Which valued-based price when patients are heterogeneous?

Health Economics
Rosella Levaggi, Paolo Pertile

Abstract

We use a simple model to study the static and dynamic efficiency of alternative regulation regimes for the reimbursement of medical innovations when responses to a new treatment (effectiveness) are heterogeneous across the eligible population. When the rational behavior of profit-maximizing firms is taken into account, only average value-based prices can ensure both static and dynamic efficiency, but they imply higher expenditure and lower consumer surplus. Ignoring dynamic efficiency, if patients' responses are sufficiently homogeneous, marginal value-based prices may dominate from the payer's perspective. We also present a refinement of average value-based prices that could reverse this result. Overall, the cost of ensuring static and dynamic efficiency is increasing in the degree of heterogeneity. A real-world example is used to illustrate these results.

References

May 5, 1998·Medical Decision Making : an International Journal of the Society for Medical Decision Making·H S Gravelle
May 5, 1998·Medical Decision Making : an International Journal of the Society for Medical Decision Making·A A Stinnett, J Mullahy
May 31, 2007·Health Economics·Karl Claxton
Jul 16, 2008·Journal of Health Economics·Anupam B Jena, Tomas J Philipson
May 11, 2010·Journal of Public Economics·Darius Lakdawalla, Neeraj Sood
Jan 19, 2013·PharmacoEconomics·Jon SussexNancy Devlin
Dec 12, 2013·Health Economics·Patricia DanzonJorge Mestre-Ferrandiz

❮ Previous
Next ❯

Citations

Jul 7, 2020·Health Economics·Simona GambaSabine Vogler
Jun 26, 2020·Health Economics·Doug Coyle
Jul 11, 2021·Health Economics·Rosella Levaggi, Paolo Pertile

❮ Previous
Next ❯

Related Concepts

Trending Feeds

COVID-19

Coronaviruses encompass a large family of viruses that cause the common cold as well as more serious diseases, such as the ongoing outbreak of coronavirus disease 2019 (COVID-19; formally known as 2019-nCoV). Coronaviruses can spread from animals to humans; symptoms include fever, cough, shortness of breath, and breathing difficulties; in more severe cases, infection can lead to death. This feed covers recent research on COVID-19.

Blastomycosis

Blastomycosis fungal infections spread through inhaling Blastomyces dermatitidis spores. Discover the latest research on blastomycosis fungal infections here.

Nuclear Pore Complex in ALS/FTD

Alterations in nucleocytoplasmic transport, controlled by the nuclear pore complex, may be involved in the pathomechanism underlying multiple neurodegenerative diseases including Amyotrophic Lateral Sclerosis and Frontotemporal Dementia. Here is the latest research on the nuclear pore complex in ALS and FTD.

Applications of Molecular Barcoding

The concept of molecular barcoding is that each original DNA or RNA molecule is attached to a unique sequence barcode. Sequence reads having different barcodes represent different original molecules, while sequence reads having the same barcode are results of PCR duplication from one original molecule. Discover the latest research on molecular barcoding here.

Chronic Fatigue Syndrome

Chronic fatigue syndrome is a disease characterized by unexplained disabling fatigue; the pathology of which is incompletely understood. Discover the latest research on chronic fatigue syndrome here.

Evolution of Pluripotency

Pluripotency refers to the ability of a cell to develop into three primary germ cell layers of the embryo. This feed focuses on the mechanisms that underlie the evolution of pluripotency. Here is the latest research.

Position Effect Variegation

Position Effect Variagation occurs when a gene is inactivated due to its positioning near heterochromatic regions within a chromosome. Discover the latest research on Position Effect Variagation here.

STING Receptor Agonists

Stimulator of IFN genes (STING) are a group of transmembrane proteins that are involved in the induction of type I interferon that is important in the innate immune response. The stimulation of STING has been an active area of research in the treatment of cancer and infectious diseases. Here is the latest research on STING receptor agonists.

Microbicide

Microbicides are products that can be applied to vaginal or rectal mucosal surfaces with the goal of preventing, or at least significantly reducing, the transmission of sexually transmitted infections. Here is the latest research on microbicides.

Related Papers

Nature Neuroscience
Katherine E Conen, Camillo Padoa-Schioppa
Journal of Shoulder and Elbow Surgery
Richard C Chad Mather, Kevin J Bozic
Läkartidningen
Peter Aspelin, Jörgen Nordenström
© 2022 Meta ULC. All rights reserved