Timely, Cheap, or Risk-Free? The Effect of Regulation on the Price and Availability of New Drugs.

The high level of regulation of innovative drugs on the market, which is necessary to protect consumers, produces important effects on drug availability and innovation. In public healthcare systems, the need to curb prices comes from expenditure considerations. The aim of price regulation is to obtain a more equitable allocation of the value of an innovative drug between industries and patients (by reducing prices to make drugs more affordable), but it may also reduce access. (In the listing process, the industry may find it more convenient to limit commercialisation to profitable subgroups of patients.) Furthermore, with the advent of personalised medicine, there is another important dimension that has to be considered, namely, incentives to invest in drug personalisation. In this paper, we review and discuss the impact of different pricing rules on the expenditure and availability of new drugs.

The illness trap: The impact of disability benefits on willingness to receive HCV treatment.

Health care is assumed to be a primary good, implying that patients should always demand or accept treatments that may enhance their life expectancy and quality of life, especially if the risks associated with the treatment are low. We argue that, especially in countries with a well-developed welfare state, treating an invalidating condition may lead to opportunity costs in terms of reduced disability allowances that may represent a barrier to treatment for low-income individuals. We test this hypothesis by applying a recursive bivariate probit approach to population data from an ad hoc administrative database for Liguria (an Italian administrative region). The dataset includes data for more than 8 thousand people affected by hepatitis C Virus (HCV) infection between 2013 and 2020. After the discovery of new direct-acting antivirals (DAAs) in 2014, HCV eradication may now be possible. However, despite the national and international efforts, several patients diagnosed with HCV choose not to undergo drug therapy despite the adverse consequences for their personal health and relevant costs to the national health system. We show that five years after the implementation of the new drugs, approximately 41 % of the diagnosed population in Liguria remains untreated. This percentage increases to 64 % within the subgroup entitled to disability benefits and characterized by lower income levels. The "illness trap" effect is more substantial for older people but also low-income patients. Moreover, we find that this effect is higher in patients with an intermediate range of comorbidities; indeed, these patients are at a higher risk of losing economic benefits if they recover from HCV. These results suggest the need for healthcare policies addressing this distorting effect when designing benefit programs and granting financial benefits to patients.

The impact of conventional cost-effectiveness analysis on pricing dynamics in the market of new medicines: a proposed countervailing approach.

BACKGROUND: Countries using cost effectiveness ratio as a decision tool for price and reimbursement decisions still witness accelerating price increases. The objective of this paper is to propose a change in the application of the incremental cost effectiveness ratio as a criterion for price policy. RESEARCH DESIGN: We develop a model that sets a price for marginal effectiveness equal to the marginal willingness to pay, but it reimburses average effectiveness according to the size of increased QALY gain. RESULTS: This new formula also allows to split the economic value of drug between patients and the industry and creates a reward to invest into QALY gains. We show some empirical data of the new prices derived from the application of the new formula, as well as the implications in terms of the consumer and manufacturer´s surplus based on two potential scenarios of the incentives generated by this new formulation. DISCUSSION: We propose that small increases in life expectancy be priced differently from substantial as a way of containing the price dynamics. CONCLUSIONS: A change in the application of the ICER threshold will help to reduce the price pressure on public budgets.

Adherence during COVID-19: The role of aging and socio-economics status in shaping drug utilization.

Our study investigates the potential impact that COVID-19 and lockdown restrictions may have had on drug utilization and the role of patient age and education in reshaping it. We focused on patients affected by diabetes mellitus, who are likely to suffer a higher degree of morbidity and mortality due to COVID-19. We used a bi-monthly administrative panel dataset from January 2019 to December 2020 from Liguria (Italy), one of the regions with the highest number of individuals over the age of 65 in Europe. The results demonstrated that, after the initial shock, when patients tried to increase their personal stock of drugs to overcome the risk of possible additional barriers generated by the coronavirus, the hoarding effect almost disappeared. Adherence has drastically reduced during the COVID-19 pandemic and has never reached pre-COVID levels again. Older and poorly educated patients seem to have suffered more from the restrictions imposed by the lockdown and fear of contagion and they may be the ideal target group when considering possible policy interventions to improve adherence.

