that in 2004, there were 67,576 government doctors in India who provided healthcare to 15,980 people.[ 15 ] Out of the $24 million spent on healthcare in India, about 77% money is spent on private healthcare, i.e., US $18.643 million. Of the 77% money spend on private healthcare; about 86% is out of pocket expenditure. The public sector expenditure is 21%, i.e. US $5.04 million and the external aids amounts to the remaining 2%, i.e., US $0.48 million.[ 16 ] Limited number of people have health insurance in India. The major issues that govern insurance penetration are the extent and type of coverage. About 10% of the total population has insurance through health financing schemes. The ironic situation is that the insurers leave out the poor and the ill population as they cannot afford the prepayment schemes. The insurance that people purchase voluntarily accounts for Rs. 4 billion, i.e., US $86.3 million, and is estimated to grow at a very fast pace.[ 17 ]

Applications of pharmacoeconomics

Historically, the principles of pharmacoeconomics were applied in the field of hospital pharmacy activities. The cost effectiveness data were used to support the addition or deletion of a drug to or from a hospital formulary. At present, the pharmacoeconomic assessment of formulary actions has become a standardized part of many pharmacy and therapeutic committees.

Pharmacoeconomic studies find value in

• Fixing the price of a new drug and re-fixing the price of an existing drug
• Finalizing a drug formulary
• Creating data for promotional materials of medicines.
• Compliance of requirement for drug license.
• Including a drug in the medical/insurance reimbursement schemes.
• Introduction of new schemes and programs in hospital pharmacy and clinical pharmacy.
• Drug development and clinical trials.[ 12 ]

Pharmacoeconomics and drug development

In India, the estimate for the development of New Chemical Entity (NCE) is often quoted at US $90-100 million due to lower input costs. For every 10,000 NCE in discovery, ten enter preclinical development, five enter human trials, and only one might be approved.[ 18 ] Accordingly, large amount of money spent on pursuing a useless chemical entity is borne by the consumer. Pharmacoeconomic studies may be planned and conducted at the clinical development stages (phases 1 to 3) and post-marketing research stage (phase 4). Subsequently, studies may need to be conducted at several stages of pharmaceutical research.[ 12 ]

Phase 1 trials

The initial clinical trial endeavors to determine the toxicity profile of the drug of interest in humans. It is during this stage that cost of illness studies should be accomplished to aid in deciding whether to further develop the drug and gather background data for future pharmacoeconomic evaluations or not. Cost of illness data may also aid in the development of preliminary models to assess the clinical benefits that must be achieved to have a marketable product.

Phase 2 trials

In phase 2 trials, the drug is administered to a limited number of patients with the target disease. During this phase, cost of illness studies can begin or continue, as can preliminary development of quality of life and recourse utilization instruments. Models can be refined as more information is available about the clinical aspects of the drug.

Phase 3 trials

Cost of illness data can be an important factor that can determine the marketability of drugs. In the phase 3 clinical trials, the drugs are administered to the patients similarly as they would be when they are marketed. At this stage, the discussion, planning, and pharmacoeconomic studies are of prime importance. It is recommended that clinical studies presenting pharmacoeconomic evaluation be conducted along with efficacy evaluation of the drugs. Even though pharmacoeconomic evaluations might be time consuming and may delay the new drug application (NDA) process, they should be done unless the drug is very innovative and has no other alternatives.

Phase 4 trials

Phase 4 trials consist of the post-marketing phase. Pharmacoeconomics can be applied to retrospective and prospective studies involving the drug. Pharmacoeconomic evaluations provide information about cost and outcomes of drugs in real life settings unlike clinical trials that are conducted in controlled settings. Pharmacoeconomic evaluations conducted during clinical trials give information about the efficacy of drugs, which in turn provide an approximation to the real world. Pharmacoeconomic evaluations and clinical trials can be conducted in conjunction with each other in several ways:

• A clinical trial can be designed to test the safety and efficacy of a drug, followed by a pharmacoeconomic evaluation.
• A clinical trial can be designed to conduct a pharmacoeconomic evaluation.
• Clinical data collected prospectively in a clinical trial can be used to conduct a retrospective or prospective pharmacoeconomic evaluation.[ 12 ]

Compliance of requirement for drug license and pharmacoeconomics

Evidence about drug quality, efficacy, and safety is an essential requirement for drug licensing and regulation. Given the ever-increasing healthcare costs, this evidence needs to be backed by evidence of cost-effectiveness as well. In simple words, evidence comparing the effectiveness of available treatments for a particular disease condition and their related costs need to be presented to the federal body before they are introduced in the market.

