Normative Health Economics: A New Approach to Cost Benefit Analysis, Mathematical Models and Applications

Cover......Page 1
Contents......Page 6
List of Tables and Figure......Page 14
List of Appendices......Page 16
Preface......Page 22
Foreword......Page 26
1.1 Introduction......Page 28
1.2 Economic evaluation methods in normative economics......Page 30
1.3 Pharmaceutical Benefits Scheme in Australia......Page 31
1.4.1 Cost benefit analysis......Page 32
1.4.2 Cost benefit analysis in the setting of PBS in Australia......Page 34
1.5.1 Main aims......Page 35
1.5.2 Other aims of this research......Page 36
1.6.1 Research approach......Page 37
1.6.2 Methodologies of economic evaluation......Page 39
1.6.3 Operations research methods......Page 40
1.7 Contributions of this research......Page 42
1.8 Outline of the book......Page 43
2.1 Introduction......Page 46
2.2 Methodologies of economic evaluation......Page 47
2.2.2 Methodologies of economic evaluation......Page 48
2.3.1 Capital budgeting......Page 53
2.3.2 The need of extending existing cost benefit analysis......Page 54
2.4.1 Discounted cash flow analysis......Page 56
2.4.3 Net present value, cost benefit ratio and decision rules......Page 58
2.5.1 Social cost benefit analysis......Page 60
2.6 Social cost benefit analysis and health program evaluation: Recent issues......Page 61
2.6.1 Valuation of benefits and costs......Page 62
2.6.2 Quality of life measurements......Page 66
2.6.3 Incorporation of ethics and equity......Page 68
2.7 Limitations and problems of the existing methods......Page 69
2.8 Conclusion......Page 72
3.1 Introduction......Page 74
3.2 Welfare economics foundations and limitations......Page 75
3.3 Applied welfare economics framework......Page 77
3.4 History of modern welfare economics......Page 78
3.4.1 New and new[sup(2)] welfare economics assumptions......Page 80
3.5.1 A social choice theory......Page 83
3.5.2 Recent developments of welfare economics and health economics......Page 86
3.6.1 New[sup(3)] welfare economics and new[sup(3)] cost benefit analysis......Page 89
3.7 Identification of costs and benefits in new[sup(3)] cost benefit analysis......Page 93
3.8.1 Estimation of costs......Page 94
3.8.2 Valuation of benefits of health programs......Page 95
3.9 Social discount rate in new[sup(3)] cost benefit analysis......Page 98
3.10 Welfare weights in new[sup(3)] cost benefit analysis......Page 99
3.12 Public policy objectives......Page 100
3.13 New[sup(3)] cost benefit analysis of health programs......Page 101
3.14 Examples of new[sup(3)] cost benefit analysis......Page 102
3.15 Advantages of the proposed framework......Page 104
3.16 Conclusion......Page 105
4.1 Introduction......Page 106
4.2 PBS: An international perspective......Page 107
4.2.2 Ireland......Page 108
4.2.4 Spain......Page 109
4.3 The Australian PBS......Page 110
4.4 Pharmaceutical Benefits Advisory Committee......Page 111
4.4.1 PBAC submission guidelines......Page 112
4.4.2 Economic evaluation for a PBAC submission......Page 113
4.5 Pharmaceutical Benefits Pricing Authority......Page 115
4.7 PBS listing process......Page 116
4.8.1 The social security system in Australia......Page 117
4.8.2 Patient co-payment and equity issues......Page 119
4.9 Safety net arrangement......Page 120
4.10 Generic medications and pricing policy......Page 121
4.11 Special patient contributions......Page 123
4.12 Freezing pharmacy approval number......Page 124
4.15 Economic evaluation in the PBS: The need for new[sup(3)] cost benefit analysis......Page 125
4.16 Conclusion......Page 126
5.1 Introduction......Page 128
5.2.2 New[sup(3)] cost benefit analysis in the PBS setting: Essential elements......Page 129
5.2.3 General principles of numerical estimates of costs and benefits......Page 130
5.3 Cardiovascular diseases......Page 139
5.3.2 Health services consumed......Page 140
5.3.4 Cardiovascular medications: Costs......Page 141