Is there a bias in patient choices for hospital care? Evidence from three Italian regional health systems.

Patients choice is at the core of competition in hospital care. In spite of a flourishing literature, little is known about the true process leading patients to choose a specific provider. Most models in this literature assume - without testing - that hospitals are perceived to be homogeneous providers. In this article we take a different direction. We assume that patients have a bias towards some types of hospitals, we test this hypothesis and show which attributes determine this bias. We exploit the characteristic of Italian health care organization, where devolution has allowed regional systems to choose the level of competition and the private-public hospitals mix. We estimate conditional logit models for hip replacement admissions in three regions (Lombardy, Veneto, and Emilia-Romagna) over the period 2014- 2016. We show that, depending on the competition framework (peculiar to each region) patients are aware that some hospitals are best performers in their area and are willing to travel more to be admitted there. This is particularly true for regional health care systems where competition between public and private providers is well developed. Our model provides interesting policy implications: a) the idea that hospitals are different in patients perception should be kept in mind in the architecture of the market for hospital care; b) clinical quality as a driver to patients choice seems to work better in a less regulated competition settings.

Waste-to-Energy and recycling: The role of plant ownership and waste mobility.

This paper proposes a stylized two-region model to study the joint effect of waste mobility and WtE plant's ownership on waste disposal choices, welfare and environmental quality. The aggregate level of recycling emerging from the mobility/private ownership scenario is excessive relative to the first best. By contrast, under waste autarky, the institutional configuration of the WtE plant turns out to be neutral and the resulting level of recycling is generally suboptimal. The analysis further shows that mobility may not be Pareto improving for both regions, and that the engagement of local authorities in the decision of how much waste to incinerate has a sound economic justification, especially in the presence of old-generation WtE plants. Finally, this work provides new insights into the debate about the relationship between WtE incineration and recycling by suggesting that the two opposing views within such debate are not totally incompatible; rather they capture different dimensions of the problem. In particular, the view that WtE combustion represents an obstacle to recycling is consistent with what is found at the local level when burning waste for energy recovery becomes available. while the view that the two activities are positively correlated is more in line with the findings at the aggregate level.

Resilient managed competition during pandemics: lessons from the Italian experience during COVID-19.

In the last decades, several European health systems have abandoned their vertically integrated health care in favour of some form of managed competition (MC), either in a centralised or decentralised format. However, during a pandemic, MC may put health systems under additional strain as they are designed to follow some form of 'organisational self-interest', and hence face reduced incentives for both provider coordination (e.g. temporary hospital close down, change in the case-mix), and information sharing. We illustrate our argument using evidence for the Covid-19 pandemic outbreak in Italy during March and April 2020, which calls for the development of 'coordination mechanisms' at times of a health emergency.

Beyond price: the effects of non-financial barriers on access to drugs and health outcomes.

OBJECTIVES: We study the impact of the pharmacy dispensing channel (as a proxy for access to drugs) on the drug purchases, health outcomes, and health care utilization (emergency room visits or hospitalizations) of chronically ill patients in Liguria, Italy, in 2017. METHODS: We use the coarsened exact matching algorithm to compare the health outcomes for a treated group of patients living in a local health authority (LHA) where drug distribution through community pharmacies was restricted. These patients were matched to a control group of patients living in other LHAs, where drugs were also dispensed through a broad network of community pharmacies. We exploit a unique administrative dataset with information on the socio-demographic characteristics and health care services utilization of Ligurian patients with chronic cardiovascular and respiratory ailments. We restrict our analysis to patients 65 years of age or older who were admitted to hospitals from 2013 to 2016 with either a principal or secondary diagnosis connected to chronic cardiovascular and respiratory diseases. RESULTS: Reduced access to drugs leads to lowered drug consumption, a higher probability of adverse health outcomes including mortality, and a higher consumption of medical services in terms of hospitalizations and emergency room visits. These effects increase with patients' age. CONCLUSION: The pharmacy dispensing channel significantly affects drug consumption and acts as a proxy for adherence among chronically ill patients. Thus, health outcomes and health care utilization should be carefully evaluated when comparing the costs of alternative dispensing channels.

