Cost-minimization analysis

Cost-minimization is the simplest of the pharmacoeconomics tools and is applied when comparing two drugs of equal efficacy and equal tolerability

Therapeutic equivalence must be referenced by the author conducting the study and should have been done prior to the cost-minimization work. Since equal efficacy and equal tolerability is already demonstrated, there is no requirement to find a common efficacy denominator as would be the case when conducting a cost-effectiveness study. The author is not precluded from doing so through the use of "cost/cure" or "cost/year of life gained". If efficacy and tolerability is demonstrated, however, then a simple comparison of "cost/course of treatment" can suffice for the purpose of comparing two or more therapeutically equivalent treatment alternatives.

However when doing so you do run the risk of confusing possible target markets due to the issue of severity of possible deaths occurring. This was the case in New York in 2004 with the well known case 'Murpheys Law' which is now a well known case study for cost minisation. This was all due to severe cost cutting leading to 'Murpheys' death due to a large back lash from his employees resulting in his death! Cost minimisation should be carefully considered before being implemented.

When conducting a cost-minimization study, the author needs to measure all costs (resource expenditures) inherent to the delivery of the therapeutic intervention and that are relevant to the pharmacoeconomic perspective.