Expanding the solution set: Organizational economics and agri-environmental policy

The market failure paradigm dominates agri-environmental research and policy. Organizational economics provides an alternative framework for analyzing agri-environmental problems and points to alternative solutions. In this paper, the traditional approach of creating markets for environmental goods and services is critiqued and set aside to provide space for an organizational analysis. From an organizational perspective, the relationship between the state and agricultural agents is viewed as grounded in an over-arching exchange relationship including elements of cooperation and trust. Such a collaborative exchange relationship may prove useful in supporting exchange between agricultural agents and the state leading to the provision of ecological goods and services. Highlighting the potential of organizational economics, the analysis suggests that agri-environmental research and policy go further in accounting for, and investigating, the unique organizational modes of exchange governing the production of food, fiber, and ecological goods and services.     

Modelling the cost-effectiveness of nevirapine triple combination therapy and dual combination therapy for the treatment of HIV disease in the United Kingdom

Summary

Recent advances in HIV antiretroviral therapy together with limited budgets have forced payers to look for evidence that new combinations provide good value for money. Using a public financing perspective, two Markov models are employed to evaluate the first-year outcomes and costs and the long-term cost-effectiveness of adding nevirapine (NVP) to dual combination therapy with zidovudine (ZDV) and didanosine (ddI) in the United Kingdom.

First-year medical care savings are estimated to be £2,122 (103.8% of NVP cost). In the longer term, NVP/ZDV/ddI therapy yields £6,186 per life year saved (costs discounted at 6%). The model is moderately sensitive only to duration of therapy effects and the therapy initiation time. These model estimates suggest that policy makers may expect to observe superior initial health outcomes and substantial medical cost savings during the first year of therapy, as well as acceptable long-term cost-effectiveness, when NVP/ZDV/ddI is used in place of dual therapy.     

Evaluating the cost-effectiveness of percutaneous closure of a patent foramen ovale versus medical management in patients with a cryptogenic stroke: from the UK payer perspective

Aims: Percutaneous closure of a patent foramen ovale (PFO) is known to lower the risk of recurrent stroke in patients with a cryptogenic stroke. However, the economic implications of transcatheter PFO closure are less well known. From a UK payer perspective, a detailed economic appraisal of PFO closure was performed for prevention of recurrent ischemic stroke in patients with a PFO who had experienced a cryptogenic stroke.

Materials and methods: A Markov cohort model was constructed using a 5-year time-horizon with a patient mean age of 45.2 years, reflecting the characteristics reported in the REDUCE trial. Transition probabilities, clinical inputs, costs, and utility values were ascertained from published and national costing sources. Total costs, incremental costs, quality-adjusted life-years (QALYs), and incremental cost-effectiveness ratios were calculated, utilizing a discount rate of 3.5%. A range of univariate and probabilistic sensitivity analyses were also performed.

Results: When applying a willingness-to-pay (WTP) threshold of £20,000/QALY in accordance with NICE guidelines, PFO closure compared with antiplatelet therapy alone showed a beneficial cost/QALY of £18,584, attained at 4 years. Applying discount rates of 0% and 6% had a negligible effect on the base-case model findings. PFO closure demonstrated a 76.9% probability of being cost-effective at a WTP threshold of £20,000/QALY at a 5-year time-horizon.

Limitations: This model focused specifically on UK stroke patients and typically enrolled young (mean age <65 years old) patients. Hence, caution should be taken when comparing data vs non-UK populations, and it remains unclear how older patients might have affected cost-effectiveness findings, as the risk of paradoxical embolism can persist as patients age.

Conclusion: Percutaneous closure of a PFO is cost-effective compared with antiplatelet therapy alone, underlining the economic benefits potentially afforded by this treatment in selected patients.     

Mirabegron for the treatment of overactive bladder: cost-effectiveness from US commercial health-plan and Medicare Advantage perspectives

Background and objective: The first class of oral pharmacologic treatments for overactive bladder (OAB) are antimuscarinics that are associated with poor persistence, anticholinergic adverse events, and increased anticholinergic burden (ACB) with risk of cognitive impairment. Mirabegron, a β3-adrenoceptor agonist, is an oral treatment that does not contribute to ACB and has early evidence of improved persistence. The objective of the analysis was to assess the cost-effectiveness of mirabegron for OAB vs six antimuscarinics in the US.

