E X E C U T I V E S U M M A R Y

Too
Many
Drugs?
The Clinical and
Economic Value of
Incremental Innovations

By:
Albert Wertheimer, PhD, MBA
Richard Levy, PhD
Thomas W. O’Connor, PharmD, MBA
Highlights

A
review of the clinical and supplying them with

pharmacology literature options when the first agent

over the last two decades reveals used is either ineffective or not

that: well tolerated.

• Newer drugs in a therapeutic • Some incremental innovations

class often represent have been associated with

improvements in therapeutic and adverse effects overall cost savings.

profiles, metabolism, dosing schedules, ease of • Newer entries in a therapeutic class are usually

administration, and other priced at a discount to existing agents.

features. These findings apply to • Policies that limit the

drug classes used to treat many availability of incremental drug

common diseases and patient innovations may deny access to

groups, especially the elderly. important therapies, reduce

• The availability of a broad range competition, and erode

of medicines provides physicians incentives for research.

with a “tool chest,” enabling them to treat the

individual needs of diverse patients with precision

This publication is a summary of the article: Wertheimer A,1 Levy R,2 O’Connor TW.3 (2001) Too many drugs? The clinical and economic
value of incremental innovations. Research in Human Capital and Development, Vol 14, Investing in Health: The Social and Economic
Benefits of Health Care Innovation; 77-118.
1
Director, Center for Pharmaceutical Health Services Research, Temple University School of Pharmacy, Philadelphia, PA
2
Vice President, National Pharmaceutical Council, Reston VA
3
Professor of Pharmacy Practice, Temple University School of Pharmacy, Philadelphia, PA
T
he process of repeated incremental
improvement is the predominant mechanism of
innovation and product development within
most manufacturing and high-technology industries,
including the pharmaceutical industry. In fact, the
history of clinical pharmacology is characterized by
incremental improvements in the safety, efficacy,
selectivity, and utility of drugs within a given class.
Some believe that incremental advances within the
pharmaceutical industry are too costly and do not
ultimately benefit the consumer. Dismissal of new
agents in a class as merely “me-too” drugs is
predicated on the belief that these agents are
essentially identical. This is a misconception. The
new agents resulting from this evolutionary process
can offer advantages in terms of improved efficacy,
better patient satisfaction and compliance and, in
some cases, greater cost-effectiveness.
Evolution of Pharmaceutical Therapies
T
he development of drug product classes is
analogous to the evolution of biological
species, and the advantages of diversity within
groups of pharmaceutical products are similar to
the advantages of biodiversity. “Pharmacodiversity”
ensures the stability and viability of the drug
group. Competition exists for survival in a changing
environment, and lack of diversity could doom a
species or lineage to extinction. Within a drug class,
products with varying features compete for
patients. The emergence of new disease and
patient targets expands the role of some agents;
others are disadvantaged by newly discovered
adverse effects. Thus, those products that are the
best “fit” for their environment dominate the
marketplace. Other products may become extinct
and still others maintain positions in “niche
markets.”
“Pharmacodiversity” ensures the stability and viability of the drug group.
There are several advantages to having multiple
agents within a class, including the following:
• Availability of alternative agents in cases of
treatment failure;
• Provision of backup in case an agent is withdrawn
from the market;
• Differing dose delivery systems and dosage forms
that enable extended uses with a variety of
patient populations;
• Availability of alternatives since patient responses
to and tolerance of agents are subject to great
individual variation;
• Ability to tailor therapy to the needs and
preferences of patients; and
• Cost containment due to increased efficacy and
patient tolerance and, as a result, decreased use of
other services (e.g., hospital, office visits).
Over time, a succession of small improvements can
add up to a big advance in therapy. The collective
therapeutic advantage of a drug class as a whole
may be of greater clinical significance than the
original advantage of the pioneer compound.
Features that emerge only at the class level include:
• Variability in pharmacological properties to fit
the needs of individual patients;
• Cumulative improvements in efficacy, selectivity,
and reduced toxicity;
• Comprehensive knowledge of the extent and
limits of pharmacological action, derived from
