Big_Picture_08 - The Big Picture: Payers, Health Insurers,...

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The Big Picture: Payers, Health Insurers, Providers, and Suppliers PAM 435 February 12, 2008
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Recap of Thursday’s Objectives Evaluate the benefits and costs of medical technologies using case studies of 4 different medical conditions: - low-birth-weight babies - depression - cardiovascular disease - colon cancer Discuss who should decide whether a medical technology is available and how much it should cost
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Key Question “Would you rather have 1950’s medical care at 1950’s medical prices, or today’s medical care at today’s medical prices?”
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Cutler’s Conclusion: Benefits of Medical Advances > Costs Cardiovascular disease 4:1 Low-birth-weight infants 5:1 Depression 7:1 All medical care combined >1:1 Benefit:Cost Ratio Medical care costs a lot, but it’s worth it: most people would prefer today’s medical care at today’s prices to yesterday’s medical care at yesterday’s prices.
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0 0.2 0.4 0.6 0.8 1 1.2 Indexed to 1.0 in 1 st quarter of 1993 1993 1995 1997 1999 2001 2003 2005 Irinotecan (1996:3) Capecitabine (1998:2) Oxaliplatin (2002:3) Cetuximab (2004:1) Bevacizumab (2004:1) 0.88 Note: (year : quarter) of entry into the market. Similar Conclusion With Colon Cancer: Quality-Adjusted Price Index, 1993-2005 Source: Lucarelli and Nicholson, 2007.
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1) Does the U.S. government estimate whether the benefits of a new medical technology are likely to exceed its costs, and keep out the “losers”? If not, should it? 2) Does the U.S. government determine the price that a new medical technology sells for? If not, should it?
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Medical Technology in the United States In the U.S., all medical treatments that improve health are approved for use. Price is not an issue in the approval decision. The government sets prices that physicians and hospitals receive for treating Medicare and Medicaid patients , which affects prices indirectly . Prices for most medical technologies are determined by the value of the product to the patient and “market forces.”
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Newer Drugs Work Better Results from Phase 3 Clinical Trials 12.5 4.7 15.6 6.7 4.4 19.4 9.1 13.1 10.6 20.3 Survival Time to Progression 5-FU/LV (A) Irinotecan + A Capecitabine Oxaliplatin + A Bev + Iri + A (Median, months) (Median, months) Source: Lucarelli and Nicholson, 2007.
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Percentage of Phase 3 Trial Patients w/ a Grade 3 or Grade 4 Side Effect Abdominal pain Diarrhea Nausea Neutropenia 5-FU-LV (A) Irinotecan + A Capecitabine Oxaliplatin + A Bev + Iri + A 10 0 30 20 40 Source: Lucarelli and Nicholson, 2007.
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Consumer Sovereignty and Capitalism Resources should be directed to their highest-valued uses, as perceived by consumers/patients. Consumers decide what goods/services to purchase based on their perceptions of value and the prices they face. No one pays more for a good than it’s worth to him/her.
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Big_Picture_08 - The Big Picture: Payers, Health Insurers,...

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