Example of Perfect Competition in healthcare?
Internet pharmacies
+ve: access to drugs for those unable to go to pharmacy; convenience to purchase whenever; privacy and anonymity; lower prices
- ve: 3 types of internet pharmacies … 2 and 3 - sale of unapproved new drugs, marketing of products without fraudulent health claims … no regulation
1) pharmacies that only fill prescriptions written by patient’s doctor
2) pharmacies that charge for a ‘cyber-consultation’ and whose cyber-doctor then writes a prescription
3) pharmacies that dispense prescription drugs without a physician’s prescription
Example of Monopolistic Competition in healthcare?
Medicines in medium and long run
Example of Oligopoly in healthcare?
Patent Rights
- Few companies control the patents … e.g. insulin drug: 3 companies own the 90% of global insulin market … hike the prices: US – 1996: common type of insulin costs $21 … 2019: same type costs $295
- E.g. pharmaceutical company researchers in the USA est. that developing a new molecular entity from discovery to launch takes av. 13.5 years and costs $1.8bn
Example of Monopoly in healthcare?
Public health insurance
Definition of Welfarism?
Systematic analysis of the social desirability of any set of arrangements solely in terms of the utility obtained by individual people
- individual utility-maximisers acting rationally
- conditions of perfect competition
- only consequences matter
- prices carry social value & are the only source of social value
Definition of Pareto improvement?
If a change can be made to the health care system making one individual better off without making at least one other person worse off
Definition of Pareto optimality/efficiency?
Once all such improvements have been exhausted, we have reached a resource allocation that is Pareto efficient
What is the Kaldor-Hicks Test?
Compensation/potential Pareto improvement test to see ‘can & would those who gain from a change acceptably compensate those who lose?’
If this test is passed, the proposed change is said to be “potentially Pareto improving”
Definition of Extra-Welfarism?
Basing of policy evaluation on values (drawn from those responsible for policy) attached to the characteristics of individuals
- Paying more attention to characteristics of people rather than utilities is important as it will encompass both efficiency and distributional types of concern and it transcends traditional utilitarianism
Relevant Outcome in Welfarism vs. Extra-Welfarism?
WELFARISM: Only indv. utility
EXTRA-WELFARISM: Indv. utility + extra measures/indicators of well-being [health/health gain, distribution of health/health gain, patient satisfaction, caregiver burden]
Source of valuation of relevant outcomes in Welfarism vs. Extra-Welfarism?
WELFARISM: Affected person
EXTRA-WELFARISM: Affected person; Expert; Representative sample of general public; Decision maker
Weighting of relevant outcomes in Welfarism vs. Extra-Welfarism?
WELFARISM: Sometimes weighted according to distribution of indv. utilities
EXTRA-WELFARISM: Allowed and considered important as means of incorporating equity considerations
Weights based on variety of considerations e.g. wealth or need
Intertemporal comparability of relevant outcomes in Welfarism vs. Extra-Welfarism?
WELFARISM: Theoretically possible through social welfare function
EXTRA-WELFARISM: Explicit comparisons made in terms of characteristics such as health