research and clinical experience with multiple
chemically-related agents; and
• Availability of a “tool chest” for further research
on basic disease mechanisms.
1
Advantages of Advanced Dose Delivery
Systems and Dosage Forms
A
dvanced delivery systems provide sustained
therapeutic drug levels for long periods of
time, can enable the use of smaller or fewer
doses, allow a less invasive mode of administration,
and prolong circulation of short-lived compounds.
Examples include:
• Transdermal fentanyl provides continuous
analgesia for three days; addresses many pain
management problems (e.g., inadequate or
mistimed dosage, labor costs, patient acceptance,
adverse effects on quality of life); and can be used
by patients unable to take oral medication.
• Transdermal estrogen replacement patches release
estradiol for up to a week and are particularly useful
for postmenopausal women who either become
nauseated when they take oral estrogens or have
elevated triglyceride levels, since the latter are less
likely to be increased with transdermal administration.1
• Transdermal patches of the local anesthetic
lidocaine for treatment of postherpetic neuralgia,
a painful complication of shingles, enables a
constant, low-level delivery of the drug.
• When taken before bedtime, sustained duration
formulations of calcium channel antagonists delay
drug release so that peak blood levels occur almost
11 hours after ingestion and are highest when
patients awaken. This pattern of release parallels
the circadian increase in blood pressure and
increased incidence of angina, heart attacks, and
stroke early in the day (see figure below).
ADVANCED DOSAGE FORM PROVIDES HIGH
LEVEL OF DRUG WHEN CHANCE OF
CARDIOVASCULAR INCIDENT IS GREATEST
• When taken in the morning, a new 12-hour
formulation of methylphenidate (Ritalin) eliminates
the need for children with attention deficit disorder
to take a dose during or after school hours. This
removes the need for storage and supervision of the
medication during school hours.
2
• Encapsulation of the antifungal agent
amphotericin B within small lipid vesicles
(liposomes) keeps the drug in the bloodstream
longer and concentrates it in areas of increased
capillary permeability, such as sites of infection.2
Toxicity is diminished by reducing exposure to
normal tissues. Other very potent compounds now
available in liposome delivery systems are
daunorubicin and doxorubicin, both used to treat
AIDS-related Kaposi’s sarcoma.1
• Using a polymer matrix, the cancer drug
carmustine can now be delivered directly to the
brain after surgery for recurrent glioblastoma. The
agent diffuses into the brain tissue over the course
of about one month, killing the remaining
malignant cells while minimizing systemic adverse
reactions.1
• A new inhaled formulation and delivery system of
the corticosteroid budesonide (Pulmicort Respules)
now enables treatment of asthma in children
under 4 years of age.3 The ability to control
asthma early on in very young children and
prevent “airway remodeling” is expected to have
long-term benefits.3
• Single-isomer forms of some drugs can have the
full therapeutic effect of the original (racemic)
medication without unwanted effects associated
with the discarded isomer. For example,
levalbuterol contains only the isomer responsible
for the bronchodilating effect of albuterol, a beta-
agonist agent used to treat asthma. The discarded
isomer has no therapeutic effect, interferes with
the overall efficacy of the drug, and may cause
detrimental airway hyperactivity. Levalbuterol
appears to be more potent than albuterol and
requires a lower dose to achieve bronchodilator
effects. Consequently, fewer beta-agonist side
effects are experienced, which is especially
important for children and elderly patients with
cardiovascular, thyroid, and other conditions that
are aggravated by beta-agonist actions.4
The S (-) isomer of the new local anesthetic
ropivacaine, a close relative of bupivacaine,
produces equivalent anesthesia but has a superior
central nervous system and cardiovascular toxicity
profile. Epidural administration of ropivacaine has
been reported to allow good analgesia with less
intense motor block than bupivacaine.
Matching Patient’s Needs: Multiple Agents
Provide Pharmacological Variability and Choice
M
any of the major classes of drugs in current
use owe their overall therapeutic
effectiveness and clinical significance to
important modifications in the pioneer agents.
A N T I H I S TA M I N E S
First-generation antihistamines are short-lived,
require multiple dosing, and penetrate the blood-
brain barrier, producing sedation and interfering
with histamine use in the brain. These agents also
have anticholinergic effects such as dry mouth.
Second-generation antihistamines are more specific
blockers of H1 receptors and penetrate the brain to
