Short- and long-term relation between economic development and government spending: the role of quality of institutions

ABSTRACT

This paper tests the Wagner’s assumption of the one-sided directional flow moving from economic growth to public spending considering an international database over the 1996–2012 period. By using indicators on the level of country control of corruption, government effectiveness, political stability, rule of law, regulatory quality and voice and accountability, the paper analyses the economic performance-public spending nexus controlling for the quality of the institutions. The empirical evidence supports the existence of the Wagner’s law, showing that, in the short-run, public spending positively reacts to a positive shock in national income, with a lower magnitude for democratic countries. In the long run, the error-correction model shows the convergence between public spending and national output occurring less quickly for non-democratic, low-income and to a smaller extent for non-OECD countries. Institutional quality, such as effort in controlling corruption and the presence of regulations that permit and promote private sector development, may help reducing the amount of per capita public spending and making it more productive. Higher expenses in compositional amenities such as public services for the elderly may explain why public spending per capita will increase the most in economies with a higher share of the population that need healthcare facilities.     

Budget impact analysis of adjunctive therapy with lacosamide for partial-onset epileptic seizures in Belgium

Summary

Objective:

This study aims to compute the budget impact of lacosamide, a new adjunctive therapy for partial-onset seizures in epilepsy patients from 16 years of age who are uncontrolled and having previously used at least three anti-epileptic drugs from a Belgian healthcare payer perspective.

Methods:

The budget impact analysis compared the ‘world with lacosamide’ to the ‘world without lacosamide’ and calculated how a change in the mix of anti-epileptic drugs used to treat uncontrolled epilepsy would impact drug spending from 2008 to 2013. Data on the number of patients and on the market shares of anti-epileptic drugs were taken from Belgian sources and from the literature. Unit costs of anti-epileptic drugs originated from Belgian sources. The budget impact was calculated from two scenarios about the market uptake of lacosamide.

Results:

The Belgian target population is expected to increase from 5333 patients in 2008 to 5522 patients in 2013. Assuming that the market share of lacosamide increases linearly over time and is taken evenly from all other anti-epileptic drugs (AEDs), the budget impact of adopting adjunctive therapy with lacosamide increases from €5249 (0.1% of reference drug budget) in 2008 to €242,700 (4.7% of reference drug budget) in 2013. Assuming that 10% of patients use standard AED therapy plus lacosamide, the budget impact of adopting adjunctive therapy with lacosamide is around €800,000–900,000 per year (or 16.7% of the reference drug budget).

Conclusions:

Adjunctive therapy with lacosamide would raise drug spending for this patient population by as much as 16.7% per year. However, this budget impact analysis did not consider the fact that lacosamide reduces costs of seizure management and withdrawal. The literature suggests that, if savings in other healthcare costs are taken into account, adjunctive therapy with lacosamide may be cost saving.     

The foundations of Chinese attitudes towards advocating luxury spending

Abstract

In China, some scholars have argued that luxury spending is socially beneficial to equalise wealth, under the assumption that the total endowment of resources is a fixed amount. This argument is not only consistent with Confucianism but also might point to another lesser known side of Confucianism that the luxury spending of the rich can be regarded as a wealth-transferring mechanism. Furthermore, luxury spending was encouraged for purposes of enjoyment; it did not involve the consideration of power and protection. This is in sharp contrast to the extravagance of the European nobility; their intention was to maintain a hierarchical structure.     

Cost of adverse events during treatment with everolimus plus exemestane or single-agent chemotherapy in patients with advanced breast cancer in Western Europe

Objective:

Treatment options for recurrent or progressive hormone receptor-positive (HR+) advanced breast cancer include chemotherapy and everolimus plus exemestane (EVE?+?EXE). This study estimates the costs of managing adverse events (AEs) during EVE?+?EXE therapy and single-agent chemotherapy in Western Europe.

Methods:

An economic model was developed to estimate the per patient cost of managing grade 3/4 AEs for patients who were treated with EVE?+?EXE or chemotherapies. AE rates for patients receiving EVE?+?EXE were collected from the phase III BOLERO-2 trial. AE rates for single-agent chemotherapy, capecitabine, docetaxel, or doxorubicin were collected from published clinical trial data. AEs with at least 2% prevalence for any of the treatments were included in the model. A literature search was conducted to obtain costs of managing each AE, which were then averaged across Western European countries (when available). Per patient costs for managing AEs among patients receiving different therapies were reported in 2012 euros (€).

Results:

The EVE?+?EXE combination had the lowest average per patient cost of managing AEs (€730) compared to all chemotherapies during the first year of treatment (doxorubicin: €1230; capecitabine: €1721; docetaxel: €2390). The most costly adverse event among all patients treated with EVE?+?EXE was anemia (on average €152 per patient). The most costly adverse event among all patients treated with capecitabine, docetaxel, or doxorubicin was lymphocytopenia (€861 per patient), neutropenia (€821 per patient), and leukopenia (€382 per patient), respectively.

