The simple economics of risk-sharing agreements between the NHS and the pharmaceutical industry

The Janssen-Cilag proposal for a risk-sharing agreement regarding bortezomib received a welcome signal from NICE. The Office of Fair Trading report included risk-sharing agreements as an available tool for the National Health Service. Nonetheless, recent discussions have somewhat neglected the economic fundamentals underlying risk-sharing agreements. We argue here that risk-sharing agreements, although attractive due to the principle of paying by results, also entail risks. Too many patients may be put under treatment even with a low success probability. Prices are likely to be adjusted upward, in anticipation of future risk-sharing agreements between the pharmaceutical company and the third-party payer. An available instrument is a verification cost per patient treated, which allows obtaining the first-best allocation of patients to the new treatment, under the risk sharing agreement. Overall, the welfare effects of risk-sharing agreements are ambiguous, and care must be taken with their use.

Impact of health conditions on absenteeism from work

A Work Project, presented as part of the requirements for the Award of a Masters Degree in Economics from the NOVA – School of Business and Economics

DETERMINE Working document #4 'Economic arguments for addressing social determinants of health inequalities'

The Institute of Public Health in Ireland (IPH) is a partner in the European project DETERMINE, building on its previous involvement in the Closing the Gap project in 2004-2006. In Year 2 the DETERMINE project  focused on identifying and exploring economic arguments to support action on social determinants of health inequalities.  Working document #4 'Economic arguments for addressing social determinants of health inequalities' presents the findings.

DETERMINE Working Document #1 'Policies and actions addressing the social determinants of health inequalities: examples of activity at EU member state level in Europe'

The Institute of Public Health in Ireland (IPH) is a partner in the European project DETERMINE, building on its previous involvement in the Closing the Gap project in 2004-2006. In the first year of the project (2007-2008) 15 DETERMINE partners identified policies and actions that have taken place within countries, and at the EU level, to address Social Determinants of Health Inequalities. These policies and actions were identified via a questionnaire, which also identified structures and tools/mechanisms being used in the country to support a 'health in all policy' approach.

Financial protection of patients through compensation of providers: the impact of Health Equity Funds in Cambodia

Public providers have no financial incentive to respect their legal obligation to exempt the poor from user fees. Health Equity Funds (HEFs) aim to make exemptions effective by giving NGOs responsibility for assessing eligibility and compensating providers for lost revenue. We use the geographic spread of HEFs over time in Cambodia to identify their impact on out-of-pocket (OOP) payments. Among households with some OOP payment, HEFs reduce the amount paid by 35%, on average. The effect is larger for households that are poorer and mainly use public health care. Reimbursement of providers through a government operated scheme also reduces household OOP payments but the effect is not as well targeted on the poor. Both compensation models raise household non-medical consumption but have no impact on health-related debt. HEFs reduce the probability of primarily seeking care in the private sector.

The significance of distributive effects in social assessment of health care

In this paper we address the importance of distributive effects in the social valuation of QALY's. We propose a social welfarefunction that generalises the functions traditionally used in the health economic literature. The novelty is that, depending on the individual health gains, our function can representeither preferences for concentrating or preferences for spreading total gain or both together, an issue which has notbeen addressed until now. Based on an experiment, we observe that this generalisation provides a suitable approximation tothe sampled social preferences.

Diversity and regional inequalities: Assessing the outcomes of the Spanish 'System of Health Care Services'

The consolidation of a universal health system coupled with a process of regionaldevolution characterise the institutional reforms of the National Health System(NHS) in Spain in the last two decades. However, scarce empirical evidence hasbeen reported on the effects of both changes in health inputs, outputs andoutcomes, both at the country and at the regional level. This paper examinesthe empirical evidence on regional diversity, efficiency and inequality ofthese changes in the Spanish NHS using cross-correlation, panel data andexpenditure decomposition analysis. Results suggest that besides significantheterogeneity, once we take into account region-specific needs there is evidenceof efficiency improvements whilst inequalities in inputs and outcomes, althoughmore visible , do not appear to have increased in the last decade. Therefore,the devolution process in the Spanish Health System offers an interesting casefor the experimentation of health reforms related to regional diversity butcompatible with the nature of a public NHS, with no sizeable regionalinequalitiest.

Testing the descriptive performance of the rank-dependent utility in the domain of health profiles

Expected utility theory (EUT) has been challenged as a descriptive theoryin many contexts. The medical decision analysis context is not an exception.Several researchers have suggested that rank dependent utility theory (RDUT)may accurately describe how people evaluate alternative medical treatments.Recent research in this domain has addressed a relevant feature of RDU models-probability weighting-but to date no direct test of this theoryhas been made. This paper provides a test of the main axiomatic differencebetween EUT and RDUT when health profiles are used as outcomes of riskytreatments. Overall, EU best described the data. However, evidence on theediting and cancellation operation hypothesized in Prospect Theory andCumulative Prospect Theory was apparent in our study. we found that RDUoutperformed EU in the presentation of the risky treatment pairs in whichthe common outcome was not obvious. The influence of framing effects onthe performance of RDU and their importance as a topic for future researchis discussed.

The social value of health programs: Is age a relevant factor?

In cost-effectiveness analysis (CEA) it is usually assumed that a QALY is of equal value to everybody, irrespective of the patient's age. However, it is possible that society assigns different social values to a QALY according to who gets it. In this paper we discuss the possibility of weighting health benefits for age in CEA. We also examinethe possibility that age-related preferences depend on the size of the health gain. An experiment was performedto test these hypotheses. The results assessing suggest that the patient's age is a relevant factor when assessing health gains.