Methods: A Markov state-transition model assessed US commercial health-plan and Medicare Advantage perspectives over a 3-year time horizon in an OAB patient population. Transition probabilities between five micturition and five incontinence severity states were derived from a network meta-analysis of 44 trials of oral OAB treatments. Therapy beginning with an oral OAB agent could discontinue or switch to another oral agent and could be followed by tibial nerve stimulation, sacral neuromodulation, or onabotulinumtoxinA. The primary outcome was cost per quality-adjusted life year (QALY). Utilities were mapped from incontinence and micturition frequencies as well as demographics. Based on analysis of data from a large healthcare system, elevated ACB was associated with increased healthcare utilization and probability of cognitive impairment.

Results: From both commercial and Medicare Advantage perspectives, mirabegron was the most clinically effective treatment, while oxybutynin was the least expensive. Tolterodine immediate release (IR) was also on the cost-effectiveness frontier. The analysis estimated costs per QALY of $59,690 and $66,347 for mirabegron from commercial health plan and Medicare Advantage perspectives, respectively, compared to tolterodine IR. Other antimuscarinics were dominated.

Conclusions: This analysis estimated that mirabegron is a cost-effective treatment for OAB from US commercial health plan and Medicare Advantage perspectives, due to fewer projected adverse events and comorbidities, and data suggesting better persistence.     

A cost-effectiveness and budget impact analysis of apremilast in patients with psoriasis in the Italian setting

Abstract

Aims: The aim of this study was to conduct a cost-effectiveness analysis, as well as a budget impact analysis, on the use of apremilast for the treatment of adult patients with moderate-to-severe plaque psoriasis (defined as a psoriasis area severity index [PASI]?≥?10), who failed to respond to, had a contraindication to, or were intolerant to other systemic therapies, within the Italian National Health Service (NHS).

Materials and methods: A Markov state-transition cohort model adapted to the Italian context was used to compare the costs of the currently available treatments and of the patients’ quality of life with two alternative treatment sequences, with or without apremilast as pre-biologic therapy. Moreover, a budget impact model was developed based on the population of patients treated for psoriasis in Italy, who would be eligible for treatment with apremilast.

Results: Over 5?years, the cost-effectiveness analysis showed that the strategy of using apremilast before biologic therapy was dominant compared with the sequence of biologic treatments without apremilast. In addition, it is important to underline that the use of apremilast slightly increases the quality-adjusted life years gained over 5?years. Furthermore, within the budget impact analysis, the strategy including apremilast would lead to a saving of €16 million within 3?years. Savings would mainly be related to a reduction in pharmaceutical spending, hospital admissions and other drug administration-related costs.

Conclusion: These models proved to be robust to variation in parameters and it suggested that the use of apremilast would lead to savings to the Italian healthcare system with potential benefits in terms of patients’ quality of life.     

Universal Health Care and the Economics of Responsibility

In the American health care system the cost of health insurance is underwritten by all three sectors of the economy: 1) households; 2) employers; and 3) government. However, while costs are shared, responsibility is not. The retreat of private firms and government from assuming a substantial share of the burden of health care costs is based on the presumption that health care is an individual’s responsibility, while the contributions of government and the private sector are basically optional - a matter of benevolence rather than responsibility. The outcome of the current debates over health care reform will depend on this issue of responsibility. Who should pay for health care? Is it a collective responsibility or an individual one? In this paper, we explore the economics of responsibility as it applies to health care. In the institutionalist framework, any reallocation of costs must be driven by an underlying philosophy of shared responsibility.     

Health economics of medical devices: opportunities and challenges

Expenditure on medical devices is substantial and is expected to grow in the future. This Editorial draws attention to health economic issues surrounding medical devices. To this effect, opportunities and challenges involved in the economic analysis of the market structure of medical device sectors and in the economic evaluation of medical devices are identified.

Markets for medical devices tend to be fragmented and suffer from a lack of transparency and competition. In response to this, there is extensive government intervention in many developed countries with a view to keeping down prices, restricting public reimbursement and promoting an efficient use of medical devices. Studies are called for that evaluate and compare country approaches towards regulating medical device markets with a view to informing medical-device policies.

Whereas economic evaluation of medicines is well established, and is used to inform pricing and reimbursement decisions in many developed countries, this is less the case for medical devices. There is a need for economic evaluations of medical devices with a view to demonstrating their cost effectiveness. In addition, countries need to implement frameworks for the assessment of new and emerging medical devices with a view to taking pricing and reimbursement decisions.     

