Incidence versus prevalence modeling in pharmacoeconomics.

Increasing standardization in pharmacoeconomics calls for systematic use of epidemiological measures, such as incidence and prevalence estimates. The implications are relevant to predicting illness events and costs and to formulary decision-making. The choice of method is determined by the purpose of the study and the nature of the disease. Prevalence-based costs are assigned to the years in which they occur - results are relevant for budget impact, cost control and in chronic conditions. In contrast, the incidence-based approach assigns the stream of costs to the year it starts. It requires knowledge of the disease course, survival rates and the impact of the illness on lifetime earnings. It is relevant for making decisions among alternative treatments,short-term cost-effectiveness and acute diseases.