Healthcare Economics

Homework Assignment 4

1. What are the three types of economic evaluations conducted in healthcare?

2. How, specifically, does cost-benefit analysis differ from cost-effectiveness analysis? 

3. How are economic evaluations utilized by policy-makers in the decision-making process in healthcare? Why are they underutilized?

4. The Food and Drug Administration (FDA) is expected to revoke approval of the drug Avastin for the treatment of stage IV breast cancer.  The drug is expensive (about $93,000 per year) but it works – shrinking tumor size by as much as 50%, slowing the disease progression, and extending life.  But after examining patient outcomes, the FDA’s Oncology Drug Advisory Committee could find no significant increase in “overall survivability.”  If Avastin’s approval is revoked, this will be the first time that the FDA has taken a cancer drug off the market solely for this reason. 

  1. In her article, “The Era of Rationing Begins,” Pacific Research Institute’s Sally Pipes views these actions the first steps toward rationing.  Is she right or is it simply a result of following the logic of comparative effectiveness research?
  2. For patients known as “super responders” the drug extends life by years.  How should this be factored into the FDA decision? 
  3. Are cost considerations legitimate when patients’ lives are at stake?  Explain. 

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