health and medical questions (answer both part 1 and part 2)

Applying Economic Principles and Tools to a Health Care

part 1

Overview

In this assignment, you apply economic principles and tools (cost, demand, and market demand curves) to the economic issue that you chose in the Week 2 activity. You are also asked to complete a brief description of health care financing payment models.

Instructions

Consider the health care issue that you identified in the Week 2 activity and address each of the following in a 3–4 page Word document:

1. Explain how economic principles can be applied to this issue to effectively guide decision making.
2. Demonstrate how supply and demand curves are used to accurately assess the issue.
3. Analyze how the cost curve can be used to assess the issue. Provide an example.
4. Compare capitation, fee for service, and pay-for-performance financing payment models to accurately reveal their similarities and differences.

Use at least three sources to support your writing. Choose sources that are credible, relevant, and appropriate. Cite each source listed on your source page at least one time within your assignment. For help with research, writing, and citation, access the

library

or review

library guides

.

Discussion question – Capitation, Payers, and Provider Behavior

part 2

Please respond to the following:

Compare primary available economic resources that health insurance payers may use to monitor, assess, and regulate health care providers’ behavior. Evaluate the degree to which alternative provider payment methods (e.g., capitation, pay for performance, et cetera.) impact HMO economic and business performance. Provide one example of such a type of method to support your response.

1
Drug Pricing Issue in Healthcare Industry
Frances Mendoza
HAS 510: Health Economics
Donna Levesque
10/22/2023
2
Introduction
Among the numerous economic issues in the Healthcare industry that are driving change
in the sector is the increasing cost of prescription drugs. The escalation in the prices of
medication has numerous challenges that affect various stakeholders in the industry. Among
them are the healthcare providers. In addition, the patients are not spared at all since they require
the items in plenty for their health to improve. By extension, the issue impacts the overall
healthcare system. It is a critical issue to be considered due to its far-reaching implications in the
sector and the dare need for a solution to it (Prasad et al., 2017). This paper will describe the
issue and provide reasons why it is driving change in the sector.
Issue Description
In the healthcare sector, the escalation of drug prices is not an issue to be ignored. It is a
challenge that is not only restricting the resources the patients have but also resulting in nonadherence to medication. The reason being that if a patient has been preselected to purchase a
certain drug but its cost is so high beyond their economic capability, they will have to skip the
doses until they get the money. In addition, sometimes the patients may be required to take a
certain drug after a certain period of time, and if it reaches that at the moment, they are supposed
to take it there is no money, non-adherence will occur too. Eventually, the overall health
outcome will be compromised. For healthcare providers, the rise in drug prices limits the
available resources and constrains their budgets for other critical healthcare needs. This happens
mostly in healthcare systems funded by the public (Vincent Rajkumar, 2020). The opacity of
drug pricing is further contributed by the complexity of the pricing structures in the
pharmaceutical industries. Among them is the role of intermediaries in the industry.
Contributing Factors
3
The high drugs’ issue is being facilitated by various factors. To start with, there are
increased research and development costs. Research in the industry, especially for new drugs,
involves a long process, and the approval process is long and costly. This makes the end product
of the exercise high since the parties involved have to cater for the resources they invested, and
the process must be profitable to them. This allows pharmaceutical companies to get their money
through the high prices of drugs (Vincent Rajkumar, 2020). Another factor is the absence of
effective competition in the sector. This happens more in patent drug cases, which causes the
manufacturers to set very high prices since they do not fear losing market share, sales, and
revenue.
Responses and Changes in Healthcare
The economic repercussions have resulted in various changes and responses in the
healthcare sector. One of them is that there has been increased advocacy from policymakers for
reforms whose aim is to enhance transparency in the pricing of drugs. The policies also aim at
expediting generic drug approval and fostering effective competition in the sector. There has also
been an increase in initiatives to promote the adoption of biosimilars (Prasad et al., 2017). These
are similar to biological drugs but cheaper.
On top of that, there has been increased emphasis on the use of reimbursement strategies
based on outcome as well as pricing models based on value. These are key in attaching the
drugs’ cost to their effects on patients and their efficacy after use. This is a shift from the
previous focus, which was on volume and value derived from pharmaceutical interventions.
There are also some firms in the sector that are trying to have direct negotiations with the
manufacturers of drugs so that they may get the drugs at a lower price (Kesselheim et al., 2016).
Others are exploring innovative partnerships for the same goal.
4
References
Kesselheim, A. S., Avorn, J., & Sarpatwari, A. (2016). The high cost of prescription drugs in the
United States: origins and prospects for reform. Jama, 316(8), 858-871.
Prasad, V., De Jesús, K., & Mailankody, S. (2017). The high price of anticancer drugs: origins,
implications, barriers, solutions. Nature reviews Clinical oncology, 14(6), 381-390.
Vincent Rajkumar, S. (2020). The high cost of prescription drugs: causes and solutions. Blood
cancer journal, 10(6), 71.