ISPOR BOOK OF TERMS. Editors MARC L. BERGER, MD KERSTIN BINGEFORS, PhD EDWIN C. HEDBLOM, PharmD CHRIS L. PASHOS, PhD GEORGE W.

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1 HEALTH GARE COST, QUALITY, AND OUTCOMES ISPOR BOOK OF TERMS Editors MARC L. BERGER, MD KERSTIN BINGEFORS, PhD EDWIN C. HEDBLOM, PharmD CHRIS L. PASHOS, PhD GEORGE W. TORRANCE, PhD Managing Editor MARILYN DIX SMITH, RPh, PhD ISEE3 INTERNATIONAL SOCIETY FOR PHARMACOECONOMICS AND OUTCOMES RESEARCH

2 Contents ix Contributors xii AboutlSPOR xiii Preface 1 Bayesian Analysis 1 Frequentist Approach 1 Bayesian Analysis in Health Economics 1 Bayesian Approach 2 Posterior Interval 2 Posterior Distribution 2 Prior Distribution 4 Biotechnology 5 Biopharmaceutical 5 Biological Drug 6 Vaccines 6 Gene Therapy 7 Bootstrapping 9 Case Mix Index 9 Case Mix 9 Risk Adjustment 9 Severity Adjustment 10 Clinical Practice Guidelines 13 Clinical Trial 15 Randomized Clinical Trial 16 Mega-Trial 16 Firms Trial 16 Head-to-Head Comparison Study 16 Equivalence Study 16 Nonrandomized Trial with Contemporaneous Controls 16 Nonrandomized Trial with Historical Controls 16 Case-Control Study 16 Cross-Sectional Study 17 Case Report Study 17 Crossover Trial 17 Open-Label Trial 17 Double-Blind Study 17 Single-Blind Study 17 Matched-Pair Study 17 Clinical Endpoint 17 Clinical Indicator 17 Economic Clinical Trial 17 Piggyback Study 17 Bridging Study 17 Clinical Research Study 17 Prospective Clinical Research Study 17 Retrospective Clinical Research Study 19 Clinical Trial - Study Blas 19 Study Bias 19 Selection Bias 19 Response Bias 19 Information Bias 20 Interviewer Bias 20 Site Selection Bias 22 Compliance 22 Adherence 22 Treatment Persistence 22 Electronic Monitoring 22 Pill Count Method 22 Prescription Refill Rate 22 Attendance 25 Conjoint Analysis 27 ContingentValuation 27 Willingness to Pay 29 Cost-Benefit Analysis 29 Cost-Benefit Ratio 30 Cost-Comparison Analysis 31 Cost-Identification Analysis 31 Cost-Consequence Analysis 33 Cost-Effectiveness Acceptability Curve 36 Cost-Effectiveness Analysis 36 Incremental Cost-Effectiveness Ratio 38 Reference Case 39 Cost Measurement Methods 39 Human Capital Method 40 Friction Cost Method 41 Cost-Minimization Analysis 43 Cost-of-Illness Study

3 iv CONTENTS 45 Cost-Utility Analysis 48 Cost-General 48 Fixed Cost 48 Variable Cost 48 Total Cost 48 Average Cost 48 Marginal Cost 49 SunkCosts 50 Cost - Health Economic«50 Direct Cost 50 Indirect Cost 50 Intangible Cost 50 Acquisition Cost 50 Allowable Cost 51 Ancillary Cost 51 Averted Cost 51 Incremental Cost 51 Out-of-Pocket Cost 52 Cost - Opportunity Cost 53 Accounting Cost 54 Data Co ding Systems 54 Diagnosis-Related Group (DRG) 56 Major Diagnostic Category (MDC) 56 Strategie Product-Line Grouping 57 International Classification of Diseases 9th/10th Edition Clinical Modification (ICD 9/10 CM) 58 Physicians Current Procedural Terminology, Fourth Edition (CPT 4) 59 Health Care Cost and Utilization Project (HCUP) Coding System 60 National Drug Code (NDC) 61 Resource Intensity Weight (RIW) 63 Decision Analysis 64 Expectation 65 Decision Tree 65 Decision Nodes 65 Chance Nodes 65 Pathway Outcomes 67 Delphi Panel Method 69 Disability-Adjusted Life Year (DALY) 71 Discounting 71 Discount Rate 72 Disease Management 73 Disease Management Support Services 74 Dominance 74 Simple Dominance 74 Extended Dominance 74 Efficient Frontier 77 Drug 77 Synthetic Drug 77 Biologie 78 Prescription Drug 78 Over-the-Counter Drug 78 Ethical Drug 78 Effective Patent Life 78 Line Extension 78 Generic Drug 79 Me-TooDrug 79 Multiple Source Drug 81 DrugEfficacy 81 Drug EfFectiveness 82 Drug Formulary 83 Drug Formulary System 83 Closed Formulary 83 Open-Preferred Formulary 83 Tiered Copayment 83 Open-Passive Formulary 83 Formulary Management 84 Drug Interaction 87 Drug Marketing 87 Opinion Leaders 88 Brand 89 DrugPricing 89 Pricing Strategy 89 CatalogPrice 90 Average Wholesale Price 90 Rebates 90 Reference-Based Pricing 91 Differential Pricing 92 Drug Research and Development 92 Basic Research 92 Preclinical Research 93 Clinical Research 93 Phase I

