PharmacoEconomics & Outcomes News 271 - 15 Jul 2000 Is DM a recipe for containing costs? The techniques of disease management (DM) have the potential to contain healthcare expenditure while improving the allocation of scarce resources, say Drs Karen Bloor and Alan Maynard from the University of York, UK. However, they point out that DM should be appraised with care, since ‘advocates of disease management . . . have failed to create an evidence base for the disease management approach itself’. The DM process is in need of randomised controlled trials, or other rigorous scientific evidence, used in conjunction with economic evaluation to assess its effectiveness and cost effectiveness, they say. To date, most of the DM literature has been based on comments and reviews.

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Merger activity, as a DM technique, may have a place in achieving macroeconomic cost control and microeconomic efficiency, but should be viewed with caution, according to Drs Bloor and Maynard, since the gains of service integration are still uncertain. Although DM has potential, it requires ‘transparency and careful scrutiny to ensure that the rate of growth of expenditure is moderated and resources are used efficiently’, they conclude. Bloor K, et al. Disease management: a global cost-containing initiative? PharmacoEconomics 17: 539-544, Jun 2000

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Economics on a micro/macro scale Drs Bloor and Maynard point out that policy-makers within both public and private healthcare systems have a common goal in achieving ‘macroeconomic cost containment and microeconomic efficiency in the allocation of resources’. However, the means of accomplishing this goal differ. Public healthcare systems such as those in Europe, Canada and Australasia see tax finance and global cash-limited budgets as the best way to achieve this, whereas private healthcare systems such as that in the US support the idea of competition in the financing and supply of healthcare. Drs Bloor and Maynard comment that in the US, managed care was developed with the hope of containing US healthcare expenditure, and DM was a provider initiative introduced into the developing managed-care environment. DM has encouraged healthcare insurers to determine the price, volume and quality of healthcare services, and while Drs Bloor and Maynard suggest that ‘such contracting for disease managed service products could facilitate macroeconomic cost containment’, this concept faces microeconomic problems such as resource allocation.

What about health outcomes? Until recently, macroeconomic expenditure has been determined by volume of activity and costs, and this has formed the basis of policy decisions, comment Drs Bloor and Maynard. This is despite the worldwide availability of validated quality-of-life measures, they add. The wide variation in clinical practice is well known, and the development of various clinical practice guidelines has ensued. Many of these guidelines have been developed with the primary intention of reducing healthcare costs, while others are based merely on clinical effectiveness, and sometimes ‘consensus opinion’. However, Drs Bloor and Maynard warn that guidelines adopted by DM companies not based on evidence of cost effectiveness may lead to cost increases and an inefficient use of resources.

Merging interests While merger and takeover activity within the pharmaceutical industry may lead to cost savings for society, there is also the potential of harm to society with the creation of a significant monopoly power, say Drs Bloor and Maynard. As pharmaceutical companies merge and their services become integrated, the question remains: do the purchasers of healthcare receive lower prices and improved quality of care?

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PharmacoEconomics & Outcomes News 15 Jul 2000 No. 271