Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
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Chapter 16, Problem 16P
To determine
Cost effectiveness.
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The question scenario is: Cost of care = $10,000 Annual deductible = $1000 Coinsurance = 20% Copayment = $20
Catastrophic care threshold = $25,000 Previous out-of-pocket payment ($, this year) = 0 What is the out of pocket
payment in this scenario with different health insurance policies? Assume that copayments will not count toward
deductible but will count toward the maximum out-of-pocket (catastrophic care)threshold. And Explain your general
approach. Use step-by-step if - then statements.
Assume a patient has a particular disease. The quality weight (q) associated with the disease is 0.5, meaning the patient has 0.5 quality-adjusted life year (QALY) from living one year with the disease. The patient with such a disease can only live for 10 years (without treatment). Now a drug has been developed to treat this disease. With the drug, the quality of life (q) can be improved to 0.8 and patients can live for 15 years.
(1) Calculate the QALYs gained due to the treatment (relative to no treatment). Assume no discounting of future years. Please show all your calculations (points will be deduced if the answer contains only one number without steps).
(2) If the drug costs $49,000, what is the incremental cost-effectiveness ratio of the treatment compared with no treatment? Please show all your calculations (points will be deduced if the answer contains only one number without steps).
(3) Assume it is agreed that a QALY is worth $5000 (the patient is willing to pay up to $5000…
You have been using Drug A as a standard of care for chemotherapy and now Drug B, a new chemo drug, is being considered for procurement by the hospital. Drug A prolongs life by 1 year and reduces quality of life of your patients by 35% due to its side effects. For you to decide to replace Drug A with Drug B it must have a quality adjusted life year in excess of:
a. 0.5 b. 0.45 c. 0.6 d. 0.65
Chapter 16 Solutions
Contemporary Engineering Economics (6th Edition)
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