a lesser extent. These improvements are associated
with longer therapeutic activity, less frequent
dosing, no anticholinergic side effects, and limited
sedation.
B E TA - B L O C K E R S
The currently available beta-blockers offer
differences in potency, cardioselectivity, effects on
the nervous system, pharmacokinetic properties
(which determine appropriateness for patients with
impaired kidney or liver function), additional
pharmacological effects, potential for interaction
with other drugs, efficacy in specific racial groups,
complexity of the dosage regimen, and adverse
effects profile. This array of differences enables
customized treatment. Another advantage is that
undesirable side effects in an individual patient can
be avoided by switching to another member of the
class (see table below).
Compared with first-generation beta-blockers,
second-generation agents, which are selective for
beta-1 receptors, are not as likely to produce
systemic vasoconstriction. Thus, they may benefit
patients with mild to moderate heart failure when
used in combination with angiotensin-converting
enzyme (ACE) inhibitors. Third-generation beta-
A D VA N TA G E S OF S E L E C T E D B E TA - B L O C K E R S
blockers may have even better myocardial protective
properties.
CALCIUM CHANNEL BLOCKERS
Agents that block the influx of calcium into muscle
cells have rapidly gained importance in the
treatment of hypertension, angina, cardiac
dysrhythmias, heart failure, cardiomyopathy, stroke,
and other cardiovascular conditions. They act on
vascular smooth muscle to cause dilation and
suppression of vasospasms and on the myocardium
to decrease contractility, conductance, and
automaticity. However, since the relative strength of
these effects varies among the agents of the class,
specific agents can be differentially effective in a
given condition. For example, they are similar in
their effectiveness against hypertension and angina
but differ in the extent of their actions on the
circulatory system.
CEPHALOSPORIN ANTIBIOTICS
First-generation cephalosporins offer therapy
primarily for gram-positive bacterial infections,
while second-generation agents provide
broad-spectrum gram-negative coverage. Some
second-generation agents provide anaerobic
coverage. Although most of these agents are
effective only in injectable form, several first- and
second-generation cephalosporins have the
advantage of being effective when given by mouth.
Third-generation agents provide broad-spectrum
gram-negative coverage. Compared with second-
generation agents, third-generation cephalosporins
exhibit a marked increase in potency against
gram-negative bacteria and increased resistance
against beta-lactamase destruction. Some third-
generation agents also have substantial
antipseudomonas activity. Generally, third-
generation cephalosporins are less active than first-
3
and second-generation agents against gram-positive ORAL CONTRACEPTIVES (OCS)
bacteria and anaerobes. Less frequent dosing is also
OCs have evolved from high-strength and high-
possible with some third-generation agents. These
potency drugs to much lower strength, lower
agents penetrate inflamed meninges (membranes
potency drugs. The multiphasic OCs represent
covering the brain and spinal cord), extending the
another incremental advance; the amount of drug in
therapeutic uses of cephalosporins.
each pill within a cycle has been carefully adjusted,
further lowering the total dose administered over
Fourth-generation agents have broad-spectrum
the use cycle.
gram-negative activity (including anti-pseudomonas
activity) and gram-positive activity comparable to
Advances in the delivery of contraceptives provide a
that of first-generation agents.
long-acting effect and simplify dosing. Intramuscular
implants of progestin-only contraceptives provide
The wide range of therapeutic choices provided by
effective contraception for 5 years with an annual
the class of cephalosporin antibiotic agents gives the
pregnancy rate of less than 1 percent.5 Newer
physician:
synthetic progestins (i.e., desogestrel, norgestimate,
• The ability to tailor treatment to combat gram-
gestodene) allow significant reductions in estrogen
positive infection, mixed infections, or anaerobic
dosage in combined contraceptive agents and have
infections;
relatively fewer androgenic effects.6 Combined with
• The availability of injectable, topical, and oral
ethynyl estradiol, these progestins represent
dosage forms; and
improved oral contraception, offering not only
• A choice between short-acting and long-acting
efficacy and safety, but also fewer side effects,
agents, depending on the nature of the bacterial
including low rates of breakthrough bleeding, cycle
infection, including bacterial strains heretofore
irregularity, amenorrhea, nausea, weight gain, acne,
resistant to existing antibiotics.
and excess hair growth.

