Abstract We use health insurance claims data from 63 large employers to estimate the extent of price shopping for nine common outpatient services in consumer-directed health plans (CDHPs) compared to traditional health plans. The main measures of price shopping include (1) the total price paid on the claim, (2) the share of claims from low- and high-cost providers, and (3) the savings from price shopping relative to choosing prices randomly. All analyses control for individual and zip code level demographics and plan characteristics. We also estimate differences in price shopping within CDHPs depending on expected health care costs and whether the service was bought before or after reaching the deductible. For eight out of nine services analyzed, prices paid by CDHP and traditional plan enrollees did not differ significantly; CDHP enrollees paid 2.3% less for office visits. Similarly, office visits was the only service where CDHP enrollment resulted in a significantly larger share of claims from low-cost providers and greater savings from price shopping relative to traditional plans. There was also no evidence that, within CDHP plans, consumers with lower expected medical expenses exhibited more price shopping or that consumers exhibited more price shopping before reaching the deductible.
{"title":"Price Shopping in Consumer-Directed Health Plans","authors":"N. Sood, Z. Wagner, P. Huckfeldt, A. Haviland","doi":"10.1515/fhep-2012-0028","DOIUrl":"https://doi.org/10.1515/fhep-2012-0028","url":null,"abstract":"Abstract We use health insurance claims data from 63 large employers to estimate the extent of price shopping for nine common outpatient services in consumer-directed health plans (CDHPs) compared to traditional health plans. The main measures of price shopping include (1) the total price paid on the claim, (2) the share of claims from low- and high-cost providers, and (3) the savings from price shopping relative to choosing prices randomly. All analyses control for individual and zip code level demographics and plan characteristics. We also estimate differences in price shopping within CDHPs depending on expected health care costs and whether the service was bought before or after reaching the deductible. For eight out of nine services analyzed, prices paid by CDHP and traditional plan enrollees did not differ significantly; CDHP enrollees paid 2.3% less for office visits. Similarly, office visits was the only service where CDHP enrollment resulted in a significantly larger share of claims from low-cost providers and greater savings from price shopping relative to traditional plans. There was also no evidence that, within CDHP plans, consumers with lower expected medical expenses exhibited more price shopping or that consumers exhibited more price shopping before reaching the deductible.","PeriodicalId":38039,"journal":{"name":"Forum for Health Economics and Policy","volume":"16 1","pages":"35 - 53"},"PeriodicalIF":0.0,"publicationDate":"2013-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"75398606","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract We analyze the problem of incentivizing research and development (R&D) into developing world disease from an economic efficiency perspective. We view the problem as how to best promote R&D into goods with positive external effects in the sense that medicines that directly affect the health of the poor also indirectly affect the utility of the altruistic “rich.” We demonstrate why existing policy proposals – such as price concessions by manufacturers – adversely impact the poor by placing the burden of R&D only on innovators rather than all altruists in the rich world. We offer policy solutions that are based on economic efficiency and therefore rely on a broad sense of how the world values the treatment of developing world disease. We estimate that global altruism toward those with malaria is, at a minimum, valued between $835 million and $2.4 billion annually and for HIV/AIDS, between $9.1 billion and $26.6 billion annually. We argue that future policies toward neglected diseases need to better incorporate how efficient R&D meets the need of this global altruism.
