More questions

1.     Name three types of costs under cost-benefit analysis

2.     Name five types of direct medical costs.

3.     Name four direct non-medical costs.

4.     Name three indirect costs.

5.     Are indirect costs easy to measure?

6.     Name four benefits

7.     What else do we call benefits?

8.     How do you calculate net benefits?

9.     Where is the optimal point to maximize net benefits?

10.  What is the compound growth formula?

11.  What is the opposite of compounding?

12.  What is the present value of 100 SR in five years if you discount at 7 percent?

13.  Compounding is ________ Discounting is ___________.

14.  Name two ways to value a life.

15.  What is the shortcoming of the human capital approach to valuing a human life?

16.  Why is the life of a 15 year old greater than the life of a 50 year old?

17.  How do you estimate the value of a life with the willingness-to-pay approach?

18.  If I would be willing to spend 10 riyals for a vitamin that has a one in a million chance of curing cancer, what value am I placing on my life?

19.  What usually indicates a higher value, the human capital approach or the willingness-to-pay approach?

20.  What two things happen when there is a new innovation in medicine?

21.  What is cost effective analysis?

22.   How does CBA compare to CEA?

23.   How do you calculate the Incremental Cost Effective Ratio?

24.   Would you ever use a option that was less costly and less effective?

25.   How to you account for the quality of life versus the quantity of life?

26.   What is the formula for Quality-Adjusted Life-Years (QALYs)

27.   What is more important, quantity or quality?

28.   What is the range for the Human Utility Index (HUI)?

29.   Name three ways to estimate the HUI.

30.   Can you survey people to get a HUI?

31.   How does a standard gamble work with HUI?

32.   How does a time trade-off with HUI?

33.   What is a Cost Utility Ratio?

34.   What is better, CEA or CUA?

35.   What is the Friedman Matrix?

36.   What are the four questions that must be asked in any health care system?

37.   What is the problem with third-parties?

38.   What are the advantages of a government health care system?

39.   What are the disadvantages of a government health care system?

40.   What are the advantages of a decentralized health care system?

41.   What are the disadvantages of a decentralized health care system?

42.   What are four things that are different about the medical market in contrast to a normal market?

43.   Can you predict events with a large group of people?

44.   Does insurance eliminate risk?

45.   Does insurance increase risk?

46.   What is risk aversion?

47.   Does progress require risk?

48.   Name three problems with insurance.

49.   What is asymmetric information?

50.   What is adverse selection?

51.   What is moral hazard?

52.   Do all insurance schemes create moral hazards?

53.   What is diversification?

54.   What kinds of incentives tend to keep costs low?

55.   If you know someone’s incentives, you can predict their ______.

25 Questions

Think like an economist

1. Economics is the study of what?

2. What three things to economists assume about people?

3. What is an economic model?

4. If you change someone’s incentives you will change their________________.

5. Is economics a hard or soft science?

6. What is more important, incentives or goals?

7. What is more important, consequences or intentions?

8. What is wealth?

9. How do you get rich?

10. Where is the iPhone made?

11. What does Yabut mean?

12. What is opportunity cost?

13. What is comparative advantage?

14. What does a production possibilities curve illustrate?

15. Why does the production possibilities curve bow out?

16. How does the production possibilities curve move out?

17. What is the difference between positive economics and normative economics?

18. Does medical care guarantee good health?

19. As I spend more and more on medical care, does health improve as well?

20. What does the law of diminishing marginal utility mean for medical spending and health?

21. If the government sets a minimum price (price floor) above market equilibrium, what will happen?

22. If the government sets a maximum price (price ceiling) above market equilibrium, what will happen?

23. Why do people trade?

24. Who wins when a trade occurs?

25. When a trade occurs there is one price, how many values are there?
  

Lecture 6

Hen 368 lecture 6 health care systems and institutions from Gale Pooley

Most Valuable Patent in History Expires

From:

http://www.pellegrinoandassociates.com/most-valuable-patent-in-history-expires/

Lipitor, a cholesterol-lowering drug used to help reduce heart attack and stroke risk, represents the most value patent in history. It expired on June 28, 2011. What does this mean for Pfizer, the inventor? 

Pfizer filed a patent application for Lipitor on 2/26/91, which issued on 12/28/93. The product was launched in the market in 1997, with revenues peaking at $12.6 billion in 2006. By the end of 2009, total revenue was greater than $105 billion. It became the most profitable patent ever produced, making it more valuable than most companies in the S&P 500. However, with its recent expiration, the patent is now worthless.

Based on this information, why would a company use patents? Patents provide protection in a variety of ways. They give the owner the exclusive right to exclude someone from practicing the invention in the market. They protect something functional or utilized (e.g., new engine design, drug compound). They allow for abnormal market profits inherent in the monopolistic nature of a patent, and patent owners can price skim if patent utility presents a strong value proposition. Furthermore, patents can command treble damages for willful infringement.

While advantages exist with patents, several disadvantages must also be considered. Patents are expensive. One patent can cost anywhere from $10,000 to $50,000. An international patent can cost upwards of $250,000! Patents have short useful lives, with the typical statutory life of 20 years or less. Patents require full disclosure, revealing specific design information to competitors. Patents lose value every day on a present value basis. Finally, patents are expensive to defend. A typical patent lawsuit in the United States costs $3 million or more.  

While the Lipitor patent has become worthless, the flip side is that Lipitor may not have been as successful at all if it didn’t have the patent to protect it. Some companies are beginning to shy away from patents and rely on trade secrets instead. However, risks also exist with trade secrets. Once a trade secret is revealed, the trade secret immediately becomes worthless. No protection exists to stop a competitor from using that information and filing for a patent. With all intellectual property, pros and cons exist. Companies have to consider those pros and cons and determine the best approach to use.

Lecture 5

Hen 368 lecture 5 cost and benefit evaluation methods from Gale Pooley