, Volume 14, Supplement 1, pp 15–24 | Cite as

The Role of Cost-Effectiveness Analysis in Managed-Care Decisions

  • Henry Grabowski
Review Article


This article considers the role of cost-effectiveness studies in the formulary and disease-state management decisions of managed-care entities. In a recently published symposium volume [Soc Sci Med 1997; 45 (4): 505-647], US managed- care entities were found to be among the leaders in applying cost-effectiveness studies to healthcare decisions. At the same time, a number of barriers were identified that hinder their wider usage in the managed-care sector. These factors are analysed in this paper along with the prospects for future changes. The potential roles for government policy in this area are also discussed in the final section of the article.


Adis International Limited Misoprostol Federal Trade Commission Pharmacy Benefit Management Total Drug Expenditure 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. 1.
    Sloan FA, Grabowski HG. The impact of cost-effectiveness on public and private policies in health care: an international perspective. Soc Sci Med 1997; 45(4): 505–647PubMedCrossRefGoogle Scholar
  2. 2.
    Shulman SR. Pharmacy benefit management companies (PBMs): why should we be interested? Pharmacoeconomics 1998; 14 Suppl. 1: 49–56CrossRefGoogle Scholar
  3. 3.
    Grabowski H, Mullins CD. Pharmacy benefit management,cost-effectiveness analysis and drug formulary decisions. Soc Sci Med 1997; 45(4): 535–54PubMedCrossRefGoogle Scholar
  4. 4.
    Barradell LB, Whittington R, Benfield P. Misoprostol: pharmacoeconomics of its use as prophylaxis against gastroduodenal damage induced by non-steroidal anti-inflammatory drugs. Pharmacoeconomics 1993; 3(2): 140–73PubMedCrossRefGoogle Scholar
  5. 5.
    Rittenhouse BE O’Brien BJ. Threats to the validity of pharmacoeconomic analyses based on clinical trial data. In: Spilker B, editor. Quality of life and pharmacoeconomics in clinical trials. 2nd ed. Philadelphia: Lippincott-Raven, 1996: 1215–23Google Scholar
  6. 6.
    Drummond MF, Davis L. Economic analyses alongside clinical trials: revisiting the methodological issues. Int J Technol Assess Health Care 1991; 7: 561–73PubMedCrossRefGoogle Scholar
  7. 7.
    Lyles A, Luce BR, Rentz AM. Managed care pharmacy, socioeconomic assessments and drug adoption decisions. Soc Sci Med 1997; 45(4): 511–21PubMedCrossRefGoogle Scholar
  8. 8.
    Oster G, Borok GM, Menzin J, et al. Cholesterol reduction intervention study (CRIS): randomized trials to assess effectiveness and costs in clinical practice. Arch Intern Med 1996; 156(7): 731–9PubMedCrossRefGoogle Scholar
  9. 9.
    Angstrom G.Mayo Clinic full speed ahead for guidelines. 1996 Drug outcomes sourcebook. New York: Faulkner and Gray, 1996; 72–4Google Scholar
  10. 10.
    Sloan FA, Whetten-Goldstein K, Wilson A. Hospital pharmacy decisions, cost containment, and the use of cost-effectiveness analysis. Soc Sci Med 1997; 45(4): 523–33PubMedCrossRefGoogle Scholar
  11. 11.
    Willems JS, Sanders CR, Riddiough MA, et al. Cost-effectiveness of vaccination against pneumococcal pneumonia. N Engl J Med 1980; 303: 553–9PubMedCrossRefGoogle Scholar
  12. 12.
    Neumann P. Government uses of cost-effectiveness information on drugs. In: Calfee J, editor. Policy issues in pharmaceutical cost-effectiveness research. Washington, DC: AEI Press, 1998Google Scholar
  13. 13.
    Blumstein JF. The Oregon experiment: the role of cost-benefit analysis in the allocation of Medicaid funds. Soc Sci Med 1997; 45(4): 545–54PubMedCrossRefGoogle Scholar
  14. 14.
    Food and Drug Administration. Principles for the review of pharmacoeconomic promotion. Draft manuscript. Rockville, Maryland, USA: FDA, Mar 1995Google Scholar
  15. 15.
    Grabowski JG. Pharmaceutical innovation, cost effectiveness, research and emerging regulatory issues. In: Calfee J, editor. Policy issues in pharmaceutical cost-effectiveness research. Washington DC: AEI Press, 1998Google Scholar
  16. 16.
    Luce BR, Lyles AC, Rentz AM. The view from managed care pharmacy. Health Aff 1996; 15(4): 168–76CrossRefGoogle Scholar
  17. 17.
    Drummond M. Government use of cost-effectiveness research in decisions about the reimbursement and use of pharmaceuticals lessons from overseas. In: Calfee J, editor. Policy issues in pharmaceutical cost-effectiveness research. Washington DC: AEI Press, 1998Google Scholar
  18. 18.
    Federal Trade Commission, Business of Economic and Consumer Protection. In the matter of pharmaceutical marketing and information exchange in the managed care environments, public hearings. Docket no. 95N-0228. Washington: FTC, Jan 16, 1995Google Scholar
  19. 19.
    Inside Washington’s FDA Week. ‘FTC worried about how FDA will review health care economic claims.’ 1998 Feb 20;4(8): 1–2Google Scholar
  20. 20.
    Inside Washington’s FDA Week. FDA seeks help with health care economic promotion guide. 1998 Feb 27; 4(9): 13Google Scholar
  21. 21.
    Reinhardt UE. Making economic evaluations respectable. Soc Sci Med 1997; 45(4): 555–62PubMedCrossRefGoogle Scholar
  22. 22.
    Neumann PJ, Zinner DE, Paltiel AD. The FDA and regulation of cost-effectiveness claims. Health Aff 1996; 15(3): 54–71CrossRefGoogle Scholar

Copyright information

© Adis Intrenational Limited 1998

Authors and Affiliations

  • Henry Grabowski
    • 1
  1. 1.Department of EconomicsDuke UniversityDurhamUSA

Personalised recommendations