Comparison and evaluation of states of health

Starting from a finite or countable set of states of health, and assumingthe existence of an objective transitive preference relation on that set,we propose a way of performing interpersonal comparisons of states ofhealth. In so doing, we first consider the population divided into types,and consider that two individuals of a different type have a comparablestate of health whenever they sit at the same centile of their respectivetype. A way of comparing and evaluating states of health for differentgroups is then proposed and rationalized. This can be viewed as both analternative and an extension of the traditional QALY approach.

Economics of dialysis dependence following renal replacement therapy for critically ill acute kidney injury patients.

BACKGROUND: The obective of this study was to perform a cost-effectiveness analysis comparing intermittent with continuous renal replacement therapy (IRRT versus CRRT) as initial therapy for acute kidney injury (AKI) in the intensive care unit (ICU). METHODS: Assuming some patients would potentially be eligible for either modality, we modeled life year gained, the quality-adjusted life years (QALYs) and healthcare costs for a cohort of 1000 IRRT patients and a cohort of 1000 CRRT patients. We used a 1-year, 5-year and a lifetime horizon. A Markov model with two health states for AKI survivors was designed: dialysis dependence and dialysis independence. We applied Weibull regression from published estimates to fit survival curves for CRRT and IRRT patients and to fit the proportion of dialysis dependence among CRRT and IRRT survivors. We then applied a risk ratio reported in a large retrospective cohort study to the fitted CRRT estimates in order to determine the proportion of dialysis dependence for IRRT survivors. We conducted sensitivity analyses based on a range of differences for daily implementation cost between CRRT and IRRT (base case: CRRT day $632 more expensive than IRRT day; range from $200 to $1000) and a range of risk ratios for dialysis dependence for CRRT as compared with IRRT (from 0.65 to 0.95; base case: 0.80). RESULTS: Continuous renal replacement therapy was associated with a marginally greater gain in QALY as compared with IRRT (1.093 versus 1.078). Despite higher upfront costs for CRRT in the ICU ($4046 for CRRT versus $1423 for IRRT in average), the 5-year total cost including the cost of dialysis dependence was lower for CRRT ($37 780 for CRRT versus $39 448 for IRRT on average). The base case incremental cost-effectiveness analysis showed that CRRT dominated IRRT. This dominance was confirmed by extensive sensitivity analysis. CONCLUSIONS: Initial CRRT is cost-effective compared with initial IRRT by reducing the rate of long-term dialysis dependence among critically ill AKI survivors.

Buried Treasure: The Economics of Leak Detection and Water Loss Prevention in Ontario

On average approximately 13% of the water that is withdrawn by Canadian municipal water suppliers is lost before it reaches final users. This is an important topic for several reasons: water losses cost money, losses force water agencies to draw more water from lakes and streams thereby putting more stress on aquatic ecosystems, leaks reduce system reliability, leaks may contribute to future pipe failures, and leaks may allow contaminants to enter water systems thereby reducing water quality and threatening the health of water users. Some benefits of leak detection fall outside water agencies’ accounting purview (e.g. reduced health risks to households connected to public water supply systems) and, as a result, may not be considered adequately in water agency decision-making. Because of the regulatory environment in which Canadian water agencies operate, some of these benefits-especially those external to the agency or those that may accrue to the agency in future time periods- may not be fully counted when agencies decide on leak detection efforts. Our analysis suggests potential reforms to promote increased efforts for leak detection: adoption of a Canada-wide goal of universal water metering; development of full-cost accounting and, pricing for water supplies; and co-operation amongst the provinces to promulgate standards for leak detection efforts and provide incentives to promote improved efficiency and rational investment decision-making.

Socio-Economic Dimensions of Health Care Development Among Tribals in Kerala: A Study of Tribal Communities in Wynad

The contemporary explanations and discussions of the relationship between medicine and health, and society centre around assumptions that can be broadly classified into three setsl. The first set considers health and illness as predominantly ‘biological’ and therefore, having nothing to do with the social and economic environment in which it occurs. The struggle to combat illness therefore, lies entirely within the purview of modern medicine which is neutral to economic or social change. The second considers practice of medicine as a natural science. It allows the doctor to separate himself from his subject matter, the patient, in the samelway as the natural scientist is assumed to separate himself from his subject matter, the natural world. As a 'science' and with the scientific method, it can produce unchallengable and autonomous body of knowledge which is free from the wider social and economic context. The third, different from the above, recognises the relationship between health, medicine and society. Social and environmental aspects as determinants of illness or of health comes to sharp focus here and it assigns to medicine the status of a mediator, the only viable mediator, between people and diseases. In this scheme of things the usefulness of medicine is unquestionable but the problem lies in not having enough of it to go arounds.

The determinants of the health status in a developing country: results from the Colombian case

El artículo busca encontrar evidencia empírica de los determinantes de la salud, como una medición de capital salud en un país en desarrollo después de una profunda reforma en el sector salud. Siguiendo el modelo de Grossman (1972) y tomando factores institucionales, además de las variables individuales y socioeconómicas. Se usaron las encuestas de 1997 y 2000 donde se responde subjetivamente sobre el estado de salud y tipo de afiliación al sistema de salud. El proceso de estimación usado es un probit ordenado. Los resultados muestran una importante conexión entre las variables individuales, institucionales y socioeconómicas con el estado de salud. El efecto de tipo de acceso al sistema de salud presiona las inequidades en salud.

Gradients of the intergenerational transmission of health in developing countries

This paper investigates sensitivity of the intergenerational transmission of health to changes in the socioeconomic and public health environment into which children are born using individual survey data on 2.24 million children born to 600000 mothers during 1970-2000 in 38 developing countries merged by country and cohort with macroeconomic data. We find that children are more likely to bear the penalty exerted by poor maternal health if they are conceived or born in adverse socioeconomic conditions. Equivalently, shocks to the child’s birth environment are more damaging of children born to women with a weaker stock of health at birth.