Conclusions:

The current model estimates that AE management during the treatment of HR+ advanced breast cancer will cost one-half to one-third less for EVE?+?EXE patients than for chemotherapy patients. The consideration of AE costs could have important implications in the context of healthcare spending for advanced breast cancer treatment.     

A study of regional variation in the inpatient cost of lower extremity amputation among patients with diabetes in the United States

Abstract

Objective:

Understanding of the effects of providers’ cost on regional variation in healthcare spending is still very limited. The objective of this study is to assess cross-state and cross-region variations in inpatient cost of lower extremity amputation among diabetic patients (DLEA) in relation to patient, hospital, and state factors.

Methods:

Patient and hospital level data were obtained from the 2007 US Agency for Healthcare Research and Quality Healthcare Cost and Utilization Project (HCUP). State level data were obtained from the US Census Bureau and the Kaiser Family Foundation websites. Regression models were implemented to analyze the association between in-patient cost and variables at patient, hospital, and state levels.

Results:

This study analyzed data on 9066 DLEA hospitalizations from 39 states. The mean cost per in-patient stay was $17,103. Four out of the five most costly states were located on the East and West coasts (NY and NJ, CA and OR). Age, race, length of stay, level of amputation, in-patient mortality, primary payer, co-morbidities, and type of hospital were significantly correlated with in-patient costs and explained 55.3% of the cost variance. Based on the means of costs unexplained by those factors, the three West coast states had the highest costs, followed by five Midwestern states, and four Southern states, and Kansas were the least costly.

Conclusions:

Over 40% of the variations in DLEA hospital costs could not be explained by major patient-, hospital-, and state-level variables. Further research is needed to examine whether similar patterns exist for other costly surgical procedures among diabetic patients.     

Determinants of healthcare spending: a state level analysis

Within the high and rising level of healthcare spending for the US as a whole is substantial variation in spending across states. Yet relatively little attention has been given to the empirical analysis of interstate differences in aggregate healthcare expenditures, and therefore little empirical evidence exists at the state level to guide policymakers. Using data for all 50 states for the year 1998, we estimate an empirical model that includes structural and reduced-form healthcare spending equations and a health production function to assess the significance, size and relative importance of factors that prior research indicates, may play an important role in explaining interstate variation in medical care expenditures, and the main pathways through which they operate. Our results indicate higher levels of healthcare spending for state populations with higher income, less education, fewer uninsured residents, less healthy lifestyles, larger proportion of elderly residents, greater availability of medical care providers and less urbanization. Our findings suggest that the most effective cost containment measures may be those that increase education and promote healthy lifestyles. Not only do these actions lead to reductions in healthcare spending, they also improve the health status of the population, and may help to achieve other important social policy goals.     

Value of innovation for hematologic malignancies

Background:

Several novel drugs are dramatically improving both lifespan and quality-of-life of patients with blood cancers.

Aim:

Prolonged disease duration and increased treatment costs for hematologic malignancies impose a relevant economic burden onto healthcare services, despite the low incidence of blood cancers. Therefore, an appropriate paradigm for valuing ‘innovation’ is urgently required in order to refine pricing and reimbursement decisions. Cost-per-QALY-gained is still the standard metric for assessing the ‘incremental’ value of new drugs; however, the high number of ‘comparator’ therapies and the huge variety of treatment sequences make plain two-treatment comparisons sub-optimal, while multiple-treatment and multiple-sequence comparisons require complex and less-transparent decision models. A repository of standard backbones for decision models might allow benchmarking and comparability among cost-effectiveness analyses; however, an international effort is required to build it up.

Results:

Deontology recommends that hematologists act in optimizing healthcare resources while preserving patient–physician alliance, but clinical practice guidelines do not support doctors in balancing cost against clinical outcomes. Decision models of chronic blood cancers unexpectedly proved that cost might be an appropriate value for innovation if treatments avoided severe toxicity and further lines of treatments, despite the eventually long duration of treatment and the competing risk of death due to comorbidity and old age.

Conclusion:

The improved transparency of decision models allows sharing of relevant structural and analytic parameters (i.e., time horizon, comparator treatments, hierarchy of end-point, assumptions, source of data, sub-group analyses) by stakeholders, physicians and patients, making health economics a noble ‘translator’ of values for innovation.     

Healthcare resource utilization among patients diagnosed with idiopathic pulmonary fibrosis in the United States

Abstract

Objectives:

Few studies have characterized healthcare resource utilization among patients with idiopathic pulmonary fibrosis. The objective of this study is to assess healthcare resource utilization among patients with idiopathic pulmonary fibrosis as compared to members without this condition.