4 CONTENTS V 93 Phase II 93 Phase III 94 Phase IV 94 Postmarketing Product Surveillance 95 DrugSafety 95 Adverse Event 95 Serious Adverse Event 95 Adverse Drug Reaction 95 Tolerability 96 Pharmacovigilance 97 Drug Use Evaluation 97 Drug Use Review 97 Medication Use Evaluation 97 Prospective Drug Use Evaluation 98 Concurrent Drug Use Evaluation 98 Retrospective Drug Use Evaluation 99 Effect Modification 99 Effect Modifier 100 Epidemiology 101 Natural History 101 Risk Factor 101 Sociodemographic Factor 101 Descriptive Epidemiology 101 Cross-Sectional Study 101 Analytic Epidemiology 101 Cohort Study 101 Case-Control Study 101 Risk Ratio 101 Retrospective Study 102 Odds Ratio 102 Population Attributable Risk 102 Bias 102 Confounding 103 European Medicines Evaluation Agency (EMEA) 103 Centralized Procedure 103 Mutual Recognition Procedure 103 Committee for Proprietary Medicinal Products 104 EuroQoL 104 EQ-5D 106 Evidence-Based Medicine 107 Cochrane Collaboration 107 Centre for Reviews and Dissemination 107 Evidence-Based Practice Centers 109 Food and Drug Administration (FDA) 111 Gene Therapy 111 Somatic Gene Therapy 111 Germline Gene Therapy 113 Health Care 113 Medical Technology 113 Health Technology 114 Preventive 114 Primary Preventive 114 Secondary Preventive 114 Tertiary Preventive 114 Diagnostic 114 Therapeutic 116 Health Care Payer 116 Single Party Payer 116 Third Party Payer 117 Health Care Payment System 119 Health Care Provider 119 Primary Care Provider 120 Secondary Care Provider 120 Tertiary Care Providers 120 Allied Health Personnel 121 Health Economics 122 Health Insurance 123 Premium 123 Benefit Design 123 Certificate of Coverage 123 Third Party Administrator 123 Deductible 123 Copayment 124 Health Insurance Programs, Government - United States 124 Medicare 124 Medicaid

5 Vi CONTENTS 124 Medicaid Prudent Pharmaceutical Purchasing Act 124 Centers for Medicare and Medicaid Services (CMS) 126 Health Policy 129 Health-Related Quality of Life (HRQOL) 131 Health Status 131 Health 131 Mortality 131 Morbidity 131 Prognosis 133 Health Technology Assessment (HTA) 134 International Network of Health Technology Assessment Agencies (INAHTA) 134 Health Utilities Index 136 Healthy-Years Equivalent (HYE) 138 Incidence 138 Incidence Rate 138 Cumulative Incidence 138 Incidence Density 138 Hazard Rate 139 Influence Diagram 141 Labeling 141 Label 141 Misbranding 142 Off-Label 143 Likelihood Ratio 143 Receiver Operating Characteristic (ROC) Curve 144 Literature Overview 144 Literature Review 145 Systematic Review 145 Meta-Analysis 148 Managed Care Organization (MCO) 149 Health Maintenance Organization (HMO) 149 Staff Model HMO 149 Group Model HMO 149 Network HMO 149 Independent Practice Association (IPA) 149 Preferred Provider Organization (PPO) 150 Medical Device 152 Modeling 153 Monte Carlo Simulation 153 Deterministic Analysis 154 Treatment Model 154 Markov Model 154 Evidence Model 154 Probabilistic Sensitivity Analysis 155 Stochastic Sensitivity Analysis 157 Monetary Value 158 Constant Dollars 158 Current Dollars 158 Monitoring Entity - Clinical Trials 159 Institutional Review Board (IRB) 159 Data and Safety Monitoring Board (DSMB) 159 Independent Data Monitoring Committee 161 National Institute of Clinical Excellence (NICE) 163 NetBenefit 163 Net Monetary Benefit 164 Net Health Benefit 164 Incremental Net Benefit 166 New Drug Application (NDA) 166 Investigational New Drug Application (IND) 166 Abbreviated New Drug Application (ANDA) 166 Supplemental New Drug Application (SNDA) 167 Approvable Letter 167 Approval Letter 167 Not Approvable Letter 167 Number Needed to Treat (NNT) 171 Observational Study 172 Outcomes Research 172 ECHO Model 173 Consequences 173 Clinical Intermediary 173 Clinical Outcomes 173 Humanistic Intermediary 173 Humanistic Outcomes 173 Costs