NONSTEROIDAL ANTI-INFLAM- The many choices of combined OCs allow for individ-
M ATO RY D R U G S (NSAIDS) ualized care. Breakthrough bleeding may improve
with a product that has a higher progestin content.
Although these agents all have similar effectiveness
Nausea and weight gain may be minimized by a
and side-effect profiles, it is difficult to predict a
preparation with a lower dose of progestin.
patient’s response to a particular NSAID agent since
Patients with hirsutism or acne may benefit from a
tolerance and clinical response to a given NSAID vary
higher estrogen dose or a new generation progesta-
widely among patients. Regardless of which NSAID is
tional preparation.6 These choices help meet the
used first, it is often necessary to try a second or
diverse and changing needs and preferences of
third agent before finding one that produces the
women throughout their reproductive lives.
desired response. Thus,
multiple agents must be
available to meet the
specific needs of individual
patients.

In 1999 the vitality of this

mature class of agents
reemerged with the
introduction of the first
cyclooxygenase-2 (COX-2)
inhibitors (celecoxib
[Celebrex] and rofecoxib
[Vioxx]), which offer side-
effect advantages (mainly
related to gastrointestinal
effects) over previous
NSAID products.

4
DIABETES M E D I C AT I O N S ENDOCRINE THERAPY FOR
New oral agents and insulin analogs developed in BREAST CANCER
the mid-1990s have contributed substantially to our
Although the aromatase inhibitor drugs, which block
ability to improve glycemic control by targeting
estrogen synthesis, have been used in breast cancer
insulin resistance and insulin secretory defects as
treatment, their shortcomings (weak action,
well as by targeting both fasting and postprandial
nonspecific effects on enzymes involved with other
blood glucose levels with minimal risk for
hormones, or substantial toxicity) have limited their
hypoglycemia. These new agents now provide more
role.6 Recently, several new-generation aromatase
options for achieving tight glycemic control and
inhibitors have been developed that are far more
allow individualized treatment.
specific and more powerful in their mechanism of
action than their predecessors. These agents are
The insulin molecule has been manipulated
assuming a role in first-line treatment of advanced
extensively to produce a range of insulin products
metastatic breast cancer.9,10,11,12
that vary in their time of onset and duration of
action. Intensive treatment regimens often
utilize several types of insulin injected at
different times of the day. Premixed
preparations of insulins with different onset
and duration times offer added convenience,
improved compliance, greater dosage
accuracy, and reduced risk of hypoglycemia.
These mixtures are especially useful for
physically impaired patients who have
difficulty preparing an insulin injection from
two vials.

Technical improvements in insulin delivery

have led to continuous subcutaneous insulin
infusion and convenient pen-type multiple-
dose injection devices. Pulmonary, nasal, and
oral administration methods are in various
stages of clinical development.

The sufonylurea agents that are currently available

for the treatment of non-insulin-dependent diabetes
have a similar molecular structure but differ widely
in potency, duration of action, dose range,
metabolism, side effects, convenience, and potential
for interaction with other drugs. This variety of
characteristics enables the matching of an agent to
the patient’s nutritional status and dietary habits,
age, concomitant medications, and other medical
conditions.7,8

5
 Economic Value of
Incremental Innovations

N
ewer agents of a class, or new formulations of than those of formulations requiring more
existing agents, often enable new cost- frequent dosing, suggesting that the cost savings
effective uses or more efficient treatment for from both oral and transdermal controlled-release
the original indication. Cost savings can come from dosage forms are related to improved compliance
reduced overall treatment costs due to shortened or (see chart below).
eliminated hospital stays, less need for surgery,
increased worker efficiency and less absenteeism. C OST S AVINGS WITH C LONIDINE
PATCH FOR H YPERTENSION
In addition, since incremental innovations must
1000
compete with their predecessors for market share,
they often are priced at a discount. New drugs in a
800
class are frequently priced lower than existing
agents within that class13 (see chart below).
600

