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Incentivising appropriate malaria treatment-seeking behaviour with price subsidies

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  • Schultz Hansen, Kristian

    ()
    (Department of Global Health and Development, London School of Health and Tropical Medicine,)

  • Hjernø Lesner, Tine

    ()
    (COHERE, Department of Business and Economics, University of Southern Denmark)

  • Østerdal, Lars Peter

    ()
    (COHERE, Department of Business and Economics, University of Southern Denmark)

Abstract

One of the most serious problems in the fight against malaria, especially in Africa, is the fact that many individuals suffering from malaria do not have easy access to effective antimalarials while at the same time a large proportion of people receiving antimalarials do not suffer from malaria. In order to improve access, a global price subsidy of 95% has been proposed for the most effective antimalarial, artemisininbased combination therapy (ACT). The objective of this proposal is to lower the consumer price on effective malaria medicine to increase access for, in particular, poor consumers. However, treatment of patients not suffering from malaria with antimalarials including ACTs has been proven widespread and a subsidy is likely to increase this overtreatment. This means waste of resources and will result in inflating the subsidy funds required. In addition, as has happened with older types of malaria medicine, treating nonmalarial fevers with malaria medicine may increase the risk of artemisinin resistance development. Diagnostic tests for malaria may have the potential for reducing overtreatment, but tests are expensive for the typical malaria treatmentseeking individual. In order to both increase access and reduce overtreatment we propose a subsidy on rapid diagnostic tests (RDTs) together with the ACT subsidy. The main objective of the paper is to investigate the optimal combination of subsidies that incentivises individuals suspecting themselves to have malaria to always test before buying an effective drug. We present a model that describes the health seeking behaviour of a representative individual using an expected utility framework. Based on numerical simulations of our model we find that a price reduction on RDTs is necessary to incentivise testing while at the same time, the subsidy on ACT can be lower than the proposed 95% without compromising access. The leastcost policy of the health policy maker is to subsidise both ACT and RDT, redirecting some of the subsidy money from ACT to RDT.

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Bibliographic Info

Paper provided by COHERE - Centre of Health Economics Research, University of Southern Denmark in its series COHERE Working Paper with number 2013:8.

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Length: 32 pages
Date of creation: 10 Sep 2013
Date of revision:
Handle: RePEc:hhs:sduhec:2013_008

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Postal: COHERE - Center for Sundhedsøkonomisk Forskning, Institut for Virksomhedsledelse og Økonomi, Syddansk Universitet, Campusvej 55, DK-5230 Odense M, Denmark
Phone: (+45) 6550 3081
Fax: (+45) 6550 3880
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Web page: http://www.sdu.dk/Om_SDU/Institutter_centre/cCohere
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Keywords: Health and economic development; public health; medical subsidy programmes; malaria; drug resistance;

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  1. Jessica Cohen & Pascaline Dupas, 2010. "Free Distribution or Cost-Sharing? Evidence from a Randomized Malaria Prevention Experiment," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 125(1), pages 1-45, February.
  2. Medlin, Carol & de Walque, Damien, 2008. "Potential applications of conditional cash transfers for prevention of sexually transmitted infections and HIV in Sub-Saharan Africa," Policy Research Working Paper Series, The World Bank 4673, The World Bank.
  3. Catherine Goodman & S. Patrick Kachur & Salim Abdulla & Peter Bloland & Anne Mills, 2009. "Concentration and drug prices in the retail market for malaria treatment in rural Tanzania," Health Economics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 18(6), pages 727-742.
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