Unbiased Analysis of Today's Healthcare Issues
How can policymakers incentivize innovators to invest in new treatments for rare diseases? One solution policymakers invoked was enacting the Orphan Drug Act of 1983 which provided a number of benefits–including lower tax rates–for innovators who created drugs to treat rare diseases. Was it effective? According to a paper by Miller and Lanthier (2016), the…
The Duke-Margolis Center for Health Policy has a great overview of some of the issues related to off-label prescribing. Below is a summary of some key points from this article. What is off-label prescribing? Off-label prescribing and use can take many forms, such as use of an approved drug for an unapproved clinical indication, use at…
Typically, economists believe that subsidizing goods or services increases utilization and the total amount of funds spent on a good. The RAND Health Insurance Experiment (HIE) proved that lowering cost sharing increases total spending on medical goods. Although reducing cost sharing on all medical care is likely to increase total healthcare spending, subsidizing highly effective therapies can actually…
Yes it is true. Wang et al. (2015) report: Unlike physician and hospital services, which are universal in Canada, coverage for prescription drugs dispensed outside hospitals falls outside the Canada Health Act and provincial governments only provide public drug programs for some population groups,primarily seniors and social assistance recipients…Canada is still the only country that…
Previously, I described a paper on risk sharing agreements in the US. The National Pharmaceutical Council has a nice video from one of the authors that also summarizes the findings.
What price does Medicaid pay for drugs? The answer is, the “best price”. What is “best price?” The 1990 Omnibus Reconciliation Act (OBRA) codified that pharmaceutical manufacturers must give Medicaid steep discounts in order to receive coverage by state Medicaid agency. How big are the discounts? The answer is the larger of a fixed percentage of the…
A Health Affairs post by Dana Goldman and Darius Lakdawalla argues that dose-based pricing for pharmaceuticals is suboptimal. They make a clear distinction between typical goods, where cost and benefits are roughly proportional to quantity consumed, and pharmaceuticals. Buying two bunches of bananas naturally costs twice as much as one bunch. Twice as many bananas can…
Outcomes-based risk sharing agreements tie reimbursement for medical goods or services to patient outcomes. Despite the increasing demand from policymakers for value-based payment mechanism, risk-sharing agreements are not that comment. A paper by Garrison et al. (2015) found that there were only 148 risk sharing agreements (RSAs) worldwide between the late 1990s and 2013 and only 18 of the…
There is a belief that providing better care can reduce cost, at least somewhat. For instance, some claim that better primary care can avoid unnecessary hospitalizations. But can increased use of prescription drugs lead to decreased medical spending? This is exactly what a paper by Roebuck et al. (2015) find. They write: We found that a 1…
What is international reference pricing (IRP)? IRP is system whereby a country states that they will pay no more than the price paid by another country or a basket of countries. In theory, countries could also regulate drug prices by saying that they would not pay more than X% of country A’s price or X%…