Peginterferon beta-1a versus other self-injectable disease-modifying therapies in the treatment of relapsing-remitting multiple sclerosis in Scotland: a cost-effectiveness analysis

Aims: Peginterferon beta-1a 125?mcg administered subcutaneously every 2 weeks, a new disease-modifying therapy (DMT) for relapsing-remitting multiple sclerosis (RRMS), was approved in January 2015 by the Scottish Medicines Consortium. This study assesses long-term clinical and economic outcomes of peginterferon beta-1a compared with other self-injectable DMTs (interferon beta-1a [22?mcg, 30?mcg, and 44?mcg], interferon beta-1b, and glatiramer acetate 20?mg) in the treatment of RRMS, from the National Health Service and Personal Social Services perspective in Scotland.

Methods: A previously published, validated Markov cohort model was adapted for this analysis. The model estimates changes in patient disability, occurrence of relapses, and other adverse events, and translates them into quality-adjusted life years and costs. Natural history data came from the ADVANCE trial of peginterferon beta-1a, the London Ontario (Canada) database, and a large population-based MS survey in the UK. The comparative efficacy of each DMT vs placebo was obtained from a network meta-analysis. Costs (2015 British Pounds) were obtained from public databases and literature. Clinical and economic outcomes were projected over 30 years and discounted at 3.5% per year.

Results: Over 30 years, peginterferon beta-1a was dominant compared with interferon beta-1a (22, 30, and 44?mcg), and interferon beta-1b, and cost-effective compared with glatiramer acetate 20?mg. Results were most sensitive to variations in each DMT’s efficacy and acquisition costs. Deterministic and probabilistic sensitivity analyses confirmed the robustness of the results.

Limitations: The impact of improved adherence with peginterferon beta-1a on clinical and economic outcomes and the impact of subsequent DMTs after treatment discontinuation were not considered. Oral and infused DMTs were not included as comparators.

Conclusion Long-term treatment with peginterferon beta-1a improves clinical outcomes, while its cost profile makes it either dominant or cost-effective compared with other self-injectable DMTs for the treatment of RRMS in Scotland.     

Use of opioid substitution therapies in the treatment of opioid use disorder: results of a UK cost-effectiveness modelling study

Aims: This study investigated the cost-effectiveness of buprenorphine maintenance treatment (BMT) and methadone maintenance treatment (MMT) vs no opioid substitution therapy (OST) for the treatment of opioid use disorder, from the UK National Health Service (NHS)/personal social services (PSS) and societal perspectives over 1 year.

Methods: Cost-effectiveness of OST vs no OST was evaluated by first replicating and then expanding an existing UK health technology assessment model. The expanded model included the impact of OST on infection rates of human immunodeficiency virus (HIV) and hepatitis C virus (HCV) infection.

Results: Versus no OST, incremental cost-effectiveness ratios (ICERs) for BMT and MMT were £13,923 and £14,206 per quality-adjusted life year (QALY), respectively, from a NHS/PSS perspective. When total costs (NHS/PSS and societal) are considered, there are substantial savings associated with adopting OST; these savings are in excess of £14,032 for BMT vs no OST and £17,174 for MMT vs no OST over 1 year. This is primarily driven by a reduction in victim costs. OST treatment also impacted other aspects of criminality and healthcare resource use.

Limitations: The model’s 1-year timeframe means long-term costs and benefits, and the influence of changes over time are not captured.

Conclusions: OST can be considered cost-effective vs no OST from the UK NHS/PSS perspective, with a cost per QALY well below the UK’s willingness-to-pay threshold. There were only small differences between BMT and MMT. The availability of two or more cost-effective options is beneficial to retaining patients in OST programs. From a societal perspective, OST is estimated to save over £14,032 and £17,174 per year for BMT and MMT vs no OST, respectively, due to savings in victim costs. Further work is required to fully quantify the clinical and health economic impacts of different OST formulations and their societal impact over the long-term.     

L-carnitine in the management of patients after acute myocardial infarction: a cost effectiveness analysis in Italy

Summary

The prevalence of acute myocardial infarction (AMI) is estimated at 500,000 individuals in the Italian population; the annual incidence can be crudely estimated at 100,000 events. This represents a major healthcare problem and generates questions about the rational allocation of public resources devoted to healthcare, since in Italy there is a National Health Service. We focused on modelling the possible economic consequences of adding L-carnitine administration to the standard care of AMI patients in Italy, by extrapolating the results obtained in the SAVE trial and matching entry criteria from the CEDIM and SAVE studies. The cost-effectiveness ratios were explored using different assumptions of the effectiveness and cost of the intervention under analysis. In our base case, administering L-carnitine had an Incremental Cost/Effectiveness Ratio of 28.2 and 22.2 million Lira per life year saved (LYS), respectively, depending on whether discounted or non-discounted benefits were used in this model. The results were sensitive to both the cost and effectiveness of L-carnitine.     