Methods:

Patients newly diagnosed with idiopathic pulmonary fibrosis were identified from a national administrative claims database (2006–2011) as having ≥2 claims with idiopathic fibrosing alveolitis, or ≥1 claim with idiopathic fibrosing alveolitis and ≥1 claim with post-inflammatory pulmonary fibrosis (earliest claim with idiopathic fibrosing alveolitis denoted the index date), a procedure of lung biopsy or high-resolution computed tomography within ±90 days of the index date, 12-month pre-index continuous enrollment, plus ≥2 confirmatory idiopathic fibrosing alveolitis diagnoses after the procedure. For each idiopathic pulmonary fibrosis patient, three members without the condition were matched by age/gender/region/payer type. Demographic/clinical characteristics were measured during the 1-year pre-index period. Healthcare resource utilization was assessed by quarter during 1-year pre- and post-index periods. Generalized estimating equation models controlling for patient characteristics were constructed to estimate adjusted post-index healthcare resource utilization.

Results:

In total, 1735 patients with idiopathic pulmonary fibrosis and 5205 without (mean age?=?71.5 years; 46.1% female) were included. Adjusted results revealed idiopathic pulmonary fibrosis patients were more likely to use healthcare resources than members without the condition 1-year post-index (number of hospitalizations, emergency room visits, and outpatients visits: 0.63 vs 0.31, 0.62 vs 0.48, and 5.7 vs 3.1 per person-year, respectively).

Conclusions:

Healthcare resource utilization is considerably higher among patients with idiopathic pulmonary fibrosis than members without the condition. Effective treatments for patients with idiopathic pulmonary fibrosis are needed to help reduce burden of healthcare resource use.     

Hospital patients with severe wounds: early evidence on the impact of Medicare payment changes on treatment patterns and outcomes

Aims: This study examines the effects of recent changes in Medicare long-term care hospital (LTCH) payments on treatment patterns and outcomes for severe wound patients discharged from short-term acute care hospitals (STACHs).

Materials and methods: The rolling implementation of a new Medicare payment policy was used to develop a difference-in-difference model. The study population consisted of Medicare beneficiaries subjected to the payment policy changes and hospitalized for stage 3, 4, or unstageable wounds; non-healing surgical wounds; and fistula. Using 2015-Q1-2017 Medicare claims data, changes in outcomes were examined for severe wound patients exposed to the new policy (treatment) and those that were not (comparison). All outcomes were modeled using linear regressions and adjusted for patient clinical characteristics. Analysis was conducted in a full sample and a sample with high-LTCH-use propensity.

Results: Severe wound patients exposed to the new policy experienced 4.1 and 7.5 percentage point (pp) reductions in LTCH use relative to the comparison group in the full sample and high-LTCH-propensity sample, respectively (p?p?=?.039). No statistically significant change was found in 60-day mortality or Medicare spending after the policy change in the treatment group as compared to the comparison group (p?>?.10). However, among severe wound patients who are exposed to the new policy in the high-LTCH-propensity sample, readmission and post-discharge sepsis rates increased after the policy change relative to the comparison group (readmission rate = 8.1 pp, p?=?.075; sepsis rate = 7.0 pp, p?=?.033).

Limitations: The findings are based on data from a limited timeframe around the policy change and, thus, provide only early evidence on the effects of the new policy.

Conclusion: The new LTCH payment policy is associated with no changes in Medicare spending and mortality, but higher readmissions and post-discharge sepsis rates among severe wound patients with a high likelihood to use an LTCH.     

Drug wastage and costs to the healthcare system in the care of patients with non-small cell lung cancer in the United States

Background: Lung cancer is one of the most prevalent cancers in the US. This study was designed to evaluate the actual drug wastage and cost to the healthcare system using patient-level retrospective observational electronic medical record (EMR) data from a cohort of lung cancer patients in the US.

Methods: Data from the Flatiron Health advanced non-small cell lung cancer (NSCLC) cohort was used for this study. Drug administered amount (in mg) was used to determine an optimal set of available vial sizes to minimize waste. Drug wastage was defined as the difference between the drug amount in the optimal set of vials and the administered amount. Wholesale acquisition costs were used to value the cost of drugs, with and without vial sharing assumptions. The amount and cost of waste were quantified over the 2-year study period (January 2015–December 2016).

Results: There were 8,467 eligible patients included in this study, providing data from 103,826 unique drug administrations across multiple lines of therapy. Overall wastage was 4.37% of the total medication used to care for patients. While costs per administration were low, the total cost of wastage for the study population represented $16,630,112 across the 2-year study period. Assuming that vial sharing occurred at the site level slightly reduced waste to 3.74% (reducing costs to $15,953,212 over 2 years).

Conclusions: Drug wastage is an important concern and has implications on healthcare costs in NSCLC. Evaluation of these real-world data suggest that pharmacists and physicians are able to reduce drug wastage by optimizing vial combinations and sharing vials among patients. Even small amounts of reduction in wastage could be useful in reducing healthcare costs in the US; however, caution is needed with drug rounding efforts to ensure patients do not receive a sub-optimal dose of medication.