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Background/Aims: There is growing interest in the use of adaptive designs to improve the efficiency of clinical trials. We apply a Bayesian decision-theoretic model of a sequential experiment using cost and outcome data from the ProFHER pragmatic trial. We assess the model’s potential for delivering value-based research. Methods: Using parameter values estimated from the ProFHER pragmatic trial, including the costs of carrying out the trial, we establish when the trial could have stopped, had the model’s value-based stopping rule been used. We use a bootstrap analysis and simulation study to assess a range of operating characteristics, which we compare with a fixed sample size design which does not allow for early stopping. Results: We estimate that application of the model could have stopped the ProFHER trial early, reducing the sample size by about 14%, saving about 5% of the research budget and resulting in a technology recommendation which was the same as that of the trial. The bootstrap analysis suggests that the expected sample size would have been 38% lower, saving around 13% of the research budget, with a probability of 0.92 of making the same technology recommendation decision. It also shows a large degree of variability in the trial’s sample size. Conclusions: Benefits to trial cost stewardship may be achieved by monitoring trial data as they accumulate and using a stopping rule which balances the benefit of obtaining more information through continued recruitment with the cost of obtaining that information. We present recommendations for further research investigating the application of value-based sequential designs.

Managed entry agreements (MEAs) have been used for several years, with the aim of curbing the growth of pharmaceutical expenditure and enhancing patient access to innovation. Yet, much remains to be understood about their economic implications. This paper studies the impact of MEAs on list prices, that is, prices before the deduction of any discount. Using a theoretical model, we show that, under most price setting regimes, the introduction of an MEA leads to a higher list price. This is confirmed by our empirical analysis of a sample of 156 medicines in six countries, providing a conservative estimate of the increase in price due to the MEA of 5.9%. A relevant policy implication is that payers may overestimate the financial gains that can be achieved through this tool.

We utilize a large administrative dataset of sickness leave in Italy (a) to investigate whether private firms are more effective than the public insurer in choosing who to monitor and (b) to study the correlation between potentially opportunistic behavior and the observable characteristics of the employee. We find that private employers are more likely to select into monitoring employees who are fit for work despite being on sick leave, if the public insurer is not supported by any data-driven tool. However, the use of a scoring mechanism, based on past records, allows the public insurer to be as effective as the employer. This result suggests that the application of machine learning to appropriate databases may improve the targeting of public monitoring to detect opportunistic behavior. Concerning the association between observable characteristics and potentially opportunistic behavior, we find that males, employees younger than 50, those on short leaves, or without a history of illness are more likely to be found fit for work.

Since the early 80s, incentives have been introduced to stimulate R&D for rare diseases. We develop a theoretical model to study the impact of push and pull incentives on the intensive and extensive margin of optimal R&D investments. The model describes the mechanisms by which the type of incentives provided may favor R&D for orphan diseases with comparatively high prevalence. In our empirical analysis, we merge data on orphan drug designations by the Food and Drug Administration with Orphanet data on disease characteristics. In line with the theoretical results, we find evidence supporting the idea that the incentives adopted may have contributed substantially to widening the gap between more and less rare diseases classified as orphan. Our theoretical and empirical findings together suggest that, if providing some therapeutic option to patients with very rare diseases is a priority, a revision of the current system of incentives should be considered.

We study the determinants of redistribution at the municipal level in the context of public childcare in Italy. Within a substantially homogeneous legislative framework, different municipalities autonomously define how participation fees vary with a compound indicator of income and wealth (ISEE), thus redistributing resources across households using the service. The nearly one hundred municipalities we take into account exhibit wide heterogeneity in redistributive attitudes. We find statistically significant correlations of these with a number of individual characteristics of policy-makers and municipalities, but not with those of the ex-ante distribution of income, which should be central according to both normative and positive theory. Since the price of public childcare is subsidized, resources are also redistributed from tax-payers to users. The evidence that we find is consistent with the hypothesis that this type of redistribution is a public good.