Australia was the first country to form evidence based guidelines about medication reimbursement on the basis of cost-effectiveness research. Since 1993, the Australian Pharmaceutical Benefit Scheme enforces the production of evidence about economic evaluation of the drug before its introduction in the market.[ 19 ] The drug manufacturer provides the submission form to the Pharmaceutical Benefits Advisory Committee for inclusion of the drug in the reimbursement list who then verify the evidence provided by the manufacturer. The committee provides recommendations to the health ministry about drug inclusion in the reimbursement list on the basis of evidence about its cost effectiveness. The final decision making by the policy makers about the cost-effectiveness of the drug is determined by the following factors:

• The importance of the clinical area
• The availability of alternative treatments
• The likely effect of listing on the healthcare system and other therapeutic activities
• The investment of the sponsor in primary research.

The committee is willing to introduce a “breakthrough” medication which might be a bit pricey, provided the manufacturer has invested considerably in its development and production in contrast to ‘me-too drugs’ which have similar counterpart's existent in the market. In spite of this, relative cost effectiveness is an important criterion. So, many other countries like UK, Belgium, Finland, Norway, Portugal, Sweden and Hungary also follow a similar process such as Australia. The Netherlands also introduced a formal process of economic evaluation in 2005. Germany has an institution for economic evaluation research and Spain has regional centers that perform health technology assessment. In Denmark, France, and Italy, pharmaceutical companies provide data about economic evaluation on a voluntary basis. These data when provided are given importance and consideration.[ 20 ] Food and Drug Administration (FDA) in United States and Central Drug Standard Control Organization (CDSCO) in India do not require an economic analysis for Drug approval. A new drug has to be approved for a program based on pharmacoeconomic analysis.

The formulary system

Formulary creation involves preparing, updating, and using a list of essential medications with their detailed information (formulary manual) and standard treatment guidelines (STGs). A formulary list is an indicator of good pharmaceutical practice and rational drug usage. The formulary consists of appropriate therapies and cost-effective medications which are of a good quality. It is a precise list which makes the process of procuring, storing, distributing, and using the drugs very easy.[ 21 ] The medications that are part of a formulary, have the following advantages:

• Availability of cost contained quality drugs: When medications are purchased in bulk, there is more price competition and “economies of scale” for procuring, storing, and distributing the quality drugs. This makes it possible to provide drugs at subsidized rates to people who require them the most.
• Provision of quality care: Healthcare personnel can be better trained to provide cost effective medications. Usage of cost-effective drugs will also make the practitioners prescribe fewer drugs whose drug interactions and adverse reactions they are aware of. This in turn will improve the provision of quality care as the selection of medication is evidence based.

The formulary system, right from the national level to the institutional level, can be strengthened with the help of studies in the areas. It will also help for the rationalization of the drug procurement system in the country and for the practical implementation of the standard treatment protocols.

HEALTH INSURANCE AND PHARMACOECONOMICS IN INDIA

In the Indian health insurance system, mostly inpatient services are covered, so it is necessary to stay for a day in the hospital to claim the insurance. This, instead of saving costs leads to cost inflation. It is necessary to have some mechanism in place, whereby the insurers can strike a contract with healthcare providers and healthcare systems that can help in cost containment,[ 21 , 22 ] There is an added need for insurance systems that encourage consumer to contain costs by providing incentives as well as contain their health expenditure.[ 23 ] In case of members with multiple coverage, it is necessary that the benefits offered and liability achieved are coordinated and regulated. There needs to be further expansion of insurance services other than inpatient services, and more focus should be placed on preventive care and wellness programs.[ 24 ]

By implementing pharmacoeconomic principle in the hospital administration and treatment protocols, both the patients and the insurance industry will benefit. Patients will receive better quality healthcare at reduced costs, and the insurance companies will be able to provide enhanced care to their clients at minimum cost.