Yearly cost per patient

N EW D RUGS IN E XISTING C LASSES T END TO BE 400

P RICED AT A D ISCOUNT 200

Price higher than average of class
0
Drugs Office visits Lab Hospital Total

Oral formulation Skin patch

% Difference in Price

+10 CP
Sclar et al., Amer J Med, 1991 (Suppl. 1A) 57S-60S.
AR CP
0
AR AR AR CX Controlled-release oral morphine and transdermal
PP
-10 SS fentanyl have higher acquisition costs compared
PP SN CB
NS AC = ACE Inhibitor with short-acting or injectable agents, but lower
-20 AR = Angiotensin II Receptor Blocker
SS
CB = Calcium Channel Blocker
total administration costs may offset the higher
-30 CX = COX-2 Inhibitor purchase price.
AC ST MA = Macrolide Antibiotic
ST NS = Non-sedating Antihistimine
-40 CB PP = Proton Pump Inhibitor
MA ST = Statin • H O S P I TA L C O S T S AV I N G S W I T H
-50 SN = Serotonin Reuptake Inhibitor
AC SS = Selective Serotonin Reuptake Inhibitor LOW- M O L E C U L A R - W E I G H T
-60 CP = Third-generation Cephalosporin

Price lower than average of class Adapted from DiMasi, 2000

HEPARINS
The low-molecular-weight (LMW) heparins represent
a major therapeutic and economic advance over
unfractionated heparin in the treatment and
• OVERALL C O S T S AV I N G S W I T H prevention of coagulation disorders. They can be
CONTROLLED-RELEASE administered once daily by subcutaneous injection
without subsequent monitoring or dose adjustment.
F O R M U L AT I O N S 14 Their longer half-life and more predictable antico-
Compared with conventional formulations of agulant response decreases the need for laboratory
calcium channel blockers, the higher costs of monitoring. Thus, the use of LMW heparins can shift
sustained-release verapamil were more than patient management to the ambulatory setting,
offset by lower physician, hospital, and laboratory thereby enabling significant cost savings by
expenditures. Similarly, patients receiving preventing or shortening hospitalization.15
sustained-release diltiazem had better
prescription refill compliance and significantly Compared with unfractionated heparin, LMW
lower aggregate health care costs. heparins were associated with a 20 percent reduction
in treatment costs attributable to decreased length of
Weekly cardiovascular therapy with transdermal hospital stay and an average cost savings of over $900
clonidine, compared with a twice-daily oral per patient.15,16 Elimination of even a single hospital
formulation, was associated with improved day through the use of LMW heparin would likely
compliance, fewer adverse effects from blood yield a savings. Rydberg et al. reported that the
level peaks, and lower non-drug health costs (e.g., average cost of treating a patient with uncomplicated
physician, hospital, and laboratory costs). Overall deep vein thrombosis was reduced by $5000 to $8000
costs of care with once-daily oral formulations of when LMW heparin was used instead of standard
various antihypertensives were found to be lower heparin therapy.17
6
• H O S P I TA L C O S T S AV I N G S W I T H
N E W- G E N E R AT I O N D I U R E T I C
Health care costs for patients with congestive
heart failure (CHF) treated with the original loop
diuretic furosemide were compared with costs for
patients assigned to treatment with a newer loop
diuretic, torasemide, which is better absorbed.18
Although torasemide is more expensive, the
patients taking torasemide experienced fewer
hospitalizations, which translated to a net savings
in hospital costs of $536 for CHF admissions and
$1027 for all cardiovascular admissions. The
authors projected a net annual savings in hospital
costs of $700,000 for CHF admissions and $1.3
million for all cardiovascular events if torasemide
was used instead of furosemide for all CHF
patients at their hospital (see chart below).
N EW D IURETIC A SSOCIATED WITH
F EWER H OSPITAL A DMISSIONS
Source: Stroupe et. al. 2000
• H O S P I TA L C O S T S AV I N G S W I T H
NEWER CEPHALOSPORIN
ANTIBIOTICS
Cephalosporins requiring once daily intravenous
administration instead of three or four times a
day can save money by reducing the time
required for hospital personnel to set up
intravenous infusions and monitor drug adminis-