Innovation, aging, and health care: Unraveling "silver" from "red" herrings?

This perspective paper argues that a sustainable health system design encompasses identifying opportunities and incentives for innovation, alongside an analysis of its effect on expenditure. Although aging alone is not a powerful cost driver, the combined effect of costly innovation, personalized care, and the rise of chronic conditions is. We identify an increasing role of prevention, the reduction of the prevalence of chronic conditions, re-organisation of incentives in health care markerts, including a closer scrutiny of the appropriateness of new treatments.

When fear backfires: Emergency department accesses during the Covid-19 pandemic.

INTRODUCTION: The increase in access to Emergency Departments (ED) worldwide causes inefficiencies, but also signals its importance. The Coronavirus (Covid-19) outbreak allows to study the reactions of patients to the news about the spreading of the infection, which may have generated the fear that ED was no longer safe. METHODS: We study access to ED of a large teaching hospital in Brescia - one of the most hit provinces in Italy by Covid-19 - during the pandemic (from the announcement of the first cases to the explosion of the pandemic, to months after end of the acute phase) to study how patients reacted to the news that ED could no longer be a safe place. We analyse triage code, mode of arrival to ED, and accesses related to chest and abdominal pain, to evaluate who was discouraged most. RESULTS: Accesses have drastically reduced immediately after the news of the first contagion. During the lockdown accesses and admissions to hospital ward have decreased; this may mean that some patients may have suffered reduced health or increased mortality risks because of this decision. At the end of June accesses to ED and admissions to hospital ward are still lower than usual. DISCUSSION: Fear of contagion and appeals not to use ED directly by Covid-19 patients may have discouraged access also for pressing health need.

Which valued-based price when patients are heterogeneous?

We use a simple model to study the static and dynamic efficiency of alternative regulation regimes for the reimbursement of medical innovations when responses to a new treatment (effectiveness) are heterogeneous across the eligible population. When the rational behavior of profit-maximizing firms is taken into account, only average value-based prices can ensure both static and dynamic efficiency, but they imply higher expenditure and lower consumer surplus. Ignoring dynamic efficiency, if patients' responses are sufficiently homogeneous, marginal value-based prices may dominate from the payer's perspective. We also present a refinement of average value-based prices that could reverse this result. Overall, the cost of ensuring static and dynamic efficiency is increasing in the degree of heterogeneity. A real-world example is used to illustrate these results.

Laboratory considerations amidst the coronavirus disease 2019 outbreak: the Spedali Civili in Brescia experience.

Coronavirus disease 2019 emergency has created an enormous stress on providers that have been transformed into coronavirus disease hospitals. This article presents the experience of the clinical laboratory of Spedali Civili in Brescia (a teaching hospital in Lombardy with over 1500 beds) in managing the crisis, and to offer practical considerations for laboratory testing for this cohort of patients. Our contribution is threefold: by comparing the demand for tests in two representative period before and within the crisis, we show the change in compositions of the analytes that other labs may expect; we present the new panels of tests that hospital staff can order with different advantage for wards and laboratory; and we show how to reorganize staff on the basis of changes mentioned above.

Is there scope for mixed markets in the provision of hospital care?

Market oriented reforms in hospital care have produced a variety of quasi markets that differ for the type of providers that are allowed to compete. Mixed markets, where public hospitals compete alongside private ones, are increasingly common, but the literature does not agree on their performances and their desirability. We review the contributions in this field by proposing a common framework which allows to account for the different approaches proposed to model public hospitals. In this paper we show under which conditions mixed markets perform better in terms of average quality, and we review the empirical literature to determine whether these conditions are met. In general, pure forms (private or public competition) are superior to mixed markets, unless patients interpret public hospitals as reference suppliers, and quality of care is important. The empirical evidence on these key questions shows that public hospitals behave differently from private organisations, but they are not necessarily less efficient. Research into patients choices seems to suggest that ownership is a value, but the empirical literature is still rather scant. From a policy point of view, our review suggests that there does not seem to be a clear answer to whether this market form should be used. Local conditions are going to play an important role.

