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Policy 1:
In the podcast presented by B2 about Vinay Prasad on Cancer Drugs, it was presented that the market for pharmaceutical drugs is not an actual market, and that cancer drugs have such a wide variety
that markets are able to thrive off of them. One argument for this policy is the use of incentives. Medical
companies and pharmaceutical companies use incentives, such as profits, to incentivize people into making these medications, which may not even be effective drugs, but they do it because it results in a large amount of revenue, and profits are attractive. One argument against this policy is the argument of
trade-offs. In this case, the trade-off would be the choice between making more revenue or saving a patient’s life. If pharmaceutical companies choose to focus on their revenue, they are trading off saving a cancer patients life to create a new drug. If companies are paying money for the drugs, that are essentially paying for a patient’s life extension, or paying for your own life. Policy 2
: In the podcast presented by A4 about medical conservatives, the policy talked about was that drug companies should be forced to place money into a public resource who would then design and run the trails. The goal is to consider the costs, benefits, and economics in terms of patient outcomes. One argument for this policy is market competition and monopoly power. When you look at patient outcomes, you are awarding the patient which provides the innovator with monopoly power, which means they are able to limit the availability of the product and set prices that are above the marginal cost of production. One argument against this policy is market pricing and producers. In the market, high
prices tell producers to do more, and people spend a lot of money on healthcare. Prices, however, only tell producers how much to allocate their resources, it will not tell producers how scarce a product is. If the price isn’t allocated, something else will be, such as the willingness to wait, and who you know in the
medical field. Policy 3
: In the podcast presented by C1 about Employer-sponsored Health Insurance, the problem of high costs associated with physicians providing unnecessary test/procedures was presented. To solve this, it was suggested to transition from fee-for-service care to value-based care. One argument for this policy is that value-based care lowers healthcare costs by using marginal analysis. By doing so, healthcare providers should only increase the payment of a patients visit (increase marginal cost) only if it will increase patient outcome (marginal benefit). However, if the cost of the procedure outweighs the benefit, meaning the patient wouldn’t benefit from the procedure, then the test should not be performed. By doing so, providers will realize that they do not have to order tests/procedures for their patients if it doesn’t benefit them. One argument against this policy is that fee-for-service incentivizes providers to order additional tests and procedures by associating additional income for each additional test and procedure that is ordered. Since this generates more income for the providers, it is a more attractive model, and therefore physicians/providers will want to use this model more, than a model that will not reward them monetarily.
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State
Time Periods
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Post-2005
State Beta
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$1400
State Gamma
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$1700
a. decreased; $400
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c. increased; $400
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State
Time Periods
Pre-2005
Post-2005
State Beta
$1000
$1400
State Gamma
$1500
$1700
a. lower
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Question 7 options:
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DTC makes patients aware of new remedies.
DTC can put a strain on doctor-patient relationship when patients demand some drugs that are not necessary or not the best options.
DTC have the potential to drive up spending on drugs and exacerbate moral hazard.
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DTC makes patients aware of new remedies.
DTC can put a strain on doctor-patient relationship when patients demand some
drugs that are not necessary or not the best options.
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Gamma is on Insurance G. Suppose further that both governments use government-set price controls.
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want to study the effect of offering coverage for this drug had an impact on health expenditures. You have average health expenditures for State Beta
and Gamma prior to 2005 and post-2005. Using the information in the table below, a quick difference-in-difference calculation suggests covering this
drug
health expenditures by approximately.
Time Periods
Pre-2005 Post-2005
$1000 $1400
$1500 $1700
State
State
Beta
State
Gamma
decreased: $400
increased; $200
decreased: $200
increased; $400
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Percent of population
Deaths Due to
Deaths due to
Marginal
Marginal Cost
vaccinated
Disease
vaccine side
Benefit of the
of the Vaccine
effects
Vaccine (extra
(extra deaths
lives saved by
due to side
vaccine)
effects)
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200
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NA
NA
10%
180
10
20%
160
25
30%
140
55
40%
120
95
50%
100
140
60%
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