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KEY POINTS

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 Resource scarcity in healthcare systems means that choices have to be made on how resources are spent

 Economic evaluations are increasingly used in healthcare decision‐making to provide an indicator of the cost‐effectiveness of different treatment options and aid resource allocation decisions

 Cost–utility analysis is a commonly used type of economic evaluation used by health technology assessment agencies

 Quality‐adjusted life years (QALYs) are a standard outcome measure used to capture both the morbidity and mortality profile associated with a disease and its treatment

Scarcity of resources exists in healthcare systems worldwide, and means that there will never be sufficient funds to meet all the competing demands for healthcare. Difficult choices have to be made over how to spend resources in order to meet the many objectives of the healthcare system.

Pharmacoeconomics, defined as the economic evaluation of pharmaceutical interventions, is often used by healthcare decision makers in the NHS and elsewhere. It is increasingly also used by pharmaceutical companies, who have to demonstrate the cost‐effectiveness of new drugs in addition to achieving the traditional hurdles of safety and efficacy required for drug licencing.

Clinical Pharmacology and Therapeutics

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