6 CONTENTS VÜ 174 Economic Outcomes Treatment Modifiers 175 Patient-Reported Outcomes (PRO) 176 Patient Rights 178 Patient Study Reeruitment 180 Pharmacoeconomics 182 Pharmacoepidemiology 183 Efficacy 183 Effectiveness 184 Channeling 184 Pharmacogenomics 185 Pharmacogenetics 186 Pharmacokinetics 186 Biopharmaceutics 186 Bioavailability 186 Clinical Pharmacokinetics 186 Pharmacodynamics Therapeutic Drug 212 Monitoring 186 Bioequivalence 188 Pharmacy Benefit Management Organization (PBM) 189 Predictive Value 190 Positive Predictive Value 190 Negative Predictive Value 190 Sensitivity 190 Specificity 191 Prevalence 192 Point Prevalence 192 Period Prevalence 192 Lifetime Prevalence 192 Prevalence Odds 193 Public Health 195 Quality-Adjusted Life Year (QALY) QualityAssurance (QA) 197 Continuous QualityAssurance (CQA) 198 Practice Profiling 198 Quality of Care Quality ofwell-being Scale (QWBS) QWBS-Self-Administered (QWBS-SA) 201 Qualitative Research 202 Open-Ended Question 202 Focus Group 221 Quantitative Research 204 Experimental Quantitative Research 204 Descriptive Quantitative Research Rationing Reimbursement 209 Allowable Cost 209 Copayment 209 Coinsurance 209 Reimbursement Per Episode of Illness 209 Per Diem Reimbursement Reliability 211 Interrater Reliability 211 Test-Retest Reliability 211 Internal Consistency Research Entities 213 Sponsor 213 Funding Agency 213 Contracting Agency 213 Contract Research Organization (CRO) 213 Site 213 Practice Research Network 213 Trials Management Organization (TMO) 213 Principal Investigator 213 Coinvestigator 213 Coordinating Center 213 S teering Committee 213 Human Subjects Committee 213 Ethics Committee Responsiveness 214 Distribution-Based Method 215 Anchor-Based Methods 215 Minimal Clinical Importance Difference (MCID) Retrospective Analysis Risk 218 Attributable Risk 219 Population Attributable Risk 220 Relative Risk Risk Adjustment

7 VÜi CONTENTS 223 Rosser Index 237 Cox Regression Model 225 Sample Selection Model 237 Proportional Hazards 226 Sensitivity Analysis Modeling 226 Tornado Diagram 238 Uncertainty 229 Severity of Illness 241 Utility 230 Short Form 36 (SF-36) 242 Utility Measurement 231 SF-36 Health Survey 242 Standard Gamble (SG) 231 RAND 36-Item Health 242 Time Trade-Off (TTO) Survey Visual Analog Scale (VAS) 231 Health Status 246 Validity Questionnaire 246 Face Validity 231 RAND-36 Health Status 246 Content Validity Inventory (HSI) 246 Criterion Validity 232 Sickness Impact Profile (SIP) 246 Construct Validity 233 Statistics in Pharmacoeconomics 247 Structural Validity 233 Descriptive Statistics 247 Process Validity 233 Inferential Statistics 247 Outcome Validity 234 Parametric Tests 247 Validation 234 Nonparametric Tests 249 Weifare Economics 236 Time-to-Event Models 249 Potential Pareto Improvement 236 Survival Analysis 250 Maximin Approach 236 Censoring 250 Welfarist Approach 236 Survival Functions 250 Extra-Welfarist Approach 236 Life Table 253 About the Editors 237 Log-Rank Test 257 Index