tration. National savings in hospital costs have
been estimated at $85 to $115 million per year.19
Cephalosporins suitable for home infusion (i.e.,
those having low toxicity, a broad spectrum of
action and, especially, a long duration of action
allowing for less-frequent dosing) can save
hospital admission costs and reduce income loss
for those patients able to work while receiving
therapy.
For example, treatment of joint infections with a
long-acting agent (cefonicid) enabled 12 of 15
patients to complete therapy on an outpatient
basis. These patients avoided 390 hospital days,
saving $64,000, and also saved $10,000 in lost
work income.20 A similar study of 79 patients
comparing home-injected versus hospital use of
ceftriaxone, another long-acting injectable agent,
showed an average savings of over $6000 per
patient and a benefit/cost ratio of 5:1.21
• IMPROVED PRODUCTIVITY WITH
N O N S E D AT I N G A N T I H I S TA M I N E S
Compared with nonsedating agents, sedating
antihistamines have been linked to more
workplace accidents and injuries as well as to
impaired work performance.22,23,24 Productivity of
workers using sedating antihistamines was 13
percent lower than the productivity of workers
using nonsedating antihistamines.23 The value of
lost output for the employer was calculated at $9
daily for each employee taking sedating antihis-
tamines.24
Similarly, it was estimated that employers can
realize a net financial gain of $2 to $4 for every
$1 spent when allergy sufferers use nonsedating
instead of sedating treatments.25 The savings
result from a combination of productivity gain,
fewer accidents and disability claims, and less sick
leave.
• S ECOND - GENERATION DIABETES
DRUGS : IMPROVED GLYCEMIC
CONTROL WITHOUT INCREASED COSTS
Addition of these agents to California’s Medi-Cal
drug formulary was correlated with an overall
improvement in the outcome of drug therapy
and a corresponding decrease in hospital and
nursing home costs. However, since drug expendi-
tures rose, total expenditures were unchanged.
Although overall costs were not reduced, the
addition of these second-generation agents
resulted in improved glycemic control without
increasing costs.26
7
Policy Implications
O
ver time, the process of incremental
innovation has resulted in striking
improvements in existing drug therapy and
patient care, and in some cases in reduced total
costs for therapy. However, short-term attempts to
contain current costs, in the form of price controls
or limitations on reimbursement for incremental
innovations, may reduce incentives for research on
these products. Access to important therapies could
be reduced and competition
within drug classes could
diminish. Therapeutics would
become less differentiated; the
“average patient” would be
About the National Pharmaceutical Council
S
ince 1953, the National Pharmaceutical Council
(NPC) has sponsored and conducted scientific,
evidence-based analyses of the appropriate use
of pharmaceuticals and the clinical and economic
value of pharmaceutical innovation. NPC provides
8
treated with the “average drug.” Patients with
more specific needs would not receive individu-
alized treatment because more selective
pharmaceutical therapies would not exist.
Policy makers must weigh the risks and benefits
associated with cost-containment tactics that limit
the availability of incremental pharmaceutical
innovations. Since drug therapy is generally agreed
to be the most cost-effective
treatment modality, the economic
as well as the clinical stakes are
high.
educational resources to a variety of health care
stakeholders, including patients, clinicians, payers
and policy makers. More than 20 research-based
pharmaceutical companies are members of the NPC.
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Sclar DA, McCombs JS, Nichol MB. Medi-Cal formulary approval rate and
quality of care: Case study of the sulfonylureas. American Pharmaceutical
Association Annual Meeting 1990; Abstract #57, p. 28.
9
For more information about NPC or for
additional resources, please contact:

The National Pharmaceutical Council

1894 Preston White Drive
Reston, VA 20191-5433

Phone: 703-620-6390
Fax: 703-476-0904
www.npcnow.org