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The Intersection of Private and Public Action in Health and Health Care Internationally

Paper Session

Friday, Jan. 3, 2020 10:15 AM - 12:15 PM (PST)

Manchester Grand Hyatt, America's Cup C
Hosted By: International Health Economics Association
  • Chair: Karen N. Eggleston, Stanford University

Global Drug Diffusion and Innovation with a Patent Pool: The Case of HIV Drug Cocktails

Lucy Xiaolu Wang
,
Cornell University

Abstract

Designed to reward innovation, patent protection often leads to high drug prices that make life-saving medicines unaffordable for patients. This tension further increases patent infringement and invalidation to reduce prices, particularly in developing countries. The situation is serious for treatments that require multiple drugs owned by different firms with numerous patents, notably for HIV. I study the impact of the first joint licensing platform for drug bundling, the Medicines Patent Pool, on global drug diffusion and innovation. The pool allows generic firms worldwide to license drug bundles cheaply and conveniently for sales in a set of developing countries. I construct a novel dataset from licensing contracts, public procurement, clinical trials, and drug approvals. Using difference-in-differences methods, I find robust evidence that the pool leads to a substantial increase in the generic supply of drugs purchased. In addition, branded-drug makers and other entities, such as public institutions, respond to the pool by increasing the number of new clinical trials. The R&D input increase is accompanied by increases in generic drug product approvals. Finally, I estimate a simple structural model to quantify welfare gains and simulate counterfactuals. The total benefit to consumers and firms far exceeds the associated costs. (latest version: https://papers.ssrn.com/abstract_id=3426554)

Private Hospital Responses to Reimbursement Changes under Insurance in India

Radhika Jain
,
Stanford University
Pascaline Dupas
,
Stanford University

Abstract

As achieving universal health coverage becomes a priority, governments in lower income countries are expanding public health insurance programs that target poor households and contract the private sector to deliver care. To contain costs while providing financial protection, many of these programs adopt bundled payment systems that reimburse hospitals a fixed rate per admission, adjusted for diagnosis and procedure, and require hospitals to provide free care. Under these systems, hospital reimbursement rates are a key policy lever to shape hospital incentives, with significant implications for service volumes, quality, patient selection, and health outcomes, but the evidence on their effects in lower income countries is limited. We provide new quantitative evidence on how private hospitals respond to changes in reimbursement rates in the context of a government health insurance program that entitles 46 million low-income individuals to free hospital care in Rajasthan, India. Exploiting a policy-induced natural experiment that increased hospital reimbursement rates by varying magnitudes across a range of services, and using administrative claims data linked to patient surveys for the 6 months prior to and 7 months following the policy change, we examine the effects of hospital reimbursement changes on hospital entry, service volumes, upcoding, and patient out-of-pocket expenses. We find that hospital participation increases and that there are changes in claim composition, largely related to changes in hospital upcoding behavior. We also find that hospitals capture some of the increased public reimbursements and that there are no meaningful changes in the socioeconomic and demographic composition of patients in the program. Our results can inform the design of public health insurance programs in weak contract enforcement environments as well as social and health programs that outsource delivery to the private sector.

Does Pay-for-Performance Improve Quality of Care? Evidence from Senegal

Mylene Lagarde
,
London School of Economics
Mohamadou Sall
,
IPDSR Senegal

Abstract

Many low-income countries have chosen to introduce pay-for-performance (P4P) schemes that link financial rewards to performance targets. Although many dimensions of providers’ effort are not contractible, such incentives are meant to increase quality of care, by increasing providers’ motivation and accountability. Despite the enthusiasm for P4P, the evidence about its effectiveness remains mixed. While some schemes have increased the volume of care provided and structural care quality, no study has looked at the impact of P4P on the process quality and effectiveness of care provided. This study aims to fill this gap, by measuring the impact of a P4P scheme on the quality and effectiveness of care for services that were rewarded and not rewarded.
We take advantage of a randomised pilot of P4P in Senegal to identify the impact of P4P on quality of care. In the pilot, primary care facilities randomised to the treatment received financial incentives linked to the volume and appropriateness of care for maternal, reproductive and child services. We conducted an audit study in 196 public primary care facilities, using unannounced standardised patients to collect objective measures of quality and effectiveness of care. SPs are healthy individuals trained to consistently portray a particular clinical case and to subsequently report the performance of the providers consulted against a checklist reflecting the national guidelines and essential recommended care. The use of SPs provides many advantages over other methods of assessing quality such as clinical observations, patient exit interviews or use of medical records. SPs are especially useful to provide comparisons across settings, without problems of patient selection. In this study, each facility was visited by five standardised patients: two portraying a condition that was incentivised by the scheme (family planning and child with dysentery) and three presenting conditions that were not incentivised (asthma, angina and tuberculosis).

The Roles of Knowledge and Food Vouchers in Improving Child Nutrition

Hyuncheol Bryant Kim
,
Cornell University
Seollee Park
,
Harvard University
Yaeeun Han
,
Cornell University

Abstract

Mother’s lack of knowledge about child nutrition and limited resources lead to poor diets among
children in developing countries, increasing their risk of chronic undernutrition. We implemented a
cluster randomized control trial that randomly provides Behavior Change Communication (BCC)
and food vouchers in Ethiopia. We find an increase in child diet quality and a reduction in chronic
child undernutrition only when BCC and vouchers are provided together. BCC or voucher alone had
limited impacts. We also find substantial knowledge spillovers to untreated new mothers, implying
sustainable impacts of BCC in the community.
Discussant(s)
David Ridley
,
Duke University
Anthony LoSasso
,
University of Illinois-Chicago
Winnie Chi-Man Yip
,
Harvard University
Jennifer Muz
,
George Washington University
JEL Classifications
  • I1 - Health
  • P4 - Other Economic Systems