Indian pharmacy practice and pharmacoeconomics

As third largest producer of drugs by volume, Indian pharmaceutical industry has diversity of medicines; yet, brand name prescriptions are the rule of the day. Formulary system is very weak and treatment protocols exist only in theory. The resources are scarce and competing programs are plenty in healthcare. The concept of healthcare insurance is yet to be popularized in the country.[ 1 ] Given the issues prevalent in the Indian healthcare system, pharmacoeconomics has many applications. Pharmacoeconomics can aid in decision making when evaluating the affordability of and access to the right medication to the right patient at the right time, comparing two drugs in the same therapeutic class or drugs with similar mechanism of action, and in establishing accountability that the claims by a manufacturer regarding a drug are justified.

Practicing pharmacists in community, hospital, and clinical settings in India can benefit considerably from the application of the principles of pharmacoeconomic into their normal practice settings. Proper application of pharmacoeconomics will empower the pharmacy practitioners and administrators to make better and more informed decisions regarding products and services they provide. Pharmacotherapy decisions traditionally depended solely on clinical outcomes like safety and efficacy, but pharmacoeconomics teaches us that there are three basic outcomes to be considered clinical, economic, and humanistic in drug therapy. It is accepted by all that appropriate drug selection decisions could not be made today based on acquisition costs only. Applied pharmacoeconomics can help in decision making, in assessing the affordability of medicines to the patients, access to the medicines when needed, and comparing various products for treatment of a disease. It will provide evidence contraindicating the promotion of certain types of high-cost medicines and services.

Pharmacoeconomics has use in health policy decision making and can be applied by a number of healthcare professionals such as policy makers, primary healthcare providers, health-care administrators, and health managers. Available in large quantities, Indian primary care providers are often bombarded with many new drugs of the same category, in addition to the existing drugs. Introduction of new drugs can confuse the doctors and administrators for the judicious selection and rational use of medicines. When introducing new medications, its outcome should be equal or more effective compared to the existing drug and shall have some economic or related advantage.

Evidence about pharmacoeconomics can aid pharmacists and policy makers in the decision-making process about the use of medications and healthcare services. With clinical training about self-medication, Ayush physicians, i.e., Ayurvedic and Naturopathic physicians focus more on diagnostic rather than therapeutic skills, and they do not know much about the drugs, i.e., the brand name, the strength, the formulation, and the dose in specific conditions. Pharmacological and pharmacoeconomic knowledge is acquired and can be applied in practical prescribing skills. Conventional pharmacists also don’t know much about proper medication use. Present qualification of pharmacist in India is Diploma in pharmacy (2-year study, plus 500 h practical training in hospital) and B.Pharm 4-year degree program and its curriculum does not provide sufficient information, practice, and knowledge about pharmacoeconomics. To overcome such a dilemma, the government of India introduced a new program in pharmacy education named PharmD (2008), which highlights the principles of pharmacoeconomics in its syllabus. Consequently, we can expect the future M.pharm pharmacy practice and new generation of clinical pharmacists and PharmD graduates to be more beneficial than conventional pharmacist as they can be expected to implement the principles of economics in daily basis practice in community and hospital pharmacy.

With ever increasing healthcare costs, value added care provided to the patients by individual healthcare institution needs to be further researched. The development of pharamcoeconomics is at an infancy stage in India at the moment, despite the rapid growth of clinical research. India is an affordable destination for conducting clinical research for many western countries. The India Chapter of ISPOR has been formed, but it needs to develop the platform for pharmacoeconomics. We hope in India clinical pharmacists including PharmD graduates be more beneficial than conventional pharmacists as they can implement the principles of economics in daily basis practice in community and hospital pharmacy.

AUTHORS’ CONTRIBUTION

All authors have significantly contributed to the project in terms of conceptualization, writing and reviewing the entire document.

Source of Support: Nil

Conflict of Interest: None declared.

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