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Health Econ > ch7 > Flashcards

ch7 Flashcards

1
Q

What are the six steps in the lifecycle of a new drug?

A
  1. find chemical compound that may treat a disease
  2. test on animals
  3. test on people
  4. get approved for sale by FDA
  5. Company has legal monopoly protected by patent
  6. After patent it up, other companies can make drug, lowering profits
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2
Q

The life cycle of a new drug is costly and complex, thus it is hard to find a promising ________ in the first place

A

chemical

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3
Q

Only _______ of drugs that enter phase 1 pass to phase 3

A

21.5%

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4
Q

The whole process can cost _______ million or more to bring a drug to the point of approval

A

500

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5
Q

Only the top ______ of drugs manage to make back money even with the patent

A

30%

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6
Q

What are the 3 downsides to stronger patents?

A
  1. customers pay monopoly prices for a longer time
  2. less incentive for further innovation by same company
  3. legal barriers to subsequent innovation by another company
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7
Q

What is the innovation vs. access tradeoff?

A

A U.S. Patent system that creates a monopoly for medicines (17 years), allowing for substantial profit, and creating an incentive for innovation. this leads to higher prices, which lowers the number of people who can access the treatment

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8
Q

What is a potential incentive created by the innovation vs access tradeoff?

A

Rent seeking
maintaining the status quo (keeping out competition without innovation)

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9
Q

What is the regulation vs speed of new treatments tradeoff?

A

Science based regulation should lower the risk of harmful medicine getting out to the public, however good treatments might be held up do to too strong of regulations. people that could be saved might not be saved from taking to long.

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10
Q

Draw a graph that demonstrates the innovation vs access tradeoff.

A

Skeleton 7-3

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11
Q

discoveries that result when innovators change their research agenda in response to profit opportunities?

A

Induced innovation

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12
Q

What are some examples of ways pharma responds to incentives caused by induced innovation?

A
  1. changing demographics (investment in drugs follows population trends)
  2. funding by the government, nonprofits, and academic institutions (incentives thru direct funding)
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13
Q

what are operation warp speed for the covid vaccine and the large-scale production of penecillin during ww2 examples of?

A

induced innovation through funding

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14
Q

what is the problem with induced innovation?

A

it takes the focus off low-profit but harmful problems

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15
Q

what are orphan diseases?

A

diseases that are rare or occur in developing countries that receive less attention from researchers, because there is less profit to be made

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16
Q

what is the tradeoff caused by FDA regulation?

A

safety and quality vs. speed of innovation

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17
Q

describe the issue of Thalidomide & Europe?

A
  1. prescribed to pregnant women with morning sickness
  2. caused birth defects in over 10000 newborns
  3. pulled from shelves and promoted stricter regulation
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18
Q

What was the Kefauver-Harris Amendment in the US (1962)?

A
  1. companies must prove new drugs are safe through clinical trials
  2. stricter regulations led to lower number of new chemical entities on market
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19
Q

type of permissive regulation in which a bad drug is approved -> people die from bad drugs

A

type I error

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20
Q

type of restrictive regulation which a good drug is rejected or delayed -> people die waiting

A

type II error

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21
Q

phase III trials do not have _________. thus we must ___________.

A

complete information about a drug.
making informed decisions based on statistical probabilities

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22
Q

draw a table based on phase III trials.

A

Skeleton 7.5

23
Q

choosing T* will always lead to what

A

some error

24
Q

what does the threshold “T” represent

A

the level of evidence required to determine whether a drug will be approved

25
Q

the ROC (rate of change maybe??) plots what?

A

the tradeoff between type I and type II errors

26
Q

how do regulators balance social welfare and potential harm?

A

incentive to avoid type 1 errors because of media attention (keep T high)
type II erorrs rarely get media attention because they are hard to catch

27
Q

what type of error is a false positive?

A

type I error

28
Q

For false positive situations more accurate tests __________ which lowers the __________ error and prevents falsely saying that someone has the condition

A

increase the T
type I

29
Q

false negative situations, inaccurate tests _______ which means that more people will be inaccurately said to NOT have a condition they actually do

A

lower the T

30
Q

Healthcare costs have __________ faster than _________ for decades.

A

increased
faster

31
Q

in 1960 Americans spent _____ on healthcare

A

1/20

32
Q

In 2010, 1 in every ___ dollars in the american economy was spent on ___________

A

6
medical care

33
Q

The amount of money spent by americans on healthcare total at ________, and _______ per person

A

$2.6 trillion
$8,402

34
Q

in the last 30 years how does US medical care CPI compare to overall inflation

A

medical care CPI has remained consistently higher than inflation

35
Q

what are the two drivers of rising prices of healthcare?

A

rising costs
rising demand

36
Q

why are there rising costs in healthcare?

A
  1. monopoly/oligopoly in pharma &
    hospitals
  2. expensive new
    technology/treatments; medical
    arms Race
  3. unnecessary treatments
  4. labor staff resource costs
37
Q

why is there rising demand in healthcare?

A
  1. aging population
  2. unhealthy population
  3. physician induced demand
  4. more insurance coverage
  5. increasing quality
38
Q

draw a graph depicting supply/cost of rising healthcare

A

skeleton 7-8

39
Q

draw a graph depicting demand of rising healthcare

A

skeleton 7-8

40
Q

what is the Dartmouth Atlas and what has it shown

A

tracks medicare spending across the united states. there is tremendous regional variation

41
Q

patients with the same diagnosis’s, can receive dramatically different care depending on?

A

where they live

42
Q

is there a corolation between more expensive treatments and health outcomes

A

more spending does not lead to better health

43
Q

what regional differences REALLY EXPLAIN higher expenditures?

A

differing health habits across areas and differences in physician/hospital actions

44
Q

Usage depends greatly on the supply of a service - physicians/hospitals may be recommending care that is expensive and uses many hospital resources but is only marginally useful

A

Supply sensitive care

45
Q

a doctor’s reliance on MRI technology may depend on?

A

how accessible an MRI Machine is to them

46
Q

____________ can also include hospitalizations and stays in a intensive care unit

A

supply-sensitive care

47
Q

______________ shows evidence of a positive correlation between number of ________ and number of ___________. suggestive evidence that the variation is at least in part due to technology _________.

A

Darmouth Atlas
hospital beds
hospital discharges
overuse

48
Q

differences can be shown via the health production function (HPF), which plots relationship between ___________ and maximal level of __________

A

expenditures
obtainable health

49
Q

HPF increases with health ________________

A

expenditures

50
Q

HPF has ___________ returns to health care spending

A

diminished

51
Q

Draw the Health Level vs. Expense graph, where Miami and La Crosses lie on the same HPF, then Miami could be achieving the same level of health for much lower expenditures

A

Skeleton 7-11 graph 1

52
Q

Draw the Health Level vs. Expense graph, where Miami and La Crosse lie on different HPF

A

Skeleton 7-11 graph 2

53
Q

Whether Miami’s higher expenditures reflects wasteful spending depends on?

A

whether Miami and La Crosse share the same HPF

54
Q

If Miami and La Crosse lie on different HPF, they are both investing in healthy optimally given local charicteristics and constraints, then?

A

variation in spending does not necessarily represent wasteful spending or technology overuse

Health Econ (8 decks)

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