Environmental and Economic Effects of a Fall in Cereal Prices in the EU Internal Market: the Case of Denmark

Reform of the EuropeanCommon Agricultural Policy (the CAP) willreduce cereal prices in the Internal Marketwhile simultaneously increasing direct supportto farmers (Agenda 2000). This paper examinesthe possible effects of liberalisation of theCAP by modelling the effects of a 10 per centreduction in cereal prices combined withcompensation to farmers. We applied anintegrated modelling system suitable forestimating both the economic and environmentalconsequences of agricultural and environmentalpolicy measures and calculated the effects of a10 per cent fall in cereal prices on nitrogenloading of the Danish marine waters, on privateconsumption, GDP, the balance of payments, andemployment. The results indicate that pricereductions do not have significant effects onnitrogen loading relative to the 50 per centreduction target, since a 10 per cent reductionin cereal prices only leads to a 2.4 per centreduction in loading.     

Comparative evaluation of the cost of water in northern Malawi: from rural water wells to science education

Worldwide, improved sources of drinking water are still lacking for 663 million people. With Malawi as a case study, we aim to address the scarcity of data available to understand the full cost and options of drinking water at a regional level covering both urban and rural areas. We studied options in the northern region of Malawi under the following thematic areas: urban piped water, water wells, handpump spare part supply networks, household point-of-use water treatment, the cost of entering a water business and capacity building in science education. Primary locally sourced data were collected as well as secondary publically available data. Additionally, local markets were surveyed for spare part networks. This research has shown that when looking at water resource economics in northern Malawi, it is not a monopoly and options are available at a range of costs. The data challenge policy-makers to reach the last 10% of the population still lacking improved drinking water. This will require a combination of expansion of urban piped water infrastructure, new boreholes in rural areas, increased handpump functionality rates, scale-up of household drinking water point-of-use treatment and growth of local universities to train local experts within the sector.     

Economic outcomes with prasugrel versus clopidogrel in acute coronary syndrome patients: observations from prasugrel users and matched clopidogrel users

Abstract

Objective:

To compare healthcare costs between clopidogrel and prasugrel over 30-day and 365-day periods after discharge from the hospital or emergency room (ER) in patients treated with prasugrel who were hospitalized or had an ER visit for an acute coronary syndrome (ACS) event.     

Perspectives from the Happiness Literature and the Role of New Instruments for Policy Analysis

After having been ignored for a long time by economists, happinessis becoming an object of serious research in 21st century economics.In Section 2 we sketch the present status of happiness economics.In Section 3 we consider the practical applicability of happinesseconomics, retaining the assumption of ordinal individual utilities.In Section 4 we introduce a cardinal utility concept, whichseems to us the natural consequence of the happiness economicsmethodology. In Section 5 we sketch how this approach can leadto a normative approach to policy problems that is admissiblefrom a positivist point of view. Section 6 concludes. (JEL codes:B21, B41, D63, I31, I38)     

A clinical- and cost-effectiveness comparison of venlafaxine and selective serotonin reuptake inhibitors (SSRIs) in the management of patients with major depressive disorder from the perspective of an Austrian sickness fund

Summary

This study evaluated the relative clinical-and cost-effectiveness of venlafaxine (Efectin®, Wyeth Pharmaceuticals, Austria) extended release (ER), venlafaxine instant release (IR) and selective serotonin reuptake inhibitors (SSRIs) in the treatment of major depressive disorder. The study took an Austrian sickness fund perspective and the evaluation originally formed part of a reimbursement submission of venlafaxine ER to the Hauptverband — an umbrella organisation representing the Austrian sickness funds.

At the time of the submission venlafaxine IR was reimbursed but published data and clinical practice suggested that it might be clinically inferior, less convenient and less acceptable to patients than the newer ER formulation. We believe this is the first study to directly compare the two venlafaxine formulations.

Major depressive disorder is a serious mental illness associated with considerable morbidity and a significant economic burden. An extensive literature review was carried out to retrieve the relevant clinical data and a meta-analysis of the homogeneous data was undertaken to establish the most clinically effective first-line treatment. An Austrian Delphi panel was used to provide treatment pattern data and to estimate outcomes for patients undergoing further lines of treatment. A 16-week time horizon was adopted and decision analysis was employed to model the cost-effectiveness of the respective agents.     

