Economics – General

Conversations with Tyler: David Cutler

Tyler Cowen has an interesting interview with Harvard health economist David Cutler speaking about (what else?) health economics. Below is an excerpt: CUTLER: Everything that we know in healthcare is that people have difficulty choosing on the basis of price and quality. It goes back a little bit to some of the behavioral issues that …

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Distributional Cost Effectiveness Analysis: A simple example

I have written previously about the need for distributional cost-effectiveness analysis (DCEA) which would increase the value of treatments who improve the health for individuals who currently have the worst expected quality-adjusted life expectancy (QALE). I’ve written about this in AJMC and Health Affairs among other places. One key question many individuals may have is …

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Uncertainty and Vaccination Decisions

An interesting result from Courbage and Peter (2021): …uncertainty about the probability of side effects and the efficacy of the vaccine always reduces take-up under ambiguity aversion. However, uncertainty about the underlying disease, being the probability of sickness or the probability of a severe course of disease, may either encourage or discourage vaccination. Because vaccination …

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Job security and health: An asymmetric impact

COVID-19 has increased job insecurity for many workers around the world. At the same time, after vaccinations, job growth is slowly coming back. Will increased job security undo deleterious impacts of previous job insecurity worries? An interesting finding from Lepinteur (2021) weighs in on the topic: Is workers’ health more sensitive to losses than gains …

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Average cost to bring a drug to market is over $1 billion

The cost to bring a drug to market is a hotly debated topic. The costs include not only the costs for basic science and clinical trials. However, one must also take into account the cost of capital (since most cost are incurred up front, but revenue begins only after drug approval) and the likelihood of …

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Is the value of a QALY constant?

Standard cost-effectiveness analysis assumes that any gain in quality-adjusted life years (QALYs) should be valued equally. This does not sound unreasonable, but is it true in practice? Consider two potential violations of constant value of QALY gains: scope insensitivity and severity independence. I define each of these below: Scope insensitivity. This assumes that individuals value …

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Why R&D expenses rising and productivity falling could be a good thing

A few facts: Pharma is increasingly a key driver of US R&D. Pharmaceutical firms share of R&D increased from <10% in the early 1970s to 24% in 2018 (among firms in Compustat data). Moreover, 5 out of top 10 largest R&D spenders in Compustat in 2010 were pharmaceutical firms. A majority of drugs are targeted …

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Quotation of the day

Once you start trading for yourself, you start thinking for yourself. Yeonmi Park, escapee from North Korea, author of In Order to Live: A North Korean Girl’s Journey to Freedom

Incorporating weight-based dosing into a budget impact model

Budget impact models aim to let payers know how much a new drug will cost them. Clearly, payer cost depends on the dose. Some drugs are dosed the same for everyone. Other drugs are dosed based on patient weight, body surface area (BSA) or other criteria. If you’re a building a budget impact model, how …

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Opioid abuse: Where you live matters

‘If all your friends jumped off a bridge, would you?’ This is a common parenting phrase is meant to motivate kids to reject peer’s actions that are bad behaviors. While this blogger will not comment how effective this parenting phrase is, peer effects are real. Consider the recent NBER working paper by Finkelstein, Gentzkow, and …

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COVID-19 impact on small businesses: October 2020 Update

Results from a survey titled “Coronavirus Impact and Recovery of the Small Businesses Economy“, which has collected responses from over 520,000 business owners in the US and Canada. Some general positive trends, but still over 20% of small business owners have concerns of their financial reserves running out and nearly 20% are concerned that the …

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