This paper develops a real options approach to the optimal sequencing of antiretroviral drug cocktails for HIV/AIDS patients in resource-poor settings. The analysis focuses on the implications of endogenous resistance mutations in the virus that reduce or eliminate the effectiveness of individual drugs within a cocktail when lack of laboratory equipment prevents these from being identified. Using a model with two drug cocktails, we show that the first-line therapy should be introduced later than in the case without resistance mutations and that the second-line therapy should be introduced earlier. We go on to discuss implications for comparative cost-effectiveness analyses.
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Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number
1371.
Find related papers by JEL classification: D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health I12 - Health, Education, and Welfare - - Health - - - Health Production
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