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In several countries, health care services are provided by public and/or private subjects, and they are reimbursed by the government, on the basis of regulated prices (in most countries, diagnosis-related group). Providers take prices as given and compete on quality to attract patients. In some countries, regulated prices differ across regions. This paper focuses on the interdependence between regional regulators within a country: It studies how price setters of different regions interact, in a simple but realistic framework. Specifically, we model a circular city as divided in two administrative regions. Each region has two providers and one regulator, who sets the local price. Patients are mobile and make their choice on the basis of provider location and service quality. Interregional mobility occurs in the presence of asymmetries in providers' cost efficiency, regulated prices, and service quality. We show that the optimal regulated price is higher in the region with the more efficient providers; we also show that decentralisation of price regulation implies higher expenditure but higher patients' welfare. [ABSTRACT FROM AUTHOR]

This paper investigates and quantifies the impact of parallel trade in markets for pharmaceuticals. The paper develops a structural model of demand and supply using data on price, sales, and the characteristics of statins in Denmark and simulates outcomes under a complete ban of parallel imports, keeping other regulatory schemes unchanged. There are two sets of key results. The first set focuses on price effects. On average, prices increase more in markets where the molecule has lost patent protection; wholesale prices for both generic and original products increase after competition from parallel importers is removed, but the final price paid by consumers (after deducting reimbursement) increases more for original products than for generics because most changes in wholesale prices are absorbed by the prevailing reimbursement rules. The second set of results reports the effects on market participants. My model takes into consideration consumers' preferences, allowing them to substitute between products. Prohibiting parallel imports induces consumers to substitute towards original products for which they have stronger preferences. In sum, banning parallel imports leads to (a) an increase in variable profits for original producers and a decrease for generic firms, (b) an increase in governmental health-care expenditures, and (c) a decrease in the welfare of Danish patients and firms. [ABSTRACT FROM AUTHOR]

Drug-specific clinical and health economic and outcomes research (HEOR) publications have amassed, but their effect on drug sales is largely unknown. We estimated the impact of publications on pharmaceutical sales in 3 markets (statins, rheumatoid arthritis, and asthma drugs) with varying generic competition. An event-study approach with fixed effects and difference-in-fixed-effects modeling was used to estimate the causal effects of drug-specific publications on subsequent quarter's drug-specific sales and volume. High-impact clinical and HEOR publications have significant positive effects on sales (mediated through price) and volume in the statin market (high generic competition). High-impact clinical publications have a significant positive effect on sales (mediated through volume) in low-generic competition market (asthma). The effects of publications in the rheumatoid arthritis market (no generic competition) on sales were null. Manufacturers' investment in clinical and HEOR publications needs to be strategic and should be anticipated and complemented by public investments in such studies. [ABSTRACT FROM AUTHOR]

We analyze a game-theoretic model of a risk-sharing agreement between a payer and a pharmaceutical firm. The drug manufacturer chooses the price while the payer sets the rebate rate and decides which patients are eligible for treatment. The manufacturer provides the payer with a rebate for nonresponding patients. We generalize on the existing literature, by making both price and rebate rate decision variables, allowing the rebate rate to be different from 100%, and incorporating 2 types of administrative costs. We identify a threshold for the expected probability of response for classifying the drug as a mass-market or niche type and investigate the optimal solutions for both types. We also identify a threshold for the rebate rate at which the net benefits become equal for responding and nonresponding patients. Through numerical examples, we examine how various parameters impact the drug manufacturer's and the payer's optimal solution. [ABSTRACT FROM AUTHOR]

Two recent studies have provided a comprehensive review/summary of a large number of estimates of the price elasticity of food consumption using a meta-regression approach. In this letter, we introduce a way of removing the income effect from these elasticities to recover the compensated elasticities. Although the income effect is small, the compensated elasticities vary by income group. Both types of elasticity should possibly be considered when assessing the impact of policy changes on food consumption. Copyright © 2015 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

Successful supply-side interdictions into illegal drug markets are predicated on the responsiveness of drug prices to enforcement and the price elasticity of demand for addictive drugs. We present causal estimates that targeted interventions aimed at methamphetamine input markets ('precursor control') can temporarily increase retail street prices, but methamphetamine consumption is weakly responsive to higher drug prices. After the supply interventions, purity-adjusted prices increased then quickly returned to pre-treatment levels within 6-12 months, demonstrating the short-term effects of precursor control. The price elasticity of methamphetamine demand is -0.13 to -0.21 for self-admitted drug treatment admissions and between -0.24 and -0.28 for hospital inpatient admissions. We find some evidence of a positive cross-price effect for cocaine, but we do not find robust evidence that increases in methamphetamine prices increased heroin, alcohol, or marijuana drug use. This study can inform policy discussions regarding other synthesized drugs, including illicit use of pharmaceuticals. Copyright © 2015 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