This paper explores the inequality related to the lifetime redistributive impact of public sector intervention across living generations. While fiscal policies are typically assessed with respect to the inter-personal dimension of inequality, they may well have heterogeneous impacts across different cohorts, thus raising the issue of intergenerational fairness. We take the case of Italy over the period 1990-2008 to show how such possibly unfair effects can be measured by adapting the methods developed in the context of the generational accounting literature. Importantly, we aim to work on a comprehensive approach, so that reforms involving several taxation and spending programmes, possibly implemented over several years, can be assessed. We find that a significant improvement in public finance sustainability came at the price of an unequal distribution of sacrifices across living generations, with younger cohorts contributing far more over their residual life-cycle.

The paper studies the incentive for providers to invest in new health care technologies under alternative payment systems, when the patients' benefits are uncertain. If the reimbursement by the purchaser includes both a variable (per patient) and a lump-sum component, efficiency can be ensured both in the timing of adoption (dynamic) and the intensity of use of the technology (static). If the second instrument is unavailable, a trade-off may emerge between static and dynamic efficiency. In this context, we also discuss how the regulator could use control of the level of uncertainty faced by the provider as an instrument to mitigate the trade-off between static and dynamic efficiency. Finally, we calibrate the model to study a specific technology and estimate the cost of a regulatory failure.

In the recent past, pharmaceutical expenditure has been steadily increasing, but the productivity of the sector—measured as the number of New Molecular Entities (NMEs)—has been decreasing. In this chapter we review and analyse the price regulation policies that are currently used by regulators worldwide and we will describe the salient features of these policies from a public health point of view. We will also discuss this in terms of their impact on innovation.

The vascular access guidelines recommend that arteriovenous fistulas (AVFs) with access dysfunction and an access blood flow (Qa)300-500 mL/min be referred for stenosis imaging and treatment. Significant (50%) stenosis, however, may be detected in a well-functioning AVF with a Qa500 mL/min, too, but whether it is worth correcting or not remains to be seen.In October 2006, we began an open randomized controlled trial enrolling patients with an AVF with subclinical stenosis and Qa500 mL/min, to see how elective stenosis repair [treatment group (TX)] influenced access failure (thrombosis or impending thrombosis requiring access revision), or loss and the related cost compared with stenosis correction according to the guidelines, i.e. after the onset of access dysfunction or a Qa400 mL/min [control group (C)]. An interim analysis was performed in July 2012, by which time the trial had enrolled 58 patients (30 C and 28 TX).TX led to a relative risk of 0.47 [95% confidence interval (CI): 0.17-1.15] for access failure (P = 0.090), 0.37 [95% CI: 0.12-0.97] for thrombosis (P = 0.033) and 0.36 [95% CI: 0.09-0.99] for access loss (P = 0.041). In the setting of our study (in which all surgery was performed as in patient procedure) no significant differences in costs emerged between the two strategies. The mean incremental cost-effectiveness ratio for TX was €282 or €321 to avoid one episode of thrombosis or access loss, respectively.Our interim analysis showed that elective repair of subclinical stenosis in AVFs with Qa500 mL/min cost-effectively reduces the risk of thrombosis and access loss in comparison with the approach of the Kidney Disease Outcomes Quality Initiative (KDOQI) guidelines, raising the question of whether the currently recommended criteria for assessing and treating stenosis should be reconsidered.

Recent years have witnessed much progress in the incorporation of economic considerations into the evaluation of public health interventions. In England, the Centre for Public Health Excellence within the National Institute for Health and Care Excellence works to develop guidance for preventing illness and assessing which public health interventions are most effective and provide best value for money...

