1.The cost-effectiveness of influenza vaccination is well established for persons aged 65 years and older. A study in the October 4 2000 issue of the Journal of the American Medical Association (JAMA) considered cost-effectiveness and cost-benefit for healthy adults less than 65 years old. A randomized experiment was run. The treatment group received an influenza vaccination, while the control group received a placebo. Any favorable benefits of influenza vaccination last only for one flu season (a year).

We consider the costs and benefits of influenza vaccination for 1,000 adults when per person

- The cost of vaccination (including lost work time) is $25.

- The cost of influenza illness (including lost work time) is $200.

- Influenza vaccination reduces the probability of getting influenza from 0.24 to 0.14.

(a) Perform a cost-benefit analysis of influenza vaccination. Does it favor vaccination?

(b) What is the cost of influenza vaccination per case of flu avoided?

2.The table below represents the costs and benefits of four alternative programs designed to treat a life-threatening disease that afflicts all people over the age of 18 (children are immune to the disease).

Program

Costs($)

Life Saved

Cost-Effectiveness Ratio

A

100,000

10

B

100,000

12

C

200,000

12

D

200,000

15

a.Fill in the cost effectiveness ratio (average cost per life saved) column of the table. In terms of the cost-effectiveness ratio, state which program is the best and briefly explain why? Hint: Your answer should be very specific.

Now suppose that program B is targeted at saving the lives of senior citizens (aged 65 and older), while program C is targeted at saving the lives of young adults (aged 18-30). Ignore alternatives A and D for question (b).

b.In this scenario, provide an economic argument in support of choosing program C over program B? Briefly explain your answer. Be sure to use economic reasoning rather than morals or emotion and be specific.

3.A study published in BMC Health Services Research in October 2008 considered the cost-effectiveness of assisting general practitioners in management of patients with diabetes by use of a centralized database of clinical data to coordinate care. Based on five years of data a simulation model was used to predict patient outcomes and complications up to the time of death.

The per-patient increase in costs due to the program were estimated to be $3,000. Quality-adjusted life years were calculated to be 8.5 years for those in the program and 8.2 years for those not in the program. A year of perfect health is felt to be worth $50,000.

(a) Perform a cost-benefit analysis of the program. What do you conclude? i.e is the program worthwhile or not ? (Hint MB Vs MC)

(b) Perform a cost-utility analysis of the program. What do you conclude? i.e is the program worthwhile or not?