Speeding up the clinical pathways by accessing emergency departments.

Inappropriate emergency admissions create overcrowding and may reduce the quality of emergency care. In Italy, overcrowding is further exacerbated by patients who use emergency admissions as a shortcut to avoid the general practitioner (GP) gateway. In this paper, we investigate access to emergency departments (EDs) by patients with non-severe medical conditions and their willingness to wait. Population data for ED accesses in Liguria (an Italian administrative region) in 2016 were used to estimate the number of strategic accesses and waiting time elasticities of low-severity patients. Our results show that the practice of using EDs to skip gatekeeping is a serious problem. The percentage of patients who engage in such practice vary from 8.7 to 9.9% of non-urgent patients; they generally prefer to access more specialized hospitals, especially during weekdays, when GPs are available, but hospitals run at full capacity. Strategic patients are usually much younger than average. From a policy point of view, our results show that long waits may discourage "genuine" patients rather than strategic ones. It is necessary to develop a system to improve access to patients mainly requiring specialist care, along with enhancing the management of diagnostic examinations through primary care.

Value-Based Pricing Alternatives for Personalised Drugs: Implications of Asymmetric Information and Competition.

The market for new drugs is changing: personalised drugs will increase the heterogeneity in patients' responses and, possibly, costs. In this context, price regulation will play an increasingly important role. In this article, we argue that personalised medicine opens new scenarios in the relationship between value-based prices, regulation and industry listing strategies. Our focus is on the role of asymmetry of information and competition. We show that, if the firm has more information than the payer on the heterogeneity in patients' responses and it adopts a profit-maximising listing strategy, the outcome may be independent of the choice of the type of value-based price. In this case, the information advantage that the manufacturer has prevents the payer from using marginal value-based prices to extract part of the surplus. However, in a dynamic setting where competition by a new entrant is possible, the choice of the type of value-based price may matter. We suggest that more research should be devoted to the dynamic analysis of price regulation for personalised medicines.

Decentralisation and waste flows: A welfare approach.

We analyse incentives, equilibria and implications of the governance framework for the disposal of municipal solid waste in an N-Region model where waste mobility is allowed. The key decisions revolve around the flow of waste between regions and the externalities associated with its final disposal. Two different institutional settings are considered: a centralised framework where a central planner takes all the decisions and a decentralised model where each region decides on its waste flows. When the regions are characterised by different levels of efficiency in the final treatment of waste, a certain degree of mobility might allow to reap the benefits of higher efficiency. However, when coupled with decentralisation, waste flows may produce sub-optimal outcomes that undermine environmental protection. In the light of these results, we show how the regulator can use the transfer price and the proximity principle as welfare-improving tools.

The redistributive effects of copayment in outpatient prescriptions: evidence from Lombardy.

BACKGROUND: In Italy, copayment has changed its nature and it can no longer be simply considered a system to curb inappropriate expenditure. It has become an important form of revenue for public health care provision, but it might also become a source of distortions in income and health benefits redistribution. METHODS: We use a rich administrative dataset gathering information on patients demand (whose records have been matched to income declared for tax purposes) to study the effects of an additional copayment (the so called "superticket" introduced by the Italian government in 2012) in Lombardy, the biggest Italian Region whose socio-economic dimension is comparable to that of many European countries (e.g., the Netherlands, Switzerland, etc.). RESULTS: Our analysis shows that at the aggregate level the non-uniform superticket schedule adopted in Lombardy is slightly pro-poor, but this result coexists with evidences pointing towards possible cases of restriction to access caused by the additional copayment. CONCLUSIONS: The introduction of the superticket and the ensuing increase in the out-of pocket payment for health care raises questions about the distribution of the burden among patients, and the sustainability of the extra revenue through time. This issue needs to be further investigated by combining health status data with the information in this dataset.