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Optimal Intertemporal Curative Drug Expenses: The Case of Hepatitis C in France

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  • Magnac, Thierry
  • Dubois, Pierre

Abstract

We study intertemporal trade-offs that health authorities (HAs) face when considering the control of an epidemy using innovative curative medical treatments. We set up a dynamically controlled Susceptibles-Infected-Recovered (SIR) model for an epidemy in which patients can be asymptomatic, and we analyze in a simple model, the optimality conditions of the sequence of cure expenses decided by HAs at the onset of the drug innovation. We show that analytical conclusions are ambiguous because of their dependence on parameter values. As an application, we focus on the case-study of Hepatitis C whose treatment underwent a major up-heaval when curative drugs were introduced in 2014. We calibrate our controlled SIR model using French data and simulate optimal policies. We show that the optimal policy entails some front loading of the intertemporal budget compared to fixed annual ones. The analysis demonstrates how beneficial the intertemporal budgeting can be compared to non forward looking constant budget allocation.

Suggested Citation

  • Magnac, Thierry & Dubois, Pierre, 2023. "Optimal Intertemporal Curative Drug Expenses: The Case of Hepatitis C in France," TSE Working Papers 23-1402, Toulouse School of Economics (TSE).
    • Handle: RePEc:tse:wpaper:127775
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    References listed on IDEAS

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    1. Collard, Fabrice & Hellwig, Christian & Assenza, Tiziana & Kankanamge, Sumudu & Dupaigne, Martial & Werquin, Nicolas & Feve, Patrick, 2020. "The Hammer and the Dance: Equilibrium and Optimal Policy during a Pandemic Crisis," CEPR Discussion Papers 14731, C.E.P.R. Discussion Papers.
    2. Swathi Iyengar & Kiu Tay-Teo & Sabine Vogler & Peter Beyer & Stefan Wiktor & Kees de Joncheere & Suzanne Hill, 2016. "Prices, Costs, and Affordability of New Medicines for Hepatitis C in 30 Countries: An Economic Analysis," PLOS Medicine, Public Library of Science, vol. 13(5), pages 1-22, May.
    3. Fernando Alvarez & David Argente & Francesco Lippi, 2021. "A Simple Planning Problem for COVID-19 Lock-down, Testing, and Tracing," American Economic Review: Insights, American Economic Association, vol. 3(3), pages 367-382, September.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    pharmacy; SIR model; controlled epidemy dynamics; optimal intertemporal poli-; cies; hepatitis C;
    All these keywords.

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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