HIMT365_MidtermExamLessons1-7_Tucker

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Apr 3, 2024

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Johnathan Tucker HIMT 365 March 16, 2024 Midterm Exam: Lesson 1-7 1. (15 points) The three basic goals for a health care system are broad access, high quality, and affordability. Explain which of these is most need of improvement in the U.S. and why. Describe a policy change that could improve this outcome and why. Out of the three goals (access, quality, affordability), affordability is the most concerning aspect of the US healthcare system. High costs create access barriers, even with insurance, due to high deductibles and copays. Additionally, rising costs strain government budgets and businesses that provide employer-sponsored insurance. One policy change could be implementing a universal healthcare system. This would spread the financial risk across a larger population, potentially leading to lower overall costs through government negotiation with drug companies and healthcare providers. Additionally, such a system could eliminate administrative waste from private insurance companies. 2. (15 points) EpiPen is commonly used to treat severe, life- threatening allergic reactions. In 2007, the price of an EpiPen was about $60; the price in 2016 was about $600. Given the inelastic demand for this product, the result has been that the quantity demanded decreased very little and consumers simply pay higher prices for the product. Note that, while the EpiPen is a name-brand product, it has been in existence for some time and there is no patent preventing similar products from being introduced in the market. a. Suppose the government imposed a $60 price ceiling to make the product more affordable. Explain why this would not help all patients who benefit from this product. A $60 price ceiling wouldn't necessarily help all patients. Lower prices might incentivize manufacturers to reduce production or shift focus to more profitable drugs, leading to potential shortages and reduced access for those who rely on EpiPens.

b. Suppose the government did not intervene and simply allowed the EpiPen producer to keep their prices high in order to maximize profits. Explain what impact the high profits would have on this market in the long run. High profits in the short term might lead to increased research and development for improved allergy treatments. However, in the long run, it could discourage competition from generic versions or alternative products, hindering innovation and keeping prices high. c. Based on your answers to parts a and b, explain whether you think the government should intervene to force lower prices for EpiPens. Based on the potential negative consequences of both no intervention and price ceilings, some form of government intervention might be necessary. This could involve tax breaks or subsidies for manufacturers producing generic EpiPens and regulation to prevent price gouging while allowing reasonable profits to incentivize production. 3. (15 points) Suppose there are a number of treatment options for a specific, life-threatening medical disorder. The treatment costs and expected QALYs gained are given for each treatment option below: Treatmen t Cost QALYs Gained A 0 0 B 200 8 C 400 10 D 500 12 E 600 9 F 700 14 G 850 15 4.

a. Identify all dominated treatment options and explain why each is dominated. Treatment B (Cost: $200, QALYs: 8): This option is dominated by Treatment D (Cost: $500, QALYs: 12). Treatment D offers more QALYs (better outcome) for a higher but still reasonable cost increase compared to B. Treatment C (Cost: $400, QALYs: 10): This option is dominated by Treatment D (Cost: $500, QALYs: 12). Similar to B, Treatment D offers more QALYs for a manageable cost increase compared to C. Treatment E (Cost: $600, QALYs: 9): This option is dominated by Treatment F (Cost: $700, QALYs: 14). Here, Treatment F offers significantly more QALYs (better outcome) for a relatively smaller cost increase compared to E. b. Calculate the Incremental Cost-Effectiveness Ratios (ICERs) for each non-dominated treatment. ICER for Treatment D: Incremental Cost = Cost_D - Cost_A = $500 - $0 = $500 Incremental QALYs Gained = QALYs_D - QALYs_A = 12 - 0 = 12 ICER_D = Incremental Cost / Incremental QALYs Gained = $500 / 12 QALYs = $41.67 per QALY gained ICER for Treatment F: Incremental Cost = Cost_F - Cost_A = $700 - $0 = $700 Incremental QALYs Gained = QALYs_F - QALYs_A = 14 - 0 = 14 ICER_F = Incremental Cost / Incremental QALY Gained = $700 / 14 QALYs = $50.00 per QALY gained ICER for Treatment G: Incremental Cost = Cost_G - Cost_A = $850 - $0 = $850 Incremental QALYs Gained = QALYs_G - QALYs_A = 15 - 0 = 15

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