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Pharmacoepidemiology studies the use and effects of drugs on large groups of people and patients. It assesses probability of beneficial and adverse effects, and risks for humans while using a particular drug.

Pharmacoepidemiology bridges pharmacology and epidemiology and borrows their methodology from both of them. It uses descriptive epidemiological method by describing exposure to a drug and by calculating rates, e.g., incidence and prevalence. Such descriptive method generates hypothesis about influence of the drug, but does not test it. Pharmacoepidemiology also uses analytic epidemiological method by means of observation (case-control and cohort studies) and experimentation (clinical trial). The analytic study compares an exposed group with a control group and serves as testing of the hypothesis.

Pharmacoepidemiology provides pharmacovigilance, the later is a type of continual monitoring of unwanted effects and other safety-related aspects of drugs in current growing integrating markets. Pharmacovigilance is conducted by spontaneous reporting systems through health care professionals and others which report adverse drug reactions to the central agency. The central agency combines reports from many sources to produce a more informative profile for drug products.