Economic Valuation of Health for Environmental Policy: Comparing Alternative Approaches. Introduction and Overview

Protecting human health is a primary goal of environmental policy and economic evaluation of health can help policy-makers judge the relative worth of alternative actions. Economists use two distinct approaches in normatively evaluating health. Whereas environmental economists use benefit-cost analysis supported by monetary valuation in terms of willingness-to-pay, health economists evaluate interventions based on cost-effectiveness or cost-utility analysis (CEA), using quality-adjusted life-years (QALY) or similar indexes. This paper provides background on the controversy about the relative merits of these approaches and introduces the remaining papers in the special issue. These papers (with one exception) were presented at a conference sponsored by the Department of Economics at the University of Central Florida with support from the US Environmental Protection Agency. Although CEA might not lead to substantially different implications for environmental policy than benefit-cost analysis, and QALY may provide a benefit transfer tool to fill gaps in the morbidity valuation literature, the papers in this issue raise serious concerns about the suitability of QALY-based CEA for environmental regulatory analysis. QALY does not in general appropriately represent individual preferences for health and CEA is neither independent of income distribution nor adequate to assess efficiency.     

Economic policy uncertainty and real output: evidence from the G7 countries

We use economic policy uncertainty index, and impulse response based test to assess the impact of economic policy-related uncertainty on real economic activity. We use monthly data, over the period from 1985:1 to 2015:3, and impulse response functions to investigate how the economies of the G7 countries respond to positive and negative economic policy uncertainty shocks of different magnitudes. We find that economic policy uncertainty is countercyclical, that the effects of uncertainty shocks increase with size and that the responses of real output to positive and negative economic policy uncertainty shocks are country specific. Our research is important for policymaking and in favour of policies that remove economic uncertainty and its negative effects on the economy. We argue that some control over yellow journalism, a transparent tax system and a set of predictable fiscal and monetary policies can minimize the social costs of economic policy uncertainty.     

Cost and effectiveness of ciprofloxacin + hydrocortisone versus neomycin + polymyxin B + hydrocortisone in France for the treatment of acute otitis externa

Summary

The cost-effectiveness of two topical otic combinations, ciprofloxacin + hydrocortisone and polymyxin B — neomycin — hydrocortisone (PNH), was assessed in the treatment of acute otitis externa (AOE). Two randomised controlled double-masked trials compared their clinical and bacteriological efficacy and safety after 7 to 10 days of qid treatment. The treatment failure cost was established from a panel of ENT specialists and GPs. A decision-tree analysis was constructed to reproduce the results of empirical treatment. The most often encountered species were Pseudomonas aeruginosa (82.4%) and Staphylococcus aureus (9.7%). Patients documented with P aeruginosa had a better ciprofloxacin + hydrocortisone bacterial and clinical efficacy. The cost of AOE first-line failure was EUR 94.44 (Societal) and EUR 57.24 (Sécurité Sociale). The savings associated with ciprofloxacin + hydrocortisone (Cipro HC ®) were respectively EUR 3.87 and EUR 2.85. This model shows that topical ciprofloxacin + hydrocortisone could be a cost saving alternative in the treatment of AOE, provided its public price does not exceed EUR 10.60.

Cipro HC® is a registered trademark of Alcon, France.     

Environmental regulations and the problem of sustainability: Moving beyond “market failure”

The standard metaphor of market failure is an impediment to the crafting of environmental policy that can escape policy lock in. Sustainability requires a policy process that can avoid this lock in. Sustainability concerns the creation of dynamic human processes that can respond to—indeed anticipate—unanticipated feedback from biological processes.     

The benefits and costs of ethanol: an evaluation of the government’s analysis

Ethanol production in the United States has been steadily growing and is expected to continue growing. Many politicians see increased ethanol use as a way to promote environmental goals, such as reducing greenhouse gas emissions, and energy security goals. This paper provides a benefit-cost analysis of increasing ethanol use based on an analysis by the Environmental Protection Agency. We find that the cost of increasing ethanol production to almost ten billion gallons a year is likely to exceed the benefits by about three billion dollars annually. We also suggest that earlier attempts aimed at promoting ethanol would have likely failed a benefit-cost test, and that Congress should consider repealing ethanol incentive programs, such as the ethanol tariff and tax credit.