The paper studies the impact of alternative reimbursement systems on two provider decisions: whether to adopt a technology whose provision requires a sunk investment cost and how many patients to treat with it. Using a simple economic model we show that the optimal pricing policy involves a two-part payment: a price equal to the marginal cost of the patient whose benefit of treatment equals the cost of provision, and a separate payment for the partial reimbursement of capital costs. Departures from this scheme, which are frequent in DRG tariff systems designed around the world, lead to a trade-off between the objective of making effective technologies available to patients and the need to ensure appropriateness in use.

The paper is a contribution to the study of the redistributive impact of public sector intervention across living generations. We aim to work on a comprehensive approach, so that reforms involving several taxation and spending programmes, possibly implemented over several years, may be assessed. By adapting methods from the generational accounting literature, we investigate the impact on fairness between living generations of fiscal policies undertaken in Italy between 1990 and 2008. Large intergenerational differences exist in net tax rates calculated over the residual lifetime horizon, which tend to be substantially higher for young generations. Pension reforms introduced in the '90s play a major role in explaining these differences. We conclude that a significant contribution to the sustainability of these reforms might have come at the price of an unequal distribution of sacrifices across living generations. Awareness of these differences could help in designing additional consolidation efforts in the perspective of achieving intergenerational fairness in Italy.

This paper aims to incorporate option values into the economic evaluation of positron emission tomography (PET). The installation of this equipment requires a substantial capital outlay, while uncertainty, especially regarding the possibility of new applications, is relevant, because the evidence available is still insufficient. Treating the number of examinations to provide as a stochastic variable, the cost-effectiveness analysis is extended to include the value of flexibility both with respect to the timing of investment and to the size of the project. The threshold values of the stochastic variable that ensure the cost-effectiveness of a PET scan according to this approach are obtained as a function of the value of the incremental effectiveness.

This paper studies the optimal timing of investment in innovative technology by health care providers competing for patients, in a real option framework. The innovative technology provides a better health outcome, thus attracting a larger number of patients. On the other hand, at the early stages of innovation it is assumed to involve a larger degree of uncertainty and higher operational costs. Since further development of the technology is expected to improve eciency over time, each provider faces a trade-o between gaining a competitive advantage by investing first, and fully exploiting the option to delay investment under uncertainty. The model is set up so that the role of the payment system on investment decisions may be investigated. This turns out not to be always intuitive. In particular, it is showed that a more generous scheme does not always induce to anticipate investment. By comparing the competitive solution with the social optimal timing, some policy implications are finally discussed.

Background After implementation of the PREDICA annual chest X-ray (CXR) screening program in smokers in the general practice setting of Varese-Italy a significant reduction in lung cancer-specific mortality (18 %) was observed. The objective of this study covering July 1997 through December 2006 was to estimate the cost-effectiveness of this intervention. Methods We examined detailed information on lung cancer (LC) cases that occurred among smokers invited to be screened in the PREDICA study (Invitation-to-screening Group, n = 5815 subjects) to estimate costs and quality-adjusted life-years (QALYs) from LC diagnosis until death. The control group consisted of 156 screening-eligible smokers from the same area, uninvited and unscreened, who developed LC and were treated by usual care. We calculated the incremental net monetary benefit (INMB) by comparing LC management in screening participants (n = 1244 subjects) and in the Invitation-to-screening group versus control group. Results The average number of QALYs since LC diagnosis was 1.7, 1.49 and 1.07, respectively, in screening participants, the invitation-to-screening group, and the control group. The average total cost (screening + management) per LC case was higher in screening participants (€17,516) and the Invitation-to-screening Group (€16,167) than in the control group (€15,503). Assuming a maximum willingness to pay of €30,000/QALY, we found that the intervention was cost-effective with high probability: 79 % for screening participation (screening participants vs. control group) and 95 % for invitation-to-screening (invitation-to-screening group vs. control group). Conclusions Based on the PREDICA study, annual CXR screening of high-risk smokers in a general practice setting has high probability of being cost-effective with a maximum willingness to pay of €30,000/QALY.