5.3.5 Cardiovascular medications: Benefits......Page 142
5.4.1 Incidence......Page 145
5.4.3 Health services consumed......Page 146
5.4.4 Mortality and burden of diabetes......Page 147
5.4.6 Type 2 diabetes medications: Benefits......Page 148
5.5.1 Incidence and mortality......Page 150
5.5.4 Breast cancer medications: Costs......Page 151
5.5.5 Breast cancer medications: Benefits......Page 152
5.6.1 Asthma and chronic obstructive pulmonary diseases......Page 153
5.6.3 Health services consumed......Page 154
5.6.4 Burden of asthma and COPD......Page 155
5.6.6 Respiratory medications used in asthma and COPD: Benefits......Page 156
5.7 Conclusion......Page 159
6.2 General framework of the cost benefit analysis calculations......Page 160
6.2.1 The cost stream......Page 161
6.2.2 The benefit stream......Page 162
6.3.1 Hypothetical cost benefit analysis of Atorvastatin 40mg under the PBAC type of criteria......Page 164
6.3.2 Financial cost benefit analysis of Atorvastatin 40mg......Page 166
6.3.3 New[sup(3)] cost benefit analysis of Atorvastatin 40mg......Page 167
6.4.1 Hypothetical cost benefit analysis of Clopidogrel 75mg under PBAC type of criteria......Page 169
6.4.2 Financial cost benefit analysis of Clopidogrel 75mg......Page 170
6.4.3 New[sup(3)] cost benefit analysis of Clopidogrel 75mg......Page 171
6.5 Cost benefit analysis of Pioglitazone 30mg......Page 172
6.5.1 Hypothetical cost benefit analysis of Pioglitazone 30mg under PBAC type of criteria......Page 175
6.5.2 Financial cost benefit analysis of Pioglitazone 30mg......Page 176
6.5.3 New[sup(3)] cost benefit analysis of Pioglitazone 30mg......Page 177
6.6.1 Hypothetical cost benefit analysis of Letrozole 2.5mg under PBAC type of criteria......Page 178
6.6.2 Financial cost benefit analysis of Letrozole 2.5mg......Page 180
6.6.3 New[sup(3)] cost benefit analysis of Letrozole 2.5mg......Page 181
6.7 Cost benefit analysis of Fluticasone/Salmeterol 500/50......Page 182
6.7.1 Hypothetical cost benefit analysis of Fluticasone/Salmeterol 500/50 under PBAC type of criteria......Page 183
6.7.2 Financial cost benefit analysis of Fluticasone/Salmeterol 500/50......Page 184
6.7.3 New[sup(3)] cost benefit analysis of Fluticasone/Salmeterol 500/50......Page 185
6.8 Cost benefit analysis of Tiotropium......Page 186
6.8.1 Hypothetical cost benefit analysis of Tiotropium under PBAC type of criteria......Page 187
6.8.2 Financial cost benefit analysis of Tiotropium......Page 188
6.8.3 New[sup(3)] cost benefit analysis of Tiotropium......Page 189
6.9 Sensitivity analysis......Page 191
6.10 Conclusion......Page 192
7.1 Introduction......Page 194
7.2 Sector planning via project planning......Page 195
7.3.1 The issues in PBS planning......Page 196
7.3.2 Capital budgeting and operations research techniques......Page 197
7.3.4 Sector planning model and new[sup(3)] cost benefit analysis......Page 199
7.3.5 PBS planning model......Page 202
7.4 Project appraisal and planning under risk and uncertainty: Sensitivity analysis......Page 207
7.5 Implications and results......Page 209
7.6.1 Definition of sustainability......Page 210
7.6.2 Sustainability criterion in NPV analysis......Page 211
7.6.5 Sustainability modelling in this study......Page 212
7.7.1 For the six medications analysed......Page 213
7.7.3 Sustainability......Page 216
7.8 General consideration......Page 217
7.10 Implications for health sector planning......Page 218
7.12 Other issues......Page 219
7.13 International comparison......Page 220
7.14.1 Validation of model and result......Page 221
7.14.3 Generalisation......Page 222
7.15 Conclusion......Page 223
8.2.1 Justification and theoretical foundation......Page 224
8.2.3 New[sup(3)] cost benefit analysis......Page 226
8.3 Summary of findings: Implications, validation and plausibility......Page 230
8.4 Limitation and areas for further research......Page 231
8.5 Conclusion......Page 232
Appendices......Page 234
Bibliography......Page 344
Index......Page 368