We use counterfactual analysis techniques to evaluate the impact of a $2 minimum unit price (MUP) on the distribution of Australian (Victorian) household off-trade alcohol purchases. Our estimates suggest that a $2 MUP significantly reduces the purchases of at-risk households by up to -0.92 [90% CI: -1.55, -0.28] standard drinks at the highest quantiles and has substantially less effect on households purchasing at light and moderate levels. A $2 MUP may reduce the proportions of male and female shoppers purchasing at the public health threshold of more than two standard drinks per household member per day by -3.03 [90% CI: -4.83, -1.22] percentage points (relative variation: -17%); and -1.85 [90% CI: -2.60, -1.10] percentage points (relative variation:-22%), respectively. Implementing an MUP on alcohol thus promises significant positive impacts on public health. Copyright © 2016 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

This paper presents a new empirical study of the effects of televised alcohol advertising and alcohol price on alcohol consumption. A novel feature of this study is that the empirical work is guided by insights from behavioral economic theory. Unlike the theory used in most prior studies, this theory predicts that restriction on alcohol advertising on TV would be more effective in reducing consumption for individuals with high consumption levels but less effective for individuals with low consumption levels. The estimation work employs data from the National Longitudinal Survey of Youth, and the empirical model is estimated with quantile regressions. The results show that advertising has a small positive effect on consumption and that this effect is relatively larger at high consumption levels. The continuing importance of alcohol taxes is also supported. Education is employed as a proxy for self-regulation, and the results are consistent with this assumption. The key conclusion is that restrictions on alcohol advertising on TV would have a small negative effect on drinking, and this effect would be larger for heavy drinkers. Copyright © 2015 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

A cluster randomized experiment was undertaken testing two sets of interventions encouraging enrollment in the Individually Paying Program (IPP), the voluntary component of the Philippines' social health insurance program. In early 2011, 1037 unenrolled IPP-eligible families in 179 randomly selected intervention municipalities were given an information kit and offered a 50% premium subsidy valid until the end of 2011; 383 IPP-eligible families in 64 control municipalities were not. In February 2012, the 787 families in the intervention sites who were still IPP-eligible but had not enrolled had their vouchers extended, were resent the enrollment kits and received SMS reminders. Half the group also received a 'handholding' intervention: in the endline interview, the enumerator offered to help complete the enrollment form, deliver it to the insurer's office in the provincial capital, and mail the membership cards. The main intervention raised the enrollment rate by 3 percentage points (ppts) (p = 0.11), with an 8 ppt larger effect (p < 0.01) among city-dwellers, consistent with travel time to the insurance office affecting enrollment. The handholding intervention raised enrollment by 29 ppts (p < 0.01), with a smaller effect (p < 0.01) among city-dwellers, likely because of shorter travel times, and higher education levels facilitating unaided completion of the enrollment form. Copyright © The World Bank Health Economics © 2015 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

Many publicly funded health systems use activity-based financing to increase hospital production and efficiency. The aim of this study is to investigate whether price changes for different treatments affect the number of patients treated and the mix of activity provided by hospitals. We exploit the variations in prices created by the changes in the national average treatment cost per diagnosis-related group (DRG) offered to Norwegian hospitals over a period of 5 years (2003-2007). We use the data from Norwegian Patient Register, containing individual-level information on age, gender, type of treatment, diagnosis, number of co-morbidities and the national average treatment costs per DRG. We employ fixed-effect models to examine the changes in the number of patients treated within the DRGs over time. The results suggest that a 10% increase in price leads to about 0.8-1.3% increase in the number of patients treated for DRGs, which are medical (for both emergency and elective patients). In contrast, we find no price effect for DRGs that are surgical (for both emergency and elective patients). Moreover, we find evidence of upcoding. A 10% increase in the ratio of prices between patients with and without complications increases the proportion of patients coded with complications by 0.3-0.4 percentage points. [ABSTRACT FROM AUTHOR]

In most activity-based financing systems, payers set prices reactively based on historical averages of hospital reported costs. If hospitals respond to prices, payers might set prices proactively to affect the volume of particular treatments or clinical practice. We evaluate the effects of a unique initiative in England in which the price offered to hospitals for discharging patients on the same day as a particular procedure was increased by 24%, while the price for inpatient treatment remained unchanged. Using national hospital records for 205,784 patients admitted for the incentivised procedure and 838,369 patients admitted for a range of non-incentivised procedures between 1 December 2007 and 31 March 2011, we consider whether this price change had the intended effect and/or produced unintended effects. We find that the price change led to an almost six percentage point increase in the daycase rate and an 11 percentage point increase in the planned daycase rate. Patients benefited from a lower proportion of procedures reverted to open surgery during a planned laparoscopic procedure and from a reduction in long stays. There was no evidence that readmission and death rates were affected. The results suggest that payers can set prices proactively to incentivise hospitals to improve quality. [ABSTRACT FROM AUTHOR]