{"title":"Should Global Health be Tailored Toward the Rich? Altruism and Efficient R&D for Neglected Diseases","authors":"A. Jena, Stéphane Mechoulan, T. Philipson","doi":"10.1515/fhep-2012-0036","DOIUrl":"https://doi.org/10.1515/fhep-2012-0036","url":null,"abstract":"Abstract We analyze the problem of incentivizing research and development (R&D) into developing world disease from an economic efficiency perspective. We view the problem as how to best promote R&D into goods with positive external effects in the sense that medicines that directly affect the health of the poor also indirectly affect the utility of the altruistic “rich.” We demonstrate why existing policy proposals – such as price concessions by manufacturers – adversely impact the poor by placing the burden of R&D only on innovators rather than all altruists in the rich world. We offer policy solutions that are based on economic efficiency and therefore rely on a broad sense of how the world values the treatment of developing world disease. We estimate that global altruism toward those with malaria is, at a minimum, valued between $835 million and $2.4 billion annually and for HIV/AIDS, between $9.1 billion and $26.6 billion annually. We argue that future policies toward neglected diseases need to better incorporate how efficient R&D meets the need of this global altruism.","PeriodicalId":38039,"journal":{"name":"Forum for Health Economics and Policy","volume":"14 1","pages":"83 - 99"},"PeriodicalIF":0.0,"publicationDate":"2013-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"83721575","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract We develop a conceptual framework for estimating the value of personalized medicines. We show that personalizing medicines generates value from two sources. The first is a market-expansion effect by persons who initiate treatment due to reduced pre-treatment uncertainty about the effectiveness or side effects of treatment. The second is a market-contraction effect due to discontinuation of treatment by persons unresponsive to treatment. We apply the conceptual framework to evaluate the value of a predictive test to assess whether patients are at elevated risk for cardiac complications from COX-2 inhibitors. We find that this predictive test would yield an overall value to patients of about $16 billion per year or $1284 per likely patient.
{"title":"Quantifying the Value of Personalized Medicines: Evidence from COX-2 Inhibitors","authors":"N. Sood, T. Philipson, P. Huckfeldt","doi":"10.1515/fhep-2013-0005","DOIUrl":"https://doi.org/10.1515/fhep-2013-0005","url":null,"abstract":"Abstract We develop a conceptual framework for estimating the value of personalized medicines. We show that personalizing medicines generates value from two sources. The first is a market-expansion effect by persons who initiate treatment due to reduced pre-treatment uncertainty about the effectiveness or side effects of treatment. The second is a market-contraction effect due to discontinuation of treatment by persons unresponsive to treatment. We apply the conceptual framework to evaluate the value of a predictive test to assess whether patients are at elevated risk for cardiac complications from COX-2 inhibitors. We find that this predictive test would yield an overall value to patients of about $16 billion per year or $1284 per likely patient.","PeriodicalId":38039,"journal":{"name":"Forum for Health Economics and Policy","volume":"15 1","pages":"101 - 122"},"PeriodicalIF":0.0,"publicationDate":"2013-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"90043409","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract Many European countries have recently implemented comprehensive smoking bans to reduce exposure to tobacco smoke in public places and all indoor workplaces. We use a difference-in-differences approach and comparable microdata for a number of European countries to evaluate the impact of national comprehensive smoking bans on workers’ perceived health. Results show that the introduction of comprehensive smoking bans has a significant effect on the probability of both exposure to smoke and work-related respiratory problems. We also highlight unintended effects in terms of mental distress. The impact across countries is shown to vary with the degree of strictness of the bans.
{"title":"The Effect of Comprehensive Smoking Bans in European Workplaces","authors":"Federica Origo, Claudio Lucifora","doi":"10.1515/fhep-2012-0030","DOIUrl":"https://doi.org/10.1515/fhep-2012-0030","url":null,"abstract":"Abstract Many European countries have recently implemented comprehensive smoking bans to reduce exposure to tobacco smoke in public places and all indoor workplaces. We use a difference-in-differences approach and comparable microdata for a number of European countries to evaluate the impact of national comprehensive smoking bans on workers’ perceived health. Results show that the introduction of comprehensive smoking bans has a significant effect on the probability of both exposure to smoke and work-related respiratory problems. We also highlight unintended effects in terms of mental distress. The impact across countries is shown to vary with the degree of strictness of the bans.","PeriodicalId":38039,"journal":{"name":"Forum for Health Economics and Policy","volume":"10 1","pages":"55 - 81"},"PeriodicalIF":0.0,"publicationDate":"2013-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"86573202","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2013-01-01Epub Date: 2013-04-15DOI: 10.1515/fhep-2012-0002
Lorens A Helmchen, William E Encinosa, Michael E Chernew, Richard A Hirth
To rein in cost, payers are exploring bundled payment, which aggregates fees for a range of services into a single prospective payment. While under bundled payment providers would have incentives to reduce cost, they might also withhold more expensive care that patients prefer. We explore how bundled payment could be aligned with a benefit design that would encourage patients' consideration of cost without jeopardizing access to the most expensive treatments. Least-costly-alternative approaches allow patient choice but might deter patients from choosing more expensive care by exposing them to potentially large out-of-pocket payments. A novel "shared-savings supplement" would reward patients for choosing the least costly alternative with a supplemental cash disbursement and thus allow them to share in any cost savings. This cash incentive for the least-costly-alternative allows a reduction of the out-of-pocket payment for the expensive alternative. Thus, patients would still have the option of the more expensive therapy while facing only a modest out-of-pocket cost. Such benefit modifications could be aligned with bundled payment by splitting the responsibility for the incremental cost of more expensive care between patients and their providers.
{"title":"Integrating Patient Incentives with Episode-Based Payment.","authors":"Lorens A Helmchen, William E Encinosa, Michael E Chernew, Richard A Hirth","doi":"10.1515/fhep-2012-0002","DOIUrl":"10.1515/fhep-2012-0002","url":null,"abstract":"<p><p>To rein in cost, payers are exploring bundled payment, which aggregates fees for a range of services into a single prospective payment. While under bundled payment providers would have incentives to reduce cost, they might also withhold more expensive care that patients prefer. We explore how bundled payment could be aligned with a benefit design that would encourage patients' consideration of cost without jeopardizing access to the most expensive treatments. Least-costly-alternative approaches allow patient choice but might deter patients from choosing more expensive care by exposing them to potentially large out-of-pocket payments. A novel \"shared-savings supplement\" would reward patients for choosing the least costly alternative with a supplemental cash disbursement and thus allow them to share in any cost savings. This cash incentive for the least-costly-alternative allows a reduction of the out-of-pocket payment for the expensive alternative. Thus, patients would still have the option of the more expensive therapy while facing only a modest out-of-pocket cost. Such benefit modifications could be aligned with bundled payment by splitting the responsibility for the incremental cost of more expensive care between patients and their providers.</p>","PeriodicalId":38039,"journal":{"name":"Forum for Health Economics and Policy","volume":"16 1","pages":"123-136"},"PeriodicalIF":0.0,"publicationDate":"2013-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6481942/pdf/nihms-1019059.pdf","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"37190571","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract Voluntary testing and counseling (VTC) is a popular method for fighting the HIV/AIDS epidemic. The purpose of VTC is to reduce the incidence of the virus in a two-fold manner. First, testing provides access to health care and antiretroviral therapies that diminish the transmission rate of the virus. Second, counseling encourages safer behavior for not only individuals who test HIV-negative and wish to avoid HIV/AIDS infection but also altruistic individuals who test HIV-positive and wish to protect their partners from becoming infected by HIV. Surprisingly, DHS surveys that were conducted in sub-Saharan Africa provide empirical evidence that testing services are underutilized. Moreover, it is rare for both partners in a couple to be tested for HIV. This paper proposes a theoretical model that indicates how misperceptions about the HIV/AIDS virus may explain these puzzles. More specifically, this study demonstrates that individuals who are at risk of HIV infection may act strategically to avoid the cost of testing if they overestimate the risk of HIV transmission or believe that health care is not required if HIV is asymptomatic. The correction of false beliefs and the promotion of self-testing are expected to increase HIV testing rates.
{"title":"Why are Testing Rates so Low in Sub-Saharan Africa? Misconceptions and Strategic Behaviors","authors":"O. Sterck","doi":"10.1515/fhep-2012-0033","DOIUrl":"https://doi.org/10.1515/fhep-2012-0033","url":null,"abstract":"Abstract Voluntary testing and counseling (VTC) is a popular method for fighting the HIV/AIDS epidemic. The purpose of VTC is to reduce the incidence of the virus in a two-fold manner. First, testing provides access to health care and antiretroviral therapies that diminish the transmission rate of the virus. Second, counseling encourages safer behavior for not only individuals who test HIV-negative and wish to avoid HIV/AIDS infection but also altruistic individuals who test HIV-positive and wish to protect their partners from becoming infected by HIV. Surprisingly, DHS surveys that were conducted in sub-Saharan Africa provide empirical evidence that testing services are underutilized. Moreover, it is rare for both partners in a couple to be tested for HIV. This paper proposes a theoretical model that indicates how misperceptions about the HIV/AIDS virus may explain these puzzles. More specifically, this study demonstrates that individuals who are at risk of HIV infection may act strategically to avoid the cost of testing if they overestimate the risk of HIV transmission or believe that health care is not required if HIV is asymptomatic. The correction of false beliefs and the promotion of self-testing are expected to increase HIV testing rates.","PeriodicalId":38039,"journal":{"name":"Forum for Health Economics and Policy","volume":"1 1","pages":"219 - 257"},"PeriodicalIF":0.0,"publicationDate":"2013-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"89723204","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract Informal care provided to the elderly by their children is proposed as a less expensive alternative to institutional long-term care. This paper explores how the elderly's consumption of medical care changes in response to changes in the informal care they receive from their children. Many earlier studies have ignored both the endogeneity of informal care and the complicated nature of health care utilization data. This paper develops a two-part model with informal care treated as an endogenous regressor and imposes exclusion restrictions on the selection process. The model is fitted using the Bayesian Markov Chain Monte Carlo (MCMC) methods, in particular the Gibbs sampler and the Metropolis-Hasting algorithm. The average treatment effects and the distributions of the treatment effects are obtained via posterior simulation. The results indicate that informal care provides a substitute for nursing home care and hospital inpatient care, but it does not affect paid home health care on average. The treatment effects are heterogeneous. The largest substitution effects occur for nursing home and hospital inpatient care at the intensive margin. The policy analysis suggests that informal care policies targeting the group that incurs the largest substitution effect may help to reduce government spending on Medicaid and Medicare.
{"title":"Formal and Informal Care: An Empirical Bayesian Analysis Using the Two-part Model","authors":"Juan Du","doi":"10.1515/1558-9544.1253","DOIUrl":"https://doi.org/10.1515/1558-9544.1253","url":null,"abstract":"Abstract Informal care provided to the elderly by their children is proposed as a less expensive alternative to institutional long-term care. This paper explores how the elderly's consumption of medical care changes in response to changes in the informal care they receive from their children. Many earlier studies have ignored both the endogeneity of informal care and the complicated nature of health care utilization data. This paper develops a two-part model with informal care treated as an endogenous regressor and imposes exclusion restrictions on the selection process. The model is fitted using the Bayesian Markov Chain Monte Carlo (MCMC) methods, in particular the Gibbs sampler and the Metropolis-Hasting algorithm. The average treatment effects and the distributions of the treatment effects are obtained via posterior simulation. The results indicate that informal care provides a substitute for nursing home care and hospital inpatient care, but it does not affect paid home health care on average. The treatment effects are heterogeneous. The largest substitution effects occur for nursing home and hospital inpatient care at the intensive margin. The policy analysis suggests that informal care policies targeting the group that incurs the largest substitution effect may help to reduce government spending on Medicaid and Medicare.","PeriodicalId":38039,"journal":{"name":"Forum for Health Economics and Policy","volume":"34 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2012-11-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"76400462","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract Flexible spending accounts (FSAs) are a widely used arrangement that allow employees to pay for qualified out-of-pocket health expenses with pre-tax dollars. The tax preference given to FSAs has been controversial and recent health care law (Patient Protection and Affordable Care Act and Health Care and Education Reconciliation Act) limits the tax exclusion to an inflation-adjusted value of $2,500 (2013 $s). The limit is estimated to increase federal payroll and income tax receipts by $13 billion between 2013 and 2019. But the welfare implications of this change are unclear.This paper uses a unique panel dataset to explore the demographic profile of households likely to be affected by the tax increase. We use a sample of 19,322 households observed over the period 1998–2008. The data include FSA expenditures, insurance claim information for covered medical and dental expenditures, and household demographic information. We explore patterns of FSA usage by income and health status.We find that households likely to be affected by the tax increase disproportionately tend to be households experiencing one or more chronic health conditions. The existence of chronic illness is associated with relatively high and persistent medical expenses and also with relatively older and wealthier households. We estimate an average tax increase of $101 in 2013 for 13.9 million households with an FSA.
{"title":"The Distributional Effects of Health Reform Limits on Flexible Spending Accounts","authors":"J. Cardon, J. Moore, M. Showalter","doi":"10.1515/1558-9544.1310","DOIUrl":"https://doi.org/10.1515/1558-9544.1310","url":null,"abstract":"Abstract Flexible spending accounts (FSAs) are a widely used arrangement that allow employees to pay for qualified out-of-pocket health expenses with pre-tax dollars. The tax preference given to FSAs has been controversial and recent health care law (Patient Protection and Affordable Care Act and Health Care and Education Reconciliation Act) limits the tax exclusion to an inflation-adjusted value of $2,500 (2013 $s). The limit is estimated to increase federal payroll and income tax receipts by $13 billion between 2013 and 2019. But the welfare implications of this change are unclear.This paper uses a unique panel dataset to explore the demographic profile of households likely to be affected by the tax increase. We use a sample of 19,322 households observed over the period 1998–2008. The data include FSA expenditures, insurance claim information for covered medical and dental expenditures, and household demographic information. We explore patterns of FSA usage by income and health status.We find that households likely to be affected by the tax increase disproportionately tend to be households experiencing one or more chronic health conditions. The existence of chronic illness is associated with relatively high and persistent medical expenses and also with relatively older and wealthier households. We estimate an average tax increase of $101 in 2013 for 13.9 million households with an FSA.","PeriodicalId":38039,"journal":{"name":"Forum for Health Economics and Policy","volume":"52 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2012-11-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"74771661","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
M. R. McKellar, Matthew B. Frank, H. Huskamp, M. Chernew
Abstract Despite bringing breakthrough medications to market, pharmaceutical companies incurred criticism during the 1990s and early 2000s because of high prices of many drugs. We argue that the benefits of pharmaceuticals should be evaluated in a dynamic context that extends beyond the patent expiration date. Now that numerous patents have expired, generic medications exist in many important drug classes. Thus, consumers reap the benefits of past innovation for years to come. We estimate that across 19 molecules whose patents expired from 2005-2009, $193-436 billion will transfer to consumers over 10 to 20 years due to patent expiration. This suggests that, while prices were high during the patent period, creating an incentive for innovation, the transfers to consumers after patent expiration are significant, which is how the patent system is designed to function.
{"title":"The Value of Patent Expiration","authors":"M. R. McKellar, Matthew B. Frank, H. Huskamp, M. Chernew","doi":"10.1515/1558-9544.1311","DOIUrl":"https://doi.org/10.1515/1558-9544.1311","url":null,"abstract":"Abstract Despite bringing breakthrough medications to market, pharmaceutical companies incurred criticism during the 1990s and early 2000s because of high prices of many drugs. We argue that the benefits of pharmaceuticals should be evaluated in a dynamic context that extends beyond the patent expiration date. Now that numerous patents have expired, generic medications exist in many important drug classes. Thus, consumers reap the benefits of past innovation for years to come. We estimate that across 19 molecules whose patents expired from 2005-2009, $193-436 billion will transfer to consumers over 10 to 20 years due to patent expiration. This suggests that, while prices were high during the patent period, creating an incentive for innovation, the transfers to consumers after patent expiration are significant, which is how the patent system is designed to function.","PeriodicalId":38039,"journal":{"name":"Forum for Health Economics and Policy","volume":"124 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2012-11-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"87937121","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Abstract Recent evidence suggests that the economic value of increased health has been enormous, with most of these gains being driven by medical R&D. The R&D process for pharmaceuticals is particularly expensive and time consuming, with well-known studies from the Tufts Center for the Study of Drug Development suggesting that developing a single successful drug costs around $1 billion and takes roughly 12 years. We argue that these estimates are incomplete because they do not incorporate the social costs imposed by the regulatory process, namely the costs to producers in terms of forgone profits and the costs to consumers in terms of delayed access to drugs. In this article, we develop a framework to estimate the social costs imposed by the regulatory process. Under this framework, delays in drug development are socially costly because of reduced consumer surplus (due to delayed access to beneficial therapies), reduced producer variable profits, and increased R&D expenditures. We apply this framework to the case of therapies aimed at treating AIDS, non-Hodgkin’s lymphoma, and breast cancer. In each case, we find that the effects of drug delays on consumer surplus and variable producer profits are far larger than the effects on R&D costs. These findings suggest that patients, not firms, would be the primary beneficiaries from any improvements in streamlining the drug development process.
最近的证据表明，健康水平的提高带来了巨大的经济价值，其中大部分收益是由医疗研发推动的。药物的研发过程尤其昂贵和耗时，塔夫茨药物开发研究中心(Tufts Center for The Study of Drug Development)的著名研究表明，开发一种成功的药物需要大约10亿美元，大约需要12年的时间。我们认为，这些估计是不完整的，因为它们没有纳入监管过程所造成的社会成本，即生产者在放弃利润方面的成本和消费者在延迟获得药物方面的成本。在本文中，我们开发了一个框架来估计监管过程所施加的社会成本。在这一框架下，由于消费者剩余减少(由于获得有益疗法的延迟)、生产者可变利润减少和研发支出增加，药物开发的延迟在社会上代价高昂。我们将这一框架应用于治疗艾滋病、非霍奇金淋巴瘤和乳腺癌的病例。在每种情况下，我们都发现药品延迟对消费者剩余和可变生产者利润的影响远大于对研发成本的影响。这些发现表明，患者，而不是公司，将是药物开发过程中任何改进的主要受益者。
{"title":"A Reexamination of the Costs of Medical R&D Regulation","authors":"T. Philipson, E. Sun, D. Goldman, A. Jena","doi":"10.1515/FHEP-2012-0020","DOIUrl":"https://doi.org/10.1515/FHEP-2012-0020","url":null,"abstract":"Abstract Recent evidence suggests that the economic value of increased health has been enormous, with most of these gains being driven by medical R&D. The R&D process for pharmaceuticals is particularly expensive and time consuming, with well-known studies from the Tufts Center for the Study of Drug Development suggesting that developing a single successful drug costs around $1 billion and takes roughly 12 years. We argue that these estimates are incomplete because they do not incorporate the social costs imposed by the regulatory process, namely the costs to producers in terms of forgone profits and the costs to consumers in terms of delayed access to drugs. In this article, we develop a framework to estimate the social costs imposed by the regulatory process. Under this framework, delays in drug development are socially costly because of reduced consumer surplus (due to delayed access to beneficial therapies), reduced producer variable profits, and increased R&D expenditures. We apply this framework to the case of therapies aimed at treating AIDS, non-Hodgkin’s lymphoma, and breast cancer. In each case, we find that the effects of drug delays on consumer surplus and variable producer profits are far larger than the effects on R&D costs. These findings suggest that patients, not firms, would be the primary beneficiaries from any improvements in streamlining the drug development process.","PeriodicalId":38039,"journal":{"name":"Forum for Health Economics and Policy","volume":"43 1","pages":"1 - 28"},"PeriodicalIF":0.0,"publicationDate":